<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
MADISON GAS AND ELECTRIC COMPANY
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
WISCONSIN 39-0444025
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
--------------------------
133 SOUTH BLAIR STREET
P.O. BOX 1231, MADISON, WISCONSIN 53701-1231
(608) 252-7000
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
------------------------------
GARY J. WOLTER, ESQ.
SENIOR VICE PRESIDENT--ADMINISTRATION AND SECRETARY
133 SOUTH BLAIR STREET
P.O. BOX 1231, MADISON, WISCONSIN 53701-1231
(608) 252-7292
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
COPIES OF ALL COMMUNICATIONS TO:
R. TODD VIEREGG, P.C.
SIDLEY & AUSTIN
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60603
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the Registration Statement becomes effective, as determined by
market conditions and other factors.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
REGISTERED REGISTERED (1) UNIT (2) PRICE (2) (2)
<S> <C> <C> <C> <C>
Common Stock ($1 par value).................
Medium-Term Notes...........................
Total....................................... $65,000,000 100% $65,000,000 $19,175
</TABLE>
(1) There are being registered hereby a presently indeterminate number of shares
of Common Stock and a presently indeterminate number of Medium-Term Notes,
all with an aggregate initial public offering price not to exceed
$65,000,000.
(2) Pursuant to Rule 457(o), the registration fee is calculated on the basis of
the proposed aggregate maximum offering price of the Common Stock and the
Medium-Term Notes.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This Registration Statement contains the following prospectuses:
- a prospectus to be used in the offer and sale of Medium-Term Notes
- a prospectus to be used in the offer and sale of shares of Common Stock
pursuant to the Investors Plus Plan
- a prospectus to be used in other offers and sales of shares of Common
Stock
The Registrant plans to consummate, from time to time, transactions
involving the sale of securities registered pursuant to this Registration
Statement, provided that the proceeds from such sales will not exceed
$65,000,000 in the aggregate. No decisions have been made as to which securities
will be issued or the timing or size of any offering of such securities. Such
decisions will be made from time to time based on market conditions and other
factors.
<PAGE>
SUBJECT TO COMPLETION DATED JULY 22, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
MADISON GAS AND ELECTRIC COMPANY
MEDIUM-TERM NOTES
DUE FROM NINE MONTHS TO 30 YEARS FROM DATE OF ISSUE
------------------
Madison Gas and Electric Company (the "Company") may offer from time to
time, at prices and on terms to be determined at or prior to the time of sale,
its unsecured Medium-Term Notes (the "Notes"), having an aggregate initial
offering price not to exceed $65,000,000, subject to reduction in the event of
sales of shares of Common Stock offered by separate prospectuses under the
registration statement referred to below of which this Prospectus is a part.
Each Note will rank as senior unsecured debt, be registered as to principal and
interest and be denominated in United States dollars.
Specific terms of the Notes in respect of which this Prospectus is being
delivered will be set forth in an accompanying prospectus supplement (as
supplemented by any applicable pricing supplement relating thereto, a
"Prospectus Supplement"), together with the terms of the offering of the Notes,
the initial offering price and the net proceeds to the Company from the sale
thereof. The applicable Prospectus Supplement will set forth, among other
matters, the following with respect to the particular Notes: the aggregate
principal amount, authorized denominations, maturity date or dates, rate or
method of calculation of interest and dates for payment thereof, and any
redemption, prepayment or sinking fund provisions.
------------------------
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 OR ANY
PROSPECTUS SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------------
The Company may sell Notes directly to purchasers or through agents
designated from time to time by the Company or to or through underwriters or a
group of underwriters which may be managed by one or more underwriters. If any
agents of the Company or any underwriters are involved in the sale of Notes in
respect of which this Prospectus is being delivered, the names of such agents or
underwriters and any applicable commission or discount will be set forth in the
applicable Prospectus Supplement. The net proceeds to the Company from the sale
of Notes will be the public offering price of such Notes less such discount, in
the case of an offering through an underwriter, or the purchase price of such
Notes less such commission, in the case of an offering through an agent, and
less, in each case, other expenses of the Company associated with the issuance
and distribution of such Notes.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Company has filed
with the Commission a registration statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Notes offered hereby and certain other securities. This
Prospectus does not contain all information set forth in the Registration
Statement and reference is hereby made to the Registration Statement and the
exhibits thereto for further information with respect to the Company and the
Notes offered hereby. Such reports, proxy statements, Registration Statement and
exhibits and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at its Northeast Regional Office located
at 7 World Trade Center, Suite 1300, New York, New York 10048 and Midwest
Regional Office located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. The Company is subject to the electronic
filing requirements of the Commission. Accordingly, pursuant to the rules and
regulations of the Commission, certain documents, including annual and quarterly
reports and proxy statements, filed by the Company with the Commission have been
and will be filed electronically. The Commission maintains a World Wide Web site
that contains reports, proxy and information statements and other information
regarding registrants (including the Company) that file electronically with the
Commission at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report of the Company on Form 10-K, for the year ended December
31, 1997 and the Quarterly Report of the Company on Form 10-Q for the quarter
ended March 31, 1998 are incorporated by reference into this Prospectus. All
documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this Prospectus and prior to the termination
of the offering of the Notes contemplated hereby shall be deemed to be
incorporated by reference into this Prospectus and to be made a part hereof from
the respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of the
Registration Statement and this Prospectus to the extent that a statement
contained in this Prospectus, in the applicable Prospectus Supplement or in any
subsequently filed document which also is or is deemed to be incorporated by
reference in this Prospectus 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 the Registration Statement or this
Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon written
or oral request of such person, a copy of any or all of the documents referred
to above which have been incorporated in this Prospectus by reference, other
than certain exhibits to such documents. Such requests should be directed to
Terry A. Hansen, Vice President-- Finance, Madison Gas and Electric Company,
Post Office Box 1231, Madison, Wisconsin 53701-1231 (Telephone: (608) 252-7923).
2
<PAGE>
THE COMPANY
The Company, a Wisconsin corporation organized as such in 1896, is a public
utility located in Madison, Wisconsin. It is engaged in generating and
transmitting electric energy and distributing it to approximately 117,000
customers throughout 250 square miles in Dane County. The Company also
distributes and transports natural gas to approximately 97,000 customers
throughout 975 square miles in Dane, Columbia, Iowa, Juneau, Monroe and Vernon
counties. The principal executive offices of the Company are located at 133
South Blair Street, Post Office Box 1231, Madison, Wisconsin 53701-1231, and its
telephone number is (608) 252-7000.
USE OF PROCEEDS
Except as may be set forth in a Prospectus Supplement, the Company intends
to use the net proceeds from the sale of the Notes for its general corporate
purposes, including the financing of capital expenditures, the refinancing of
indebtedness, and possible business investments and acquisitions. Pending such
applications, the net proceeds would be temporarily invested in marketable
securities.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the unaudited ratios of earnings to fixed
charges of the Company for each of the years 1993 through 1997 and for the three
months ended March 31, 1998.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1)...................... 4.15x 4.49x 4.23x 2.71x 4.02x
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1998
---------------------
<S> <C>
Ratio of earnings to fixed charges(1)...................... 5.58x
</TABLE>
- ------------------------
(1) For the purpose of computing the ratio of earnings to fixed charges,
earnings have been calculated by adding to income before interest expense,
current and deferred federal and state income taxes, investment tax credits
deferred and restored charged (credited) to operations and the estimated
interest component of rentals. Fixed charges represent interest expense,
amortization of debt discount, premium and expense, and the estimated
interest component of rentals.
3
<PAGE>
DESCRIPTION OF NOTES
GENERAL
The Notes offered hereby will be issued under the Indenture dated as of
, 1998, as supplemented from time to time (the "Indenture"), between the
Company and Bank One, N.A., as trustee (the "Trustee"). The Indenture is subject
to and governed by the Trust Indenture Act of 1939, as amended. The summary
contained herein of certain provisions of the Notes is subject to and is
qualified in its entirety by reference to the provisions of the Indenture and
the forms of Notes (including the definitions of certain terms therein), each of
which has been filed as an exhibit to the Registration Statement, to which
exhibits reference is hereby made. Certain capitalized terms used below but not
defined herein have the meanings ascribed to them in the Indenture. Unless
otherwise noted, section references below are to the Indenture.
The Notes are the only securities that may be issued under the Indenture.
The Indenture does not limit the aggregate amount of Notes that may be issued
under the Indenture, but the aggregate initial offering price of the Notes that
may be issued under this Prospectus is limited to $65,000,000 subject to
reduction in the event of sales of Common Stock under the Registration Statement
of which this Prospectus is a part. The Notes will be denominated in United
States dollars, and payments of principal of, premium, if any, and any interest
on the Notes will be made in United States dollars. Currency amounts in this
Prospectus and any Prospectus Supplement are stated in United States dollars.
Unless otherwise specified in the applicable Prospectus Supplement, the Notes
will have the terms described below.
The general provisions of the Indenture do not contain any provisions that
would limit the ability of the Company to incur indebtedness or that would
afford holders of Notes ("Holders") protection in the event of a highly
leveraged or similar transaction involving the Company. However, the general
provisions of the Indenture contain certain restrictions on mortgages and liens.
See "Restrictions on Secured Debt" below. Reference is made to the applicable
Prospectus Supplement for information with respect to any deletions from,
modifications of or additions to the Events of Default or covenants of the
Company that are described below, including any additional covenants or other
provisions providing event risk or similar protection.
All of the Notes need not be issued at the same time, and may vary as to
interest rate, maturity and other provisions. (Section 2.05) The Notes are
offered on a continuing basis and will mature on a day from nine months to 30
years from their date of issue, as selected by the initial purchaser and agreed
to by the Company, and may be subject to redemption at the option of the Company
or repayment at the option of the Holder prior to Stated Maturity (as defined
below). See "Redemption and Repayment" below.
Each Note will be represented by either a global security (a "Book-Entry
Note") registered in the name of a nominee of the Depositary or a certificate
issued in definitive form (a "Certificated Note"), as specified in the
applicable Prospectus Supplement. Beneficial interests in Book-Entry Notes will
be shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. Owners of beneficial interests in
Book-Entry Notes will be entitled to physical delivery of Certificated Notes
only under the limited circumstances described herein. See "Book-Entry System"
below. Unless otherwise specified in the applicable Prospectus Supplement, Notes
will be issued in denominations of $1,000 and integral multiples thereof.
(Section 2.04)
Payments of interest and principal (and premium, if any) to Beneficial
Owners (as defined below under "Book-Entry System") of Book-Entry Notes are
expected to be made in accordance with the procedures of the Depositary and its
participants in effect from time to time as described below under "Book-Entry
System."
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of and any premium and accrued interest on all Notes shall be payable
as follows:
(a) On or before 10:00 a.m., New York City time, of the day on which any
payment of principal, accrued interest or premium is due on any Book-Entry
Note pursuant to the terms thereof, the Company will deliver to the Trustee
immediately available funds sufficient to make such payment. On or before
10:30 a.m., New York City time or such other time as shall be agreed upon
between the
4
<PAGE>
Trustee and the Depositary, of the day on which such payment is due, the
Trustee will deposit with the Depositary such funds by wire transfer into
the account specified by the Depositary. As a condition to the payment at
the Maturity of any part of the principal and any applicable premium of any
Book-Entry Note, the Depositary will surrender, or cause to be surrendered,
such Book-Entry Note to the Trustee, whereupon a new Book-Entry Note will be
issued to the Depositary.
(b) With respect to any Note that is not a Book-Entry Note, principal,
any premium and accrued interest due at the Maturity of such Note will be
payable in immediately available funds when due upon presentation and
surrender of such Note at the Corporate Trust Office of the Trustee,
currently c/o First Chicago Trust Company of New York, as agent for the
Trustee, 14 Wall Street, 8th Floor, Suite 4607, New York, New York 10005,
PROVIDED that such Note is presented to the Trustee in time for the Trustee
to make such payment in such funds in accordance with its normal procedures.
Accrued interest on (and, in the case of Amortizing Notes, as defined below
under "Amortizing Notes", installments of principal of) any Note that is not
a Book-Entry Note (other than accrued interest or such installments payable
at Maturity) will be paid by a clearinghouse funds check mailed on the
Interest Payment Date; PROVIDED, HOWEVER, that if any Holder of Notes, the
aggregate principal amount of which equals or exceeds $10,000,000, provides
a written request to the Trustee on or before the applicable Record Date for
such Interest Payment Date, accrued interest (and such installments of
principal) shall be paid by wire transfer of immediately available funds to
a bank within the continental United States or by direct deposit into the
account of such Holder if such account is maintained with the Trustee.
(Section 2.11)
Notwithstanding anything in this Prospectus to the contrary, unless
otherwise specified in the applicable Prospectus Supplement , if a Note is an
Original Issue Discount Note (as defined below under "Original Issue Discount
Notes"), the amount payable on such Note in the event the principal amount
thereof is declared to be due and payable immediately as described below under
"Description of Notes-- Events of Default" or in the event of redemption or
repayment thereof prior to its Stated Maturity, in lieu of the principal amount
due at the Stated Maturity thereof, will be the Amortized Face Amount of such
Note as of the date of declaration, redemption or repayment, as the case may be.
The "Amortized Face Amount" of an Original Issue Discount Note will be the
amount equal to (i) the principal amount of such Note multiplied by the Issue
Price (as defined below) specified in the applicable Prospectus Supplement plus
(ii) the portion of the difference between the dollar amount determined pursuant
to the preceding clause (i) and the principal amount of such Note that has
accreted at the yield to maturity specified in the applicable Prospectus
Supplement (computed in accordance with generally accepted United States bond
yield computation principles) to such date of declaration, redemption or
repayment, but in no event will the Amortized Face Amount of an Original Issue
Discount Note exceed the principal amount stated in such Note. (Section 1.03)
Each Note will bear interest at a fixed rate (a "Fixed Rate Note"), which
may be zero in the case of a "Zero Coupon Note", or at a variable rate (a
"Floating Rate Note") determined by reference to the Commercial Paper Rate,
LIBOR, Prime Rate or Treasury Rate or such other interest rate formula (the
"Interest Rate Basis") as may be specified in the applicable Prospectus
Supplement as adjusted by a Spread and/or Spread Multiplier, if any (as defined
herein), applicable to such Notes. The Prospectus Supplement relating to each
Note will describe, among other things, the following items: (i) the price
(expressed as a percentage of the aggregate principal amount thereof) at which
such Note will be issued (the "Issue Price"); (ii) the date on which such Note
will be issued (the "Original Issue Date"); (iii) the date on which such Note
will mature (the "Stated Maturity") and whether the Stated Maturity may be
extended by the Company, and if so, the Extension Periods and the Final Maturity
Date (each as defined below under "Extension of Maturity"); (iv) whether such
Note is a Fixed Rate Note or a Floating Rate Note; (v) if such Note is a Fixed
Rate Note, the rate per annum at which such Note will bear interest, if any, the
Interest Payment Date or Dates, if different from those set forth below under
"Fixed Rate Notes" and whether such rate may be changed by the Company prior to
Stated Maturity; (vi) if such Note is a Floating Rate Note, the Initial Interest
Rate, the Interest Rate Basis, the Interest Reset Dates, the Interest
5
<PAGE>
Payment Dates, the Index Maturity, the Spread, if any, the Spread Multiplier, if
any (all as defined herein), the maximum interest rate, if any, the minimum
interest rate, if any, and any other terms relating to the particular method of
calculating the interest rate for such Note, and whether any such Spread and/or
Spread Multiplier may be changed by the Company prior to Stated Maturity; (vii)
whether such Note is an Original Issue Discount Note, and if so, the yield to
maturity; (viii) whether such Note is an Amortizing Note, and if so, the basis
or formula for the amortization of principal and/or interest and the payment
dates for such periodic principal payments; (ix) the record date or dates for
determining the person entitled to receive payments of interest, principal and
premium, if any (a "Record Date"), if other than as set forth below; (x) whether
such Note may be redeemed at the option of the Company, or repaid at the option
of the Holder, prior to Stated Maturity and, if so, the provisions relating to
such redemption or repayment; (xi) any sinking fund or other mandatory
redemption provisions with respect to such Note; (xii) whether such Note will be
issued initially as a Book-Entry Note or a Certificated Note; and (xiii) any
other terms of such Note not inconsistent with the provisions of the Indenture.
Certificated Notes may be presented for payment and for registration of
transfer or exchange at the Corporate Trust Office of the Trustee, currently c/o
First Chicago Trust Company of New York, as agent for the Trustee, 14 Wall
Street, 8th Floor, Suite 4607, New York, New York 10005. (Section 6.02)
All percentages resulting from any calculation with respect to any Notes
will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded upward
(e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and
all dollar amounts used in or resulting from such calculation on any Notes will
be rounded to the nearest cent with one-half cent being rounded upward. (Section
2.04)
As used herein, "Business Day" means, unless otherwise specified in the
applicable Prospectus Supplement, any Monday, Tuesday, Wednesday, Thursday or
Friday that in The City of New York is not a day on which banking institutions
are authorized or obligated by law, regulation or executive order to close and,
with respect to Notes as to which LIBOR (as defined below under "Floating Rate
Notes--LIBOR Notes") is the applicable Interest Rate Basis is also a London
Business Day. As used herein, "London Business Day" means any day on which
dealings in deposits in United States dollars are transacted in the London
interbank market. (Section 1.03)
RESTRICTIONS ON SECURED DEBT
The Notes will constitute unsecured and unsubordinated indebtedness of the
Company, and will rank on a parity with the Company's other unsecured and
unsubordinated indebtedness, but will rank junior to the first mortgage bonds of
the Company ("First Mortgage Bonds") which were issued under the Indenture of
Mortgage and Deed of Trust, dated as of January 1, 1946, between the Company and
First Wisconsin Trust Company (now known as Firstar Trust Company), as trustee,
and indentures supplemental thereto ("Bond Indenture").
THE BOND INDENTURE
Security and Priority. The Bond Indenture constitutes a direct first
mortgage lien upon substantially all of the fixed property, and upon the permits
and licenses, owned by the Company, subject to "permissible encumbrances" (as
defined in the Bond Indenture). The Bond Indenture contains provisions
subjecting to the lien thereof fixed property, and permits and licenses, which
the Company may subsequently acquire, subject, however, to "permissible
encumbrances" and to liens existing or placed upon such property at the time of
acquisition thereof by the Company.
The Company has covenanted in the Indenture that while any of the Notes are
outstanding, it will not (i) issue any additional First Mortgage Bonds, or (ii)
subject to the lien of the Bond Indenture any property which is exempt from such
lien, unless the Company concurrently issues to the Trustee under the Indenture,
a First Mortgage Bond or Bonds in the same aggregate principal amount and having
the same interest rate or rates, maturity date or dates, redemption provisions
and other terms as the Notes then outstanding and thereby give to the holders of
all outstanding Notes the benefit of the security of such First
6
<PAGE>
Mortgage Bond or Bonds. (Section 4.01) At such time as the Trustee under the
Indenture is the only holder of First Mortgage Bonds outstanding under the Bond
Indenture, the Trustee will surrender such First Mortgage Bonds to the Company
for cancellation and the Bond Indenture will be discharged and defeased.
(Section 4.07).
In addition, the Company has covenanted in the Indenture that neither the
Company nor a Subsidiary will create or assume, except in favor of the Company
or a Wholly-Owned Subsidiary (as defined below under "Certain Definitions"), any
mortgage, pledge, or other lien or encumbrance upon any Principal Facility (as
defined below under "Certain Definitions") or any stock of any Regulated
Subsidiary (as defined below under "Certain Definitions") or indebtedness of any
Subsidiary to the Company or any other Subsidiary whether now owned or hereafter
acquired without equally and ratably securing the outstanding Notes. This
limitation will not apply to the lien of the Bond Indenture or certain permitted
encumbrances described in the Indenture, including (a) purchase money mortgages
entered into within specified time limits; (b) liens extending, renewing or
refunding any liens permitted by clause (a) of this covenant; (c) liens existing
on acquired property; (d) certain tax, materialmen's, mechanics' and judgment
liens, certain liens arising by operation of law and certain other similar
liens; (e) certain mortgages, pledges, liens or encumbrances in favor of any
state or local government or governmental agency in connection with certain
tax-exempt financings; (f) liens to secure the cost of construction or
improvement of any property entered into within specified time limits; and (g)
mortgages, pledges, liens and encumbrances not otherwise permitted if the sum of
the indebtedness thereby secured does not exceed the greater of $20,000,000 or
10% of Common Shareholders' Equity (as defined below under "Certain
Definitions"). (Section 6.06)
INTEREST AND INTEREST RATES
Unless otherwise specified in the applicable Prospectus Supplement , each
Note (other than a Zero Coupon Note), will bear interest from and including its
Original Issue Date or from and including the most recent Interest Payment Date
to which interest on such Note has been paid or duly provided for at a fixed
rate per annum or at a rate per annum determined pursuant to an Interest Rate
Basis stated therein and in the applicable Prospectus Supplement , that may be
adjusted by a Spread and/or Spread Multiplier, until Maturity and the principal
thereof is paid or made available for payment. Unless otherwise specified in the
applicable Prospectus Supplement, interest will be payable on each Interest
Payment Date and at Maturity. "Maturity" means the date on which the principal
of a Note or an installment of principal becomes due and payable in accordance
with its terms and the terms of the Indenture, whether at Stated Maturity, upon
acceleration, redemption, repayment or otherwise. Interest (other than defaulted
interest which may be paid to the Holder on a special record date) will be
payable to the Holder at the close of business on the Record Date next preceding
an Interest Payment Date; provided, however, that the first payment of interest
on any Note originally issued between a Record Date and the next Interest
Payment Date will be made on the Interest Payment Date following the next
succeeding Record Date to the Holder on such next succeeding Record Date and
interest payable on the Maturity date, including, if applicable, upon
redemption, shall be payable to the person to whom principal is payable.
Interest rates, interest rate formulae and other variable terms of the Notes
are subject to change by the Company from time to time, but no such change will
affect any Note already issued or as to which an offer to purchase has been
accepted by the Company. Unless otherwise specified in the applicable Prospectus
Supplement, the Interest Payment Dates and the Record Dates for Fixed Rate Notes
will be as described below under "Fixed Rate Notes." The Interest Payment Dates
for Floating Rate Notes will be as specified in the applicable Prospectus
Supplement, and unless otherwise specified in the applicable Prospectus
Supplement, each Record Date for a Floating Rate Note will be the fifteenth day
(whether or not a Business Day) preceding each Interest Payment Date.
Each Note (other than a Zero Coupon Note) will bear interest at either (a) a
fixed rate or (b) a floating rate determined by reference to an Interest Rate
Basis which may be adjusted by a Spread and/or Spread Multiplier; provided that
the interest rate in effect for the ten days immediately prior to Stated
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Maturity will be the interest rate in effect on the tenth day preceding such
Stated Maturity. Any Floating Rate Note may also have either or both of the
following: (i) a maximum interest rate, or ceiling, on the rate of interest
which may accrue during any interest period, and (ii) a minimum interest rate,
or floor, on the rate of interest which may accrue during any interest period.
The applicable Prospectus Supplement relating to each Note will designate either
a fixed rate of interest per annum on the applicable Fixed Rate Note or one or
more of the following Interest Rate Bases as applicable to the relevant Floating
Rate Note: (a) the Commercial Paper Rate, in which case such Note will be a
"Commercial Paper Rate Note," (b) LIBOR, in which case such Note will be a
"LIBOR Note," (c) the Prime Rate, in which case such Note will be a "Prime Rate
Note," (d) the Treasury Rate, in which case such Note will be a "Treasury Rate
Note," or (e) such other Interest Rate Basis or formula as may be specified in
such Prospectus Supplement.
Notwithstanding the determination of the interest rate as provided below,
the interest rate on the Notes for any interest period shall not be greater than
the maximum interest rate, if any, or less than the minimum interest rate, if
any, specified in the applicable Prospectus Supplement. The interest rate on the
Notes will in no event be higher than the maximum rate permitted by New York or
other applicable law, as the same may be modified by United States federal law
of general application. Under present New York law, the maximum rate of interest
is 25% per annum on a simple interest basis. This limit may not apply to Notes
in which $2,500,000 or more has been invested.
FIXED RATE NOTES
Unless otherwise specified in the applicable Prospectus Supplement, each
Fixed Rate Note (other than a Zero Coupon Note) will accrue interest from and
including its Original Issue Date at the annual rate stated on the face thereof,
as specified in the applicable Prospectus Supplement. Unless otherwise specified
in the applicable Prospectus Supplement, payments of interest on any Fixed Rate
Note with respect to any Interest Payment Date or Maturity will include interest
accrued from and including the Original Issue Date, or from and including the
most recent Interest Payment Date to which interest has been paid or duly
provided for, to but excluding such Interest Payment Date or Maturity. Fixed
Rate Notes may bear one or more annual rates of interest during the periods or
under the circumstances specified therein and in the applicable Prospectus
Supplement. Unless otherwise specified in the applicable Prospectus Supplement,
interest on Fixed Rate Notes will be computed and paid on the basis of a 360-day
year of twelve 30-day months.
Unless otherwise specified in the applicable Prospectus Supplement, the
Interest Payment Dates for Fixed Rate Notes, including Fixed Rate Amortizing
Notes, will be semi-annually on each and and the Record Dates will
be each and (whether or not a Business Day) and the Stated Maturity.
In the case of Fixed Rate Amortizing Notes, Interest Payment Dates may be
quarterly on each , , and if specified in the applicable
Prospectus Supplement, and the Record Dates will be each , ,
and (whether or not a Business Day) next preceding each such Interest
Payment Date. If the Interest Payment Date or Maturity for any Fixed Rate Note
is not a Business Day, all payments to be made on such day with respect to such
Note will be made on the next day that is a Business Day with the same force and
effect as if made on the due date, and no additional interest will be payable on
the date of payment for the period from and after the due date as a result of
such delayed payment.
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FLOATING RATE NOTES
The interest rate on each Floating Rate Note will be equal to the interest
rate calculated by reference to the specified Interest Rate Basis (i) plus or
minus the Spread, if any, and/or (ii) multiplied by the Spread Multiplier, if
any. The "Spread" is the number of basis points (one basis point equals
one-hundredth of a percentage point) specified in the applicable Prospectus
Supplement as being applicable to such Note, and the "Spread Multiplier" is the
percentage of the Interest Rate Basis (adjusted for any Spread) specified in the
applicable Prospectus Supplement as being applicable to such Note. The
applicable Prospectus Supplement will specify the Interest Rate Basis and the
Spread and/or Spread Multiplier, if any, and the maximum or minimum interest
rate, if any, applicable to each Floating Rate Note. In addition, such
Prospectus Supplement will contain particulars as to the Calculation Agent
(unless otherwise specified in the applicable Prospectus Supplement, The First
National Bank of Chicago (in such capacity, the "Calculation Agent")), Index
Maturity, Original Issue Date, the interest rate in effect for the period from
the Original Issue Date to the first Interest Reset Date specified in the
applicable Prospectus Supplement (the "Initial Interest Rate"), Interest
Determination Dates, Interest Payment Dates, Record Dates, and Interest Reset
Dates with respect to such Note.
Except as provided below or in the applicable Prospectus Supplement, the
Interest Payment Dates for Floating Rate Notes, including Floating Rate
Amortizing Notes, will be (i) in the case of Floating Rate Notes that reset
daily, weekly or monthly, the third Wednesday of each month or the third
Wednesday of March, June, September and December of each year, as specified on
the face thereof and in the applicable Prospectus Supplement; (ii) in the case
of Floating Rate Notes that reset quarterly, the third Wednesday of March, June,
September and December of each year as specified on the face thereof and in the
applicable Prospectus Supplement; (iii) in the case of Floating Rate Notes that
reset semiannually, the third Wednesday of each of two months of each year, as
specified on the face thereof and in the applicable Prospectus Supplement; and
(iv) in the case of Floating Rate Notes that reset annually, the third Wednesday
of one month of each year, as specified on the face thereof and in the
applicable Prospectus Supplement and, in each case, at Maturity. If any Interest
Payment Date, other than Maturity, for any Floating Rate Note is not a Business
Day for such Floating Rate Note, such Interest Payment Date will be postponed to
the next day that is a Business Day for such Floating Rate Note, except that, in
the case of a LIBOR Note, if such Business Day for such Floating Rate Note is in
the next succeeding calendar month, such Interest Payment Date will be the
immediately preceding London Business Day. If the Maturity for any Floating Rate
Note falls on a day that is not a Business Day, all payments to be made on such
day with respect to such Note will be made on the next day that is a Business
Day with the same force and effect as if made on the due date, and no additional
interest will be payable on the date of payment for the period from and after
the due date as a result of such delayed payment.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (such period being the "Interest
Reset Period" for such Note, and the first day of each Interest Reset Period
being an "Interest Reset Date"), as specified in the applicable Prospectus
Supplement. Unless otherwise specified in the applicable Prospectus Supplement,
the Interest Reset Date will be, in the case of Floating Rate Notes which reset
daily, each Business Day for such Floating Rate Note; in the case of Floating
Rate Notes (other than Treasury Rate Notes) which reset weekly, the Wednesday of
each week; in the case of Treasury Rate Notes which reset weekly, the Tuesday of
each week, except as provided below; in the case of Floating Rate Notes which
reset monthly, the third Wednesday of each month; in the case of Floating Rate
Notes which reset quarterly, the third Wednesday of each March, June, September
and December; in the case of Floating Rate Notes which reset semiannually, the
third Wednesday of each of two months of each year, as specified in the
applicable Prospectus Supplement; and in the case of Floating Rate Notes which
reset annually, the third Wednesday of one month of each year, as specified in
the applicable Prospectus Supplement; provided, however, that the interest rate
in effect from the Original Issue Date to but excluding the first Interest Reset
Date with respect to a Floating Rate Note will be the Initial Interest Rate (as
specified in the applicable Prospectus Supplement). If any Interest
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Reset Date for any Floating Rate Note is not a Business Day for such Floating
Rate Note, such Interest Reset Date will be postponed to the next day that is a
Business Day for such Floating Rate Note, except that in the case of a LIBOR
Note, if such Business Day is in the next succeeding calendar month, such
Interest Reset Date will be the immediately preceding London Business Day. Each
adjusted rate will be applicable on and after the Interest Reset Date to which
it relates to but excluding the next succeeding Interest Reset Date or until
Maturity.
The interest rate for each Interest Reset Period will be the rate determined
by the Calculation Agent on the Calculation Date (as defined below) pertaining
to the Interest Determination Date pertaining to the Interest Reset Date for
such Interest Reset Period. Unless otherwise specified in the applicable
Prospectus Supplement, the "Interest Determination Date" pertaining to an
Interest Reset Date for (a) a Commercial Paper Rate Note (the "Commercial Paper
Interest Determination Date") or (b) a Prime Rate Note (the "Prime Interest
Determination Date") will be the second Business Day immediately preceding such
Interest Reset Date. Unless otherwise specified in the applicable Prospectus
Supplement, the Interest Determination Date pertaining to an Interest Reset Date
for a LIBOR Note (the "LIBOR Interest Determination Date") will be the second
London Business Day immediately preceding such Interest Reset Date. Unless
otherwise specified in the applicable Prospectus Supplement, the Interest
Determination Date pertaining to an Interest Reset Date for a Treasury Rate Note
(the "Treasury Interest Determination Date") will be the day of the week in
which such Interest Reset Date falls on which Treasury bills would normally be
auctioned. Treasury bills are usually sold at auction on Monday of each week,
unless that day is a legal holiday, in which case the auction is usually held on
the following Tuesday, except that such auction may be held on the preceding
Friday. If an auction is so held on the preceding Friday, such Friday will be
the Treasury Interest Determination Date pertaining to the Interest Reset Period
commencing in the next succeeding week. If an auction date falls on any Interest
Reset Date for a Treasury Rate Note, then such Interest Reset Date will instead
be the first Business Day immediately following such auction date. Unless
otherwise specified in the applicable Prospectus Supplement, the "Calculation
Date" pertaining to any Interest Determination Date will be the earlier of (i)
the tenth calendar day after the Interest Determination Date or, if such day is
not a Business Day, the next day that is a Business Day, or (ii) the Business
Day immediately preceding the applicable Interest Payment Date or Maturity, as
the case may be.
"Index Maturity" means, with respect to a Floating Rate Note, the period to
Stated Maturity of the instrument or obligation on which the interest rate
formula of such Floating Rate Note is calculated, as specified in the applicable
Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, each
Floating Rate Note will accrue interest from and including its Original Issue
Date at the rate determined as provided in such Note and as specified in the
applicable Prospectus Supplement. Unless otherwise specified in the applicable
Prospectus Supplement, payments of interest on any Floating Rate Note with
respect to any Interest Payment Date will include interest accrued from and
including the Original Issue Date, or from and including the most recent
Interest Payment Date to which interest has been paid or duly provided for, to
but excluding the Interest Payment Date or Maturity. With respect to Floating
Rate Notes, accrued interest is calculated by multiplying the face amount of a
Note by an accrued interest factor. This accrued interest factor is computed by
adding the interest factors calculated for each day from and including the
Original Issue Date, or from and including the last date to which interest has
been paid or duly provided for, to but excluding the date for which accrued
interest is being calculated. The interest factor for each such day (unless
otherwise specified) is computed by dividing the interest rate applicable to
such day by 360, in the case of Commercial Paper Rate Notes, LIBOR Notes and
Prime Rate Notes or by the actual number of days in the year, in the case of
Treasury Rate Notes.
The Calculation Agent will calculate the interest rate on the Floating Rate
Notes, as provided below. The Trustee will, upon the request of the Holder of
any Floating Rate Note, provide the interest rate then in effect and, if then
determined, the interest rate which will become effective as a result of a
determination made with respect to the most recent Interest Determination Date
(defined below) with respect to
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such Note. For purposes of calculating the rate of interest payable on Floating
Rate Notes, the Company has entered into or will enter into an agreement with
the Calculation Agent. The Calculation Agent's determination of any interest
rate shall be final and binding in the absence of manifest error.
COMMERCIAL PAPER RATE NOTES
Each Commercial Paper Rate Note will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any) specified in the Commercial Paper Rate Note and in
the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement,
"Commercial Paper Rate" means, with respect to any Commercial Paper Interest
Determination Date, the Money Market Yield (calculated as described below) of
the rate on such date for commercial paper having the Index Maturity specified
in the applicable Prospectus 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 of the Board of Governors
("H.15(519)") under the heading "Commercial Paper." In the event that such rate
is not published prior to 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Commercial Paper Interest Determination Date, then the
Commercial Paper Rate with respect to such Commercial Paper Interest
Determination Date will be the Money Market Yield of the rate on such Commercial
Paper Interest Determination Date for commercial paper having the Index Maturity
specified in the applicable Prospectus 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 "Commercial Paper." If by 3:00 P.M.,
New York City time, on such Calculation Date such rate is not published in
either H.15(519) or Composite Quotations, then the Commercial Paper Rate with
respect to such Commercial Paper 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 (quoted on a bank discount basis) as of 11:00 A.M.,
New York City time, on such Commercial Paper Interest Determination Date of
three leading dealers of commercial paper in The City of New York selected by
the Calculation Agent for commercial paper having the Index Maturity specified
in the applicable Prospectus Supplement placed for an industrial issuer whose
bond rating is "AA," or the equivalent, from a nationally recognized securities
rating agency; provided, however, that if the dealers selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, the
Commercial Paper Rate with respect to such Commercial Paper Interest
Determination Date will be the Commercial Paper Rate in effect immediately prior
to such Commercial Paper Interest Determination Date.
"Money Market Yield" will be a yield (expressed as a percentage rounded, if
necessary, to the nearest one hundred-thousandth of a percent) calculated in
accordance with the following formula:
<TABLE>
<S> <C> <C>
D x 360
Money Market Yield = 360 - (D x M) x 100
</TABLE>
where "D" refers to the 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 period for which accrued interest is being calculated.
LIBOR NOTES
Each LIBOR Note will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified in
the LIBOR Note and in the applicable Prospectus Supplement.
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Unless otherwise specified in the applicable Prospectus Supplement, "LIBOR"
means, with respect to any LIBOR Interest Determination Date, the rate
determined by the Calculation Agent in accordance with the following provisions:
(i) With respect to any LIBOR Interest Determination Date, LIBOR will be
either: (a) if "LIBOR Reuters" is specified in the Note and the applicable
Prospectus Supplement, the arithmetic mean of the offered rates (unless the
specified Designated LIBOR Page (as defined below) by its terms provides only
for a single rate, in which case such single rate will be used) for deposits in
United States dollars having the Index Maturity specified in the Note and the
applicable Prospectus Supplement, commencing on the second London Business Day
immediately following such LIBOR Interest Determination Date, which appear on
the Designated LIBOR Page specified in the Note and the applicable Prospectus
Supplement as of 11:00 A.M., London time, on that LIBOR Interest Determination
Date, if at least two such offered rates appear (unless, as aforesaid, only a
single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR
Telerate" is specified in the Note and the applicable Prospectus Supplement, the
rate for deposits in United States dollars having the Index Maturity specified
in the Note and the applicable Prospectus Supplement, commencing on the second
London Business Day immediately following such LIBOR Interest Determination
Date, which appears on the Designated LIBOR Page specified in the Note and the
applicable Prospectus Supplement as of 11:00 A.M., London time, on that LIBOR
Interest Determination Date. Notwithstanding the foregoing, if fewer than two
offered rates appear on the Designated LIBOR Page with respect to LIBOR Reuters
(unless the specified Designated LIBOR Page by its terms provides only for a
single rate, in which case such single rate will be used), or if no rate appears
on the Designated LIBOR Page with respect to LIBOR Telerate, whichever may be
applicable, LIBOR with respect to such LIBOR Interest Determination Date will be
determined as if the parties had specified the rate described in clause (ii)
below.
(ii) With respect to any LIBOR Interest Determination Date on which fewer
than two offered rates appear on the Designated LIBOR Page with respect to LIBOR
Reuters (unless the specified Designated LIBOR Page by its terms provides only
for a single rate, in which case such single rate will be used), or if no rate
appears on the Designated LIBOR Page with respect to LIBOR Telerate, as the case
may be, the Calculation Agent will request the principal London office of each
of four major banks in the London interbank market selected by the Calculation
Agent to provide the Calculation Agent with its offered rate quotation for
deposits in United States dollars for the period of the Index Maturity specified
in the Note and the applicable Prospectus Supplement, commencing on the second
London Business Day immediately following such LIBOR Interest Determination
Date, to prime banks in the London interbank market as of 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 United States dollars in such
market at such time. If at least two such quotations are provided, LIBOR with
respect to such LIBOR Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of such quotations. If fewer
than two quotations are provided, LIBOR with respect to such LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted as of 11:00
A.M. New York City Time, on such LIBOR Interest Determination Date by three
major banks in The City of New York selected by the Calculation Agent for loans
in United States Dollars to leading European banks, commencing on the second
London Business Day immediately following such LIBOR Interest Determination Date
having the Index Maturity specified in the Note and the applicable Prospectus
Supplement in a principal amount that is representative for a single transaction
in such United States 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 with respect to such LIBOR Interest
Determination Date will be LIBOR in effect immediately prior to such LIBOR
Interest Determination Date.
"Designated LIBOR Page" means either (a) the display on the Reuters Monitor
Money Rates Service for the purpose of displaying the London interbank rates of
major banks for United States Dollars (if "LIBOR Reuters" is specified in the
Note and the applicable Prospectus Supplement), or (b) the display
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<PAGE>
on the Dow Jones Telerate Service for the purpose of displaying the London
interbank rates of major banks for United States dollars (if "LIBOR Telerate" is
specified in the Note and the applicable Prospectus Supplement). If neither
LIBOR Reuters nor LIBOR Telerate is specified in the Note and the applicable
Prospectus Supplement, LIBOR for United States dollars will be determined as if
LIBOR Telerate (and page 3750) had been chosen.
PRIME RATE NOTES
Each Prime Rate Note will bear interest at the interest rate (calculated
with reference to the Prime Rate and the Spread and/or Spread Multiplier, if
any) specified in the Prime Rate Note and in the applicable Prospectus
Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, "Prime
Rate" means, with respect to any Prime Interest Determination Date, the rate on
such date as published in H.15(519) under the heading "Bank Prime Loan." In the
event that such rate is not published prior to 9:00 A.M., New York City time, on
the Calculation Date pertaining to such Prime Interest Determination Date, then
the Prime Rate with respect to such Prime Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the rates
of interest publicly announced by each bank that appears on the Reuters Screen
USPRIME1 as such bank's prime rate or base lending rate as in effect with
respect to such Prime Interest Determination Date. If fewer than four such rates
appear on the Reuters Screen USPRIME1 with respect to such Prime Interest
Determination Date, the Prime Rate with respect to such Prime Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the prime rates quoted on the basis of the actual number of
days in the year divided by 360 as of the close of business on such Prime
Interest Determination Date by at least two of the three major money center
banks in The City of New York selected by the Calculation Agent. If fewer than
two quotations are provided, the Prime Rate with respect to such Prime Interest
Determination Date will be determined on the basis of the rates furnished in The
City of New York by the appropriate number of substitute banks or trust
companies organized and doing business under the laws of the United States, or
any state thereof, having total equity capital of at least $500,000,000 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 appropriate number of substitute banks or trust companies
selected as aforesaid are not quoting as mentioned in this sentence, the Prime
Rate with respect to such Prime Interest Determination Date will be the Prime
Rate in effect immediately prior to such Prime Interest Determination Date.
"Reuters Screen USPRIME1" means the display designated as page "USPRIME1" on
the Reuters Monitor Money Rate Service (or such other page which may replace the
USPRIME1 page on the service for the purpose of displaying the prime rate or
base lending rate of major banks).
TREASURY RATE NOTES
Each Treasury Rate Note will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any) specified in the Treasury Rate Note and in the applicable Prospectus
Supplement.
Unless otherwise specified in the applicable Prospectus Supplement,
"Treasury Rate" means, with respect to any Treasury Interest Determination Date,
the rate resulting from the most recent auction of direct obligations of the
United States ("Treasury bills") having the Index Maturity specified in the
applicable Prospectus Supplement, as such rate is published in H.15(519) under
the heading, "Treasury bills--auction average (investment)" or, if not so
published by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Treasury Interest Determination Date, the average auction rate on such
Treasury Interest Determination Date (expressed as a bond equivalent, on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily basis)
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
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<PAGE>
specified Index Maturity are not reported as provided above by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Treasury Interest
Determination Date, or if no such auction is held in a particular week, then the
Treasury Rate with respect to such Treasury Interest Determination Date 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
Interest Determination Date, of three leading primary U.S. government securities
dealers selected by the Calculation Agent for the issue of Treasury bills with a
remaining maturity closest to the Index Maturity specified in the applicable
Prospectus Supplement; PROVIDED, HOWEVER, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the Treasury Rate with respect to such Treasury Interest Determination
Date will be the Treasury Rate in effect immediately prior to such Treasury
Interest Determination Date.
ORIGINAL ISSUE DISCOUNT NOTES
The Company may from time to time offer Original Issue Discount Notes. The
Prospectus Supplement applicable to certain Original Issue Discount Notes may
provide that Holders of such Notes will not receive periodic payments of
interest. For purposes of determining whether Holders of the requisite principal
amount of Notes outstanding under the Indenture have made a demand or given a
notice or waiver or taken any other action, the outstanding principal amount of
Original Issue Discount Notes shall be deemed to be the amount of the principal
that would be due and payable upon declaration of acceleration of the Stated
Maturity thereof as of the date of such determination. See "General."
"Original Issue Discount Note" means (i) a Note that has a "stated
redemption price at maturity" that exceeds its "issue price" (each as defined
for United States federal income tax purposes) by at least 0.25% of its stated
redemption price at maturity multiplied by the number of complete years from the
Original Issue Date to the Stated Maturity for such Note (or, in the case of a
Note that provides for payment of any amount other than the "qualified stated
interest" (as so defined) prior to maturity, the weighted average maturity of
the Note) and (ii) any other Note designated by the Company as issued with
original issue discount for United States federal income tax purposes.
AMORTIZING NOTES
The Company may from time to time offer Notes for which payments of
principal and interest are made in installments over the life of the Note
("Amortizing Notes"). Interest on each Amortizing Note will be computed as
specified in the applicable Prospectus Supplement. Unless otherwise specified in
the applicable Prospectus Supplement, payments with respect to an Amortizing
Note will be applied first to interest due and payable thereon and then to the
reduction of the unpaid principal amount thereof. A table setting forth
repayment information with respect to each Amortizing Note will be attached to
such Note and to the applicable Prospectus Supplement and will be available,
upon request, to subsequent Holders.
RESET NOTES
The Prospectus Supplement relating to each Note will indicate whether the
Company has the option with respect to such Note to reset the interest rate, in
the case of a Fixed Rate Note, or to reset the Spread and/or Spread Multiplier,
in the case of a Floating Rate Note (in each case, a "Reset Note"), and, if so,
(i) the date or dates on which such interest rate or such Spread and/or Spread
Multiplier, as the case may be, may be reset (each an "Optional Interest Reset
Date") and (ii) the formula, if any, for such resetting.
The Company may exercise such option with respect to a Note by notifying the
Trustee of such exercise at least 45 but not more than 60 calendar days prior to
an Optional Interest Reset Date for such Note. If the Company so notifies the
Trustee of such exercise, the Trustee will send not later than 40
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<PAGE>
calendar days prior to such Optional Interest Reset Date, by telegram, telex,
facsimile transmission, hand delivery or letter (first class, postage prepaid)
to the Holder of such Note a notice (the "Reset Notice") indicating (i) that the
Company has elected to reset the interest rate, in the case of a Fixed Rate
Note, or the Spread and/or Spread Multiplier, in the case of a Floating Rate
Note, (ii) such new interest rate or such new Spread and/or Spread Multiplier,
as the case may be, and (iii) the provisions, if any, for redemption of such
Note during the period from such Optional Interest Reset Date to the next
Optional Interest Reset Date or, if there is no such next Optional Interest
Reset Date, to the Stated Maturity of such Note (each such period a "Subsequent
Interest Period"), including the date or dates on which or the period or periods
during which and the price or prices at which such redemption may occur during
such Subsequent Interest Period.
Notwithstanding the foregoing, not later than 20 calendar days prior to an
Optional Interest Reset Date for a Note, the Company may, at its option, revoke
the interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, provided for in the Reset
Notice and establish a higher interest rate, in the case of a Fixed Rate Note,
or a Spread and/or Spread Multiplier resulting in a higher interest rate, in the
case of a Floating Rate Note, for the Subsequent Interest Period commencing on
such Optional Interest Reset Date by causing the Trustee to send by telegram,
telex, facsimile transmission, hand delivery or letter (first class, postage
prepaid) notice of such higher interest rate or Spread and/or Spread Multiplier
resulting in a higher interest rate, as the case may be, to the Holder of such
Note. Such notice will be irrevocable. All Notes with respect to which the
interest rate or Spread and/or Spread Multiplier is reset on an Optional
Interest Reset Date to a higher interest rate or Spread and/or Spread Multiplier
resulting in a higher interest rate will bear such higher interest rate, in the
case of a Fixed Rate Note, or Spread and/or Spread Multiplier resulting in a
higher interest rate, in the case of a Floating Rate Note, whether or not
tendered for repayment as provided in the next paragraph.
If the Company elects prior to an Optional Interest Reset Date to reset the
interest rate or the Spread and/or Spread Multiplier of a Note, the Holder of
such Note will have the option to elect repayment of such Note, in whole but not
in part, by the Company on such Optional Interest Reset Date at a price equal to
the principal amount thereof plus accrued and unpaid interest to but excluding
such Optional Interest Reset Date. In order for a Note to be so repaid on an
Optional Interest Reset Date, the Holder thereof must follow the procedures set
forth below under "Redemption and Repayment" for optional repayment, except that
the period for delivery of such Note or notification to the Trustee will be at
least 25 but not more than 35 calendar days prior to such Optional Interest
Reset Date. A Holder who has tendered a Note for repayment following receipt of
a Reset Notice may revoke such tender for repayment by written notice to the
Trustee received prior to 5:00 P.M., New York City time, on the tenth calendar
day prior to such Optional Interest Reset Date.
EXTENSION OF MATURITY
The Prospectus Supplement relating to each Note will indicate whether the
Company has the option to extend the Stated Maturity of such Note for one or
more periods of from one to five whole years (each an "Extension Period") up to
but not beyond the date (the "Final Maturity Date") specified in such Prospectus
Supplement.
The Company may exercise such option with respect to a Note by notifying the
Trustee of such exercise at least 45 but not more than 60 calendar days prior to
the Stated Maturity of such Note (including, if such Stated Maturity has
previously been extended, the Stated Maturity as previously extended) in effect
prior to the exercise of such option (the "Pre-Exercise Stated Maturity Date").
If the Company so notifies the Trustee of such exercise, the Trustee will send
not later than 40 calendar days prior to the Pre-Exercise Stated Maturity Date,
by telegram, telex, facsimile transmission, hand delivery or letter (first
class, postage prepaid) to the Holder of such Note a notice (the "Extension
Notice") relating to such Extension Period, indicating (i) that the Company has
elected to extend the Stated Maturity of such
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Note, (ii) the new Stated Maturity, (iii) in the case of a Fixed Rate Note, the
interest rate applicable to such Extension Period or, in the case of a Floating
Rate Note, the Spread and/or Spread Multiplier applicable to the Extension
Period, and (iv) the provisions, if any, for redemption of such Note during the
Extension Period, including the date or dates on which or the period or periods
during which and the price or prices at which such redemption may occur during
the Extension Period. Upon the sending by the Trustee of an Extension Notice to
the Holder of a Note, the Stated Maturity of such Note will be extended
automatically, and, except as modified by the Extension Notice and as described
in the next two paragraphs, such Note will have the same terms as prior to the
sending of such Extension Notice.
Notwithstanding the foregoing, not later than 20 calendar days prior to the
Pre-Exercise Stated Maturity Date for a Note, the Company may, at its option,
revoke the interest rate, in the case of a Fixed Rate Note, or the Spread and/or
Spread Multiplier, in the case of a Floating Rate Note, provided for in the
Extension Notice and establish a higher interest rate, in the case of a Fixed
Rate Note, or a Spread and/or Spread Multiplier resulting in a higher interest
rate, in the case of a Floating Rate Note, for the Extension Period by causing
the Trustee to send by telegram, telex, facsimile transmission, hand delivery or
letter (first class, postage prepaid) notice of such higher interest rate or
Spread and/or Spread Multiplier resulting in a higher interest rate, as the case
may be, to the Holder of such Note. Such notice will be irrevocable. All Notes
with respect to which the Stated Maturity is extended will bear such higher
interest rate, in the case of a Fixed Rate Note, or Spread and/or Spread
Multiplier resulting in a higher interest rate, in the case of a Floating Rate
Note, for the Extension Period, whether or not tendered for repayment as
provided in the next paragraph.
If the Company extends the Stated Maturity of a Note (including, if such
Stated Maturity has previously been extended, the Stated Maturity as previously
extended), the Holder of such Note will have the option to elect repayment of
such Note, in whole but not in part, by the Company on the Pre-Exercise Stated
Maturity Date (including the last day of the then current Extension Period) at a
price equal to the principal amount thereof plus accrued and unpaid interest to
but excluding such date. In order for a Note to be so repaid on the Original
Stated Maturity Date, the Holder thereof must follow the procedures set forth
below under "Redemption and Repayment" for optional repayment, except that the
period for delivery of such Note or notification to the Trustee will be at least
25 but not more than 35 calendar days prior to the Original Stated Maturity
Date. A Holder who has tendered a Note for repayment following receipt of an
Extension Notice may revoke such tender for repayment by written notice to the
Trustee received prior to 5:00 P.M., New York City time, on the tenth calendar
day prior to the Original Stated Maturity Date.
RENEWABLE NOTES
The applicable Prospectus Supplement will indicate whether a Note (other
than an Amortizing Note) will mature at its Pre-Exercise Stated Maturity Date
unless the term of all or any portion of any such Note is renewed by the Holder
in accordance with the procedures described in such Prospectus Supplement.
COMBINATION OF PROVISIONS
If so specified in the applicable Prospectus Supplement, any Note may be
subject to all of the provisions, or any combination of the provisions,
described above under "Reset Notes," "Extension of Maturity" and "Renewable
Notes."
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REDEMPTION AND REPAYMENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Notes will not be subject to any sinking fund. The Notes will be redeemable at
the option of the Company prior to the Stated Maturity thereof only if an
Initial Redemption Date is specified in the applicable Prospectus Supplement
("Initial Redemption Date"). If so specified, the Notes will be subject to
redemption at the option of the Company on the date or dates and at the prices
specified in such Prospectus Supplement. The selection of Notes or portions
thereof to be redeemed prior to their Stated Maturity shall be in the sole
discretion of the Company. Each Note which by its terms is redeemable prior to
its Stated Maturity may be redeemed by the Company in whole or in part without
also redeeming any other Note which is redeemable prior to its Stated Maturity.
The Company may exercise any such option by causing the Trustee to mail a notice
of such redemption at least 30 but not more than 60 calendar days prior to the
date of redemption in accordance with the provisions of the Indenture. In the
event of redemption of a Note in part only, such Note will be canceled and a new
Note or Notes representing the unredeemed portion thereof will be issued in the
name of the Holder thereof. (Section 3.02)
Unless otherwise specified in the applicable Prospectus Supplement, a Note
will not be repayable prior to Stated Maturity at the option of the Holder. If
so specified, a Note will be repayable at the option of the Holder, in whole or
in part, on a date or dates prior to Stated Maturity and at a price or prices
specified in the applicable Prospectus Supplement, plus accrued and unpaid
interest to but excluding the date of repayment.
In order for a Note that is repayable at the option of the Holder to be
repaid prior to Stated Maturity, the Trustee must receive at least 30 but not
more than 45 calendar days prior to the repayment date (i) the Note with the
form entitled "Option to Elect Repayment" on the reverse of the Note duly
completed or (ii) a telegram, telex, facsimile transmission, hand delivery or
letter (first class, postage prepaid) from a member of a national securities
exchange or the National Association of Securities Dealers, Inc. or a commercial
bank or trust company in the United States setting forth the name of the Holder
of the Note, the principal amount of the Note, the principal amount of the Note
to be repaid, the certificate number or a description of the tenor and terms of
the Note, a statement that the option to elect repayment is being exercised
thereby and a guarantee that the Note to be repaid with the form entitled
"Option to Elect Repayment" set forth in the Note duly completed will be
received by the Trustee not later than five Business Days after the date of such
telegram, telex, facsimile transmission, hand delivery or letter and such Note
and form duly completed are received by the Trustee by such fifth Business Day.
Exercise of the repayment option by the Holder of a Note will be irrevocable,
except that a Holder who has tendered a Note for repayment may revoke such
tender for repayment by written notice to the Paying Agent received prior to
5:00 P.M., New York City time, on the tenth calendar day prior to the repayment
date. The repayment option may be exercised by the Holder of a Note for less
than the entire principal amount of the Note provided that the principal amount
of the Note remaining outstanding after such repayment is an authorized
denomination. Upon such partial repayment such Note will be canceled and a new
Note or Notes for the remaining principal amount thereof will be issued in the
name of the Holder thereof.
While any Book-Entry Note is represented by one or more global Notes (each,
a "Global Note") held by or on behalf of the Depositary, and registered in the
name of the Depositary or its nominee, any such option for repayment may be
exercised by the applicable Participant (as defined below under "Book-Entry
System") that has an account with the Depositary, on behalf of a Beneficial
Owner of the Global Note or Notes representing such Book-Entry Notes, by
delivering a written notice substantially similar to the above-mentioned form
duly completed to the Trustee at its Corporate Trust Office (or such other
address of which the Company will from time to time notify the Holders), at
least 30 but not more than 60 calendar days prior to the date of repayment.
Notices of election from Participants on behalf of Beneficial Owners of the
Global Note or Notes representing such Book-Entry Notes to exercise their option
to have such Book-Entry Notes repaid must be received by the Trustee by 5:00
P.M., New York City time, on the last day for giving such notice. In order to
ensure that a notice is received by the Trustee on a particular day, the
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Beneficial Owner of the Global Note or Notes representing such Book-Entry Notes
must so direct the applicable Participant before such Participant's deadline for
accepting instructions for that day. Different firms may have different
deadlines for accepting instructions from their customers. Accordingly,
Beneficial Owners of the Global Note or Notes representing Book-Entry Notes
should consult the Participants through which they own their interest therein
for the respective deadlines for such Participants. All notices shall be
executed by a duly authorized officer of such Participant (with signatures
guaranteed) and will be irrevocable. In addition, Beneficial Owners of the
Global Note or Notes representing Book-Entry Notes shall effect delivery at the
time such notices of election are given to the Depositary by causing the
applicable Participant to transfer such Beneficial Owner's interest in the
Global Note or Notes representing such Book-Entry Notes, on the Depositary's
records, to the Trustee. See "Book-Entry System." (Section 3.04)
If applicable, the Company will comply with the requirements of Rule 14e-1
under the Exchange Act, and any other securities laws or regulations in
connection with any such repayment.
REPURCHASE
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may be held or
resold or, at the discretion of the Company, may be surrendered to the Trustee
for cancellation.
OTHER PROVISIONS
Any provisions with respect to the determination of an Interest Rate Basis,
the specifications of an Interest Rate Basis, calculation of the interest rate
applicable to, or the principal payable at Maturity on, any Note, its Interest
Payment Dates or any other matter relating thereto may be modified by the terms
as specified on the face of such Note, or in an annex relating thereto if so
specified on the face thereof, and/or in the applicable Prospectus Supplement.
BOOK-ENTRY SYSTEM
DTC will act as securities depositary for the Book-Entry Notes. The
Book-Entry 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 issue of the Notes, each in the aggregate principal
amount of such issue, and will be deposited with DTC. If, however, the aggregate
principal amount of any issue exceeds the maximum principal amount (if any)
permitted by DTC, one Global Note will be issued with respect to such maximum
principal amount and an additional Global Note will be issued with respect to
any remaining principal amount of such issue.
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 Section 17A of the Exchange 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 ("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 DTC's 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 Commission.
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Purchases of Book-Entry Notes under DTC's system must be made by or through
Direct Participants, which will receive a credit for the Book-Entry Notes on
DTC's records. The ownership interest of each actual purchaser of each
Book-Entry Note ("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' records. A Beneficial Owner will not receive written
confirmation from DTC of its purchase, but such Beneficial Owner is expected to
receive a written confirmation providing details of such transaction, as well as
periodic statements of its holdings, from the Direct or Indirect Participant
through which such Beneficial Owner entered into such transaction. Transfers of
ownership interests in the Book-Entry Notes are to be accomplished by entries
made on the books of Participants acting on behalf of the Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Book-Entry Notes, except in the event that use of the book-entry
system for one or more Book-Entry Notes is discontinued.
To facilitate subsequent transfers, all Global Notes deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Global 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 Book-Entry Notes; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Book-Entry Notes are credited, which may or may not be the Beneficial Owners.
The Participants will remain responsible for keeping account of their holdings
on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices for Book-Entry Notes shall be sent to Cede & Co. If less
than all of the Book-Entry Notes within an issue are being redeemed, DTC's
current practice is to determine by lot the amount of the interest of each
Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to Book-Entry
Notes. Under its usual procedures, DTC will mail an "Omnibus Proxy" to the
issuer 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 Book-Entry Notes are credited on the Record Date (identified in a
listing attached to the Omnibus Proxy).
Principal and interest payments on the Book-Entry Notes will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the payable date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on the payable date. Payments
by Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as in the case of securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participants and not of DTC, the paying agent 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 paying agent, disbursement of such payments
to Direct Participants is the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
A Beneficial Owner must give notice to elect to have its Book-Entry Notes
purchased or tendered, through its Participant, to the paying agent, and must
effect delivery of such Book-Entry Notes by causing the Direct Participant to
transfer the Participant's interest in the Book-Entry Notes, on DTC's records,
to the paying agent. The requirement for physical delivery of Book-Entry Notes
in connection with a demand for purchase or a mandatory purchase will be deemed
satisfied when the ownership rights in the Book-Entry Notes are transferred by
Direct Participants on DTC's records.
If DTC is at any time unwilling or unable to continue as depositary or if
DTC ceases to be a "clearing agency" registered pursuant to Section 17A of the
Exchange Act, and, in either case, a successor depositary
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is not appointed by the Company within 90 days, or if any Notes are represented
by a Global Note at a time when an Event of Default with respect to the Notes
shall have occurred and be continuing, the Company will issue individual
Certificated Notes in exchange for Book-Entry Notes represented by Global Notes.
In addition, the Company may at any time, and in its sole discretion, determine
that one or more Book-Entry Notes will no longer be represented by one or more
Global Notes and, in such event, will issue individual Certificated Notes in
exchange for Book-Entry Notes represented by such Global Notes.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor Notes depositary). In that event,
Certificated Notes will be printed and delivered in exchange for the Book-Entry
Notes represented by the Global Notes held by DTC.
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. So long as DTC or its
nominee is the registered owner of a Global Note, DTC or its nominee, as the
case may be, will be considered the sole Holder of the Notes represented by such
Global Note for all purposes under the Indenture. Except as provided above,
owners of beneficial interests in a Global Note will not be entitled to have the
Note represented by such Global Note registered in their names, will not receive
or be entitled to receive physical delivery of such Note in certificated form
and will not be considered the owners or Holders thereof under the Indenture.
The laws of some states require that certain purchasers of securities take
physical delivery of such securities in certificated form; accordingly, such
laws may limit the transferability of beneficial interests in a Global Note.
None of the Company, the Agent, the Trustee, any paying agent or the
registrar for the Notes will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests in a Global Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests. (Section 2.12)
EXCHANGE, REGISTRATION AND TRANSFER
Notes will be exchangeable for registered Notes of like aggregate principal
amount and of like Stated Maturity (as defined below under "Certain
Definitions") and with like terms and conditions. Upon surrender for
registration of transfer of any Note at the office or agency of the Company
maintained for such purpose, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee, one or more
new registered Notes of the like aggregate principal amount of such
denominations as are authorized for Notes of a like Stated Maturity and with
like terms and conditions. No service charge will be made for any transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
(Section 3.05)
The Company shall not be required (i) to register, transfer or exchange
Notes during a period beginning at the opening of business 15 days before the
day of the transmission of a notice of redemption of Notes of a like Stated
Maturity and with like terms and conditions selected for redemption and ending
at the close of business on the day of such transmission, or (ii) to register,
transfer or exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part. (Section 3.05)
EVENTS OF DEFAULT
Under the Indenture, "Event of Default" with respect to any Note means any
one of the following events (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law,
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body): (1) default in the
payment of any interest upon any Note when it becomes due and payable, and
continuance of such default for a period of 30 days; (2) default in the payment
of the principal of (and premium, if any, on) any Note at its Maturity;
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(3) default in the performance or breach of any covenant or warranty in the
Indenture (other than a covenant or warranty a default in whose performance or
whose breach is elsewhere in the Indenture specifically dealt with), and
continuance of such default or breach for a period of 60 days after there has
been given to the Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding, a written notice specifying such default or breach and requiring it
to be remedied; (4) default (i) in the payment of any principal of or interest
on any Indebtedness of the Company or any Subsidiary of the Company (other than
Notes), aggregating more than $10,000,000 in principal amount, when due after
giving effect to any applicable grace period or (ii) in the performance of any
other term or provision of any Indebtedness of the Company or any Subsidiary of
the Company (other than Notes) in excess of $10,000,000 principal amount that
results in such Indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable, and such
acceleration shall not have been rescinded or annulled, or such Indebtedness
shall not have been discharged, within a period of 15 days after there has been
given to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the Notes then
outstanding, a written notice specifying such default or defaults; (5) the entry
against the Company or any Subsidiary of the Company of one or more judgments,
decrees or orders by a court from which no appeal may be or is taken for the
payment of money, either individually or in the aggregate, in excess of
$10,000,000, and the continuance of such judgment, decree or order unsatisfied
and in effect for any period of 45 consecutive days after the amount thereof is
due without a stay of execution; (6) certain events of bankruptcy, insolvency or
reorganization with respect to the Company; or (7) any other Event of Default
with respect to the subject Note described in the applicable Prospectus
Supplement. (Section 8.01)
The Indenture requires the Company to file with the Trustee, annually, an
officer's certificate as to the Company's compliance with all conditions and
covenants under the Indenture. (Section 6.04) The Indenture provides that the
Trustee may withhold notice to the Holders of Notes of any default (except
payment defaults on any Note) if it determines that the withholding of such
notice is in the interest of the Holders of such Notes. (Section 8.12)
If an Event of Default with respect to the Notes at the time outstanding
occurs and is continuing, then in every case the Trustee or the Holders of not
less than 25% in aggregate principal amount of the Notes then outstanding may
declare the principal amount (or, if any Notes are Original Issue Discount
Notes, the Amortized Face Amount) of all the Notes to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or Amortized
Face Amount) shall become immediately due and payable. Upon payment of such
amount in United States dollars, all obligations of the Company in respect of
the payment of principal of the Notes shall terminate (except as otherwise
provided in the Indenture or the Prospectus Supplement). (Section 8.02)
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default with respect to the Notes shall occur and
be continuing, the Trustee shall be under no obligation to exercise any of its
rights or powers under the Indenture at the request or direction of any of the
Holders of the Notes unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or direction.
(Section 9.03). The Holders of a majority in principal amount of the outstanding
Notes shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee under the Indenture, or
exercising any trust or power conferred on the Trustee with respect to the
Notes, unless the Trustee determines that the proceeding or action so directed
may not lawfully be taken, would involve the Trustee in personal liability or
would be unduly prejudicial to other Holders of Notes. (Section 8.11)
At any time after such a declaration of acceleration with respect to the
Notes has been made and before a judgment or decree for payment of the money due
has been obtained by the Trustee as provided
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in the Indenture, the Holders of a majority in aggregate principal amount of the
Notes then outstanding, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if (1) the Company has
paid or deposited with the Trustee a sum in United States dollars sufficient to
pay (A) all overdue installments of interest on all Notes, (B) the principal of
(and premium, if any, on) any Notes which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates prescribed
therefor in such Notes; (C) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest on each Note at the rate
borne by such Note, and (D) all sums paid or advanced by the Trustee and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and (2) all Events of Default with respect to the Notes,
other than the nonpayment of the principal of the Notes which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in the Indenture. No such rescission and waiver will affect any
subsequent default or impair any right consequent thereon. (Section 8.02)
MERGER OR CONSOLIDATION
The Indenture provides that the Company may not consolidate with or merge
into any other corporation or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, (1) unless the corporation
formed by such consolidation or into which the Company is merged or the Person
which acquires by conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an entirety (the "successor corporation")
is a corporation organized and existing under the laws of the United States or
any State or the District of Columbia and expressly assumes by a supplemental
indenture the due and punctual payment of the principal of (and premium, if any)
and interest on all Notes and the performance of every covenant of the Indenture
on the part of the Company to be performed or observed; (2) unless immediately
after giving effect to such transaction, no Event of Default, and no event
which, after notice or lapse of time, or both, would become an Event of Default,
shall have occurred and be continuing; (3) if, as a result of any such
consolidation or merger or such conveyance, transfer or lease, properties or
assets of the Company would become subject to a mortgage, pledge, lien, security
interest or other encumbrance which would not otherwise be permitted by the
Indenture without making effective provision whereby the Notes then outstanding
and any other indebtedness of the Company then entitled thereto will be equally
and ratably secured with any and all indebtedness and obligations secured
thereby, the Company or such successor corporation or Person, as the case may
be, will take such steps as will be necessary effectively to secure all Notes
equally and ratably with (or prior to) all indebtedness secured thereby; and (4)
unless the Company has delivered to the Trustee an officers' certificate and an
opinion of counsel each stating that such consolidation, merger, conveyance,
transfer or lease and such supplemental indenture comply with the provisions of
the Indenture and that all conditions precedent therein provided for relating to
such transaction have been complied with. (Section 12.01)
MODIFICATION OR WAIVER
Without the consent of any Holders, the Company and the Trustee, at any time
and from time to time, may enter into a supplemental indenture for any of the
following purposes: (1) to make such provision in regard to matters or questions
arising under the Indenture as may be necessary or desirable and not
inconsistent with the Indenture or for the purpose of supplying any omission,
curing any ambiguity, or curing, correcting or supplementing any defective or
inconsistent provision; PROVIDED that such provisions may not adversely affect
the interests of Holders of outstanding Notes created prior to the execution of
such supplemental indenture in any material respect; (2) to change or eliminate
any of the provisions of this Indenture; PROVIDED that any such change or
elimination shall become effective only when there is no outstanding Note
created prior to the execution of such supplemental indenture which is entitled
to the benefit of such provision; (3) to secure the Notes; (4) to establish the
form of Notes as permitted by the Indenture or to establish or reflect any terms
of any Note determined in accordance with the Indenture;
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(5) to evidence the succession of another corporation to the Company, and the
assumption by any such successor of the covenants of the Company in the
Indenture and in the Notes; (6) to grant to or confer upon the Trustee for the
benefit of the Holders any additional rights, remedies, powers or authority; (7)
to permit the Trustee to comply with any duties imposed upon it by law; (8) to
specify further the duties and responsibilities of, and to define further the
relationships among, the Trustee, any Authenticating Agent and any paying agent;
(9) to add to the covenants of the Company for the benefit of the Holders of all
or any Notes (and if such covenants are to be for the benefit of less than all
Notes, stating that such covenants are expressly being included solely for the
benefit of such Notes), or to surrender a right or power conferred on the
Company in the Indenture; and (10) to add any additional Events of Default (and
if such Events of Default are to be applicable to less than all Notes, stating
that such Events of Default are expressly being included for the benefit of such
Notes). (Section 13.01)
With the consent of the Holders of a majority in aggregate principal amount
of the Notes then outstanding that would be affected by the particular
supplemental indenture, the Company and the Trustee, may at any time and from
time to time, enter into a supplemental indenture for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of modifying in any manner the rights of the Holders of such
Notes; PROVIDED, HOWEVER, that no such supplemental indenture may (i) change the
Stated Maturity of any Note; or reduce the rate of interest on any Note; or
change the method of calculating interest, or any term used in the calculation
of interest or the period for which interest is payable, on any Floating Rate
Note; or reduce the principal amount of any Note or any premium thereon, or
reduce the amount of the principal of an Original Issue Discount Note that would
be due and payable upon a declaration of acceleration of the Maturity thereof,
or adversely affect the right of repayment or renewal, if any, at the option of
the Holder; or change the currency of payment of any Note; or change the date on
which any Note may be redeemed; or adversely affect the rights of any Holder to
institute suit for the enforcement of any payment of principal of or any premium
or interest on any Note; in each case without the consent of the Holder of each
Note then outstanding that would be affected thereby, including Notes for which
an offer to purchase has been accepted by the Company, or (ii) reduce the
aforesaid percentage of the principal amount of Notes, the Holders of which are
required to consent to any such supplemental indenture, or the percentage in
principal amount of the Notes then outstanding, the consent of the Holders of
which is required for any waiver of certain past defaults or Events of Default
under the Indenture or the consequences thereof, in each case without the
consent of the Holders of all of the Notes then outstanding. (Section 13.02)
Prior to any declaration accelerating the Maturity of the Notes, the Holders
of a majority in aggregate principal amount of the Notes then outstanding may on
behalf of the Holders of all the Notes waive any past default or Event of
Default under the Indenture and its consequences, except a default (1) in the
payment of the principal of or any premium or interest on any Note, or (2) in
respect of a covenant or provision hereof which pursuant to the second paragraph
under "Modification or Waiver" cannot be modified or amended without the consent
of the Holder of each Note then outstanding that would be affected thereby. Upon
any such waiver, such default will cease to exist, and any Event of Default
arising therefrom will be deemed to have been cured, for every purpose of the
Indenture and the Notes, but no such waiver will extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
(Section 8.11)
The Company may omit in any particular instance to comply with the covenants
in the Indenture described above under "Restrictions on Secured Debt" (and if so
specified in the applicable Prospectus Supplement, any covenant not set forth in
the Indenture but specified in such Prospectus Supplement to be applicable to
any Note, except as otherwise provided in such Prospectus Supplement), if before
the time for such compliance the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding either waive such compliance in
such instance or generally waive compliance with such covenants, but no such
waiver may extend to or affect any covenant except to the extent expressly so
waived, and, until such waiver becomes effective, the obligations of the Company
and the duties of the Trustee in respect of any such covenant will remain in
full force and effect. (Section 6.07)
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DISCHARGE OF INDENTURE
The Indenture may be discharged, subject to certain terms and conditions,
when (1) either (A) all Notes theretofore authenticated and delivered have been
delivered to the Trustee for cancellation, or (B) all such Notes not theretofore
delivered to the Trustee for cancellation (i) have become due and payable, (ii)
will become due and payable at their Stated Maturity within one year, or (iii)
are to be called for redemption within one year under arrangements satisfactory
to the Trustee for the giving of notice by the Trustee, and the Company, in the
case of (i), (ii) or (iii) of this subclause (B), has irrevocably deposited or
caused to be deposited with the Trustee as trust funds in trust for such purpose
an amount in United States dollars, U.S. Government Obligations maturing as to
principal and interest in such amounts and at such times as will ensure the
availability of United States dollars, or a combination of United States dollars
and U.S. Government Obligations, sufficient to pay and discharge the entire
indebtedness on such Notes for principal (and premium, if any) and interest to
the date of such deposit (in the case of Notes which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may be;
PROVIDED, HOWEVER, in the event a petition for relief under any applicable
federal or state bankruptcy, insolvency or other similar law is filed with
respect to the Company within 91 days after the deposit and the Trustee is
required to return the deposited money to the Company, the obligations of the
Company under the Indenture with respect to such Notes will not be deemed
terminated or discharged; (2) the Company has paid or caused to be paid all
other sums payable under the Indenture by the Company; (3) the Company has
delivered to the Trustee an officers' certificate and an opinion of counsel each
stating that all conditions precedent therein provided for relating to the
satisfaction and discharge of the Indenture with respect to the Notes have been
complied with; and (4) the Company has delivered to the Trustee an opinion of
counsel or a ruling of the Internal Revenue Service to the effect that Holders
of the Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and discharge. (Section 5.01)
PAYMENT AND PAYING AGENTS
So long as any of the Notes remain outstanding, the Company will maintain in
the Borough of Manhattan, The City of New York, an office or agency where the
Notes may be presented for registration of transfer and for exchange as in the
Indenture provided, and where, at any time when the Company is obligated to make
a payment upon Notes (other than a payment which it is permitted to make by
check), the Notes may be presented for payment, and will maintain at any such
office or agency and at its principal office an office or agency where notices
and demands to or upon the Company in respect of the Notes or of this Indenture
may be served; PROVIDED that the Company may maintain at its principal executive
offices, one or more other offices or agencies for any or all of the foregoing
purposes. The Company has appointed the Trustee as agent of the Company for the
foregoing purposes. (Section 6.02)
REGARDING THE TRUSTEE
The Trustee is one of a number of banks with which the Company maintains
ordinary banking relationships and from which the Company has obtained credit
facilities and lines of credit.
CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms as used in the
Indenture. Reference is made to Article One of the Indenture for the full
definition of all such terms.
"Common Shareholders' Equity," at any time, means the total common
shareholders' equity of the Company and its consolidated subsidiaries,
determined on a consolidated basis in accordance with generally accepted
accounting principles, as of the end of the most recently completed fiscal
quarter of the Company for which financial information is then available.
"Holder" means the person in whose name a Registered Note is registered in
the Note register.
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"Indebtedness" means with respect to any person (i) any liability of such
person (a) for borrowed money, or (b) evidenced by a bond, note, debenture or
similar instrument (including purchase money obligations but excluding trade
payables), or (c) for the payment of money relating to a lease that is required
to be classified as a capitalized lease obligation in accordance with generally
accepted accounting principles; (ii) any liability of others described in the
preceding clause (i) that such person has guaranteed, that is recourse to such
person or that is otherwise its legal liability; and (iii) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of the types referred to in clauses (i) and (ii) above.
"Maturity" when used with respect to any Note means the date on which the
principal of the Note or an installment of principal becomes due and payable as
provided therein or in the Indenture, whether at the Stated Maturity or by
declaration of acceleration, call for redemption, repayment at the option of the
Holder or otherwise.
"Outstanding" when used with respect to Notes, means, as of the date of
determination, all the Notes theretofore authenticated and delivered under the
Indenture, except as provided in such Indenture.
"Principal Facility" means the real property, fixtures, machinery and
equipment relating to any facility owned by the Company or any Subsidiary (which
may include a network of electric or gas distribution facilities or a network of
electric or gas transmission facilities), except any facility that, in the
opinion of the Board of Directors, is not of material importance to the business
conducted by the Company and its Subsidiaries, taken as a whole.
"Regulated Subsidiary" means any Subsidiary which owns or operates
facilities used for the transmission or distribution of electric energy and is
subject to the jurisdiction of any governmental authority of the United States
or any state or political subdivision thereof, as to any of its: rates;
services; accounts; issuances of securities; affiliate transactions; or
construction, acquisition or sale of any such facilities, except that any
"exempt wholesale generator", "qualifying facility", "foreign utility company",
and "power marketer", each as defined in the Indenture, shall not be a Regulated
Subsidiary.
"Subsidiary" means any corporation of which at least a majority of the
outstanding stock having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation, irrespective of whether or not at
the time stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency, is at the
time, directly or indirectly, owned or controlled by the Company or by one or
more Subsidiaries thereof, or by the Company and one or more Subsidiaries.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States for the payment of which its full faith and
credit is pledged, or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States, which, in either case under clause (i) or (ii), are not callable
or redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such custodian for the
account of the holder of a depository receipt; PROVIDED that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of interest on or principal of the U.S. Government Obligation evidenced by such
depository receipt.
"Wholly-Owned Subsidiary" means a Subsidiary of which all of the outstanding
voting stock (other than directors' qualifying shares) is at the time, directly
or indirectly, owned by the Company, or by one or more Wholly-Owned Subsidiaries
of the Company or by the Company and one or more Wholly-Owned Subsidiaries.
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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the principal United States federal income
tax consequences of the purchase, ownership and disposition of Notes to
beneficial owners ("holders") of Notes purchasing Notes at their original
issuance. This summary is based on the Internal Revenue Code of 1986, as amended
(the "Code"), legislative history, administrative pronouncements, judicial
decisions and final, temporary and proposed Treasury Regulations (including
Treasury Regulations which set forth rules applicable to debt instruments issued
with "original issue discount", the "OID Regulations"), changes to any of which
subsequent to the date hereof may affect the tax consequences described herein.
Any such change may apply retroactively.
This summary discusses only the principal United States federal income tax
consequences to those holders holding Notes as capital assets within the meaning
of Section 1221 of the Code. It does not address all of the tax consequences
that may be relevant to a holder in light of the holder's particular
circumstances or to holders subject to special rules (including pension plans
and other tax-exempt investors, banks, thrifts, insurance companies, real estate
investment trusts, regulated investment companies, dealers in securities or
currencies and persons so treated for federal income tax purposes, persons whose
functional currency (as defined in Section 985 of the Code) is other than the
United States dollar, and persons who hold Notes as part of a straddle, hedging
or conversion transaction). This summary also assumes that a taxpayer obtains
any necessary consent of the Internal Revenue Service ("IRS") before changing a
method of accounting.
Persons considering the purchase of Notes should consult their tax advisors
with regard to the application of United States federal income tax laws to their
particular situations as well as any tax consequences to them arising under the
laws of any state, local or foreign taxing jurisdiction.
As used herein, the term "United States Holder" means a beneficial owner of
a Note who or which is, for United States federal income tax purposes, (i) a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) generally, an estate or trust
described in Section 7701(a)(30) of the Code. The term also includes certain
holders who are former citizens or long-term residents of the United States
whose income and gain from the Notes will be subject to United States taxation.
TAXATION OF INTEREST
The taxation of interest on a Note depends on whether it constitutes
"qualified stated interest" (as defined below). Interest on a Note that
constitutes qualified stated interest is includible in a United States Holder's
income as ordinary interest income when actually or constructively received, if
such Holder uses the cash method of accounting for federal income tax purposes,
or when accrued, if such Holder uses an accrual method of accounting for federal
income tax purposes. Interest that does not constitute qualified stated interest
is included in a United States Holder's income under the rules described below
under "Original Issue Discount," regardless of such Holder's method of
accounting. Notwithstanding the foregoing, interest that is payable on a Note
with a fixed maturity date of one year or less from its issue date (a
"Short-Term Note") is included in a United States Holder's income under the
rules described below under "Short-Term Notes."
FIXED RATE NOTES
Interest on a Fixed Rate Note will constitute "qualified stated interest" if
the interest is unconditionally payable, or will be constructively received
under Section 451 of the Code, in cash or in property (other than debt
instruments of the Company) at least annually at a single fixed rate.
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FLOATING RATE NOTES
Interest on a Floating Rate Note that is unconditionally payable, or will be
constructively received under Section 451 of the Code, in cash or in property
(other than debt instruments of the Company) at least annually will constitute
"qualified stated interest" if the Note is a "variable rate debt instrument"
("VRDI") under the rules described below and the interest is payable at a single
"qualified floating rate" or single "objective rate" (each as defined below). If
the Note is a VRDI but the interest is payable other than at a single qualified
floating rate or at a single objective rate, special rules apply to determine
the portion of such interest that constitutes "qualified stated interest". See
"Original Issue Discount--FLOATING RATE NOTES THAT ARE VRDIS," below.
DEFINITION OF VARIABLE RATE DEBT INSTRUMENT (VRDI), QUALIFIED FLOATING RATE AND
OBJECTIVE RATE
A Note is a VRDI if all of the four following conditions are met. First, the
"issue price" of the Note (as described below) must not exceed the total
noncontingent principal payments by more than an amount equal to the lesser of
(i) .015 multiplied by the product of the total noncontingent principal payments
and the number of complete years to maturity from the issue date (or, in the
case of a Note that provides for payment of any amount other than qualified
stated interest before maturity, its weighted average maturity) and (ii) 15% of
the total noncontingent principal payments.
Second, the Note must provide for stated interest (compounded or paid at
least annually) at (a) one or more qualified floating rates, (b) a single fixed
rate and one or more qualified floating rates, (c) a single objective rate or
(d) a single fixed rate and a single objective rate that is a "qualified inverse
floating rate" (as defined below).
Third, the Note must provide that a qualified floating rate or objective
rate in effect at any time during the term of the Note is set at the value of
the rate on any day that is no earlier than three months prior to the first day
on which that value is in effect and no later than one year following that first
day.
Fourth, the Note may not provide for any principal payments that are
contingent except as provided in the first requirement set forth above.
Subject to certain exceptions, a variable rate of interest on a Note is a
"qualified floating rate" if variations in the value of the rate can reasonably
be expected to measure contemporaneous fluctuations in the cost of newly
borrowed funds in United States dollars. A variable rate will be considered a
qualified floating rate if the variable rate equals (i) the product of an
otherwise qualified floating rate and a fixed multiple (I.E., a Spread
Multiplier) that is greater than 0.65, but not more than 1.35 or (ii) the
product described in clause (i) plus or minus a fixed rate (I.E., a Spread). If
the variable rate equals the product of an otherwise qualified floating rate and
a single Spread Multiplier greater than 1.35 or less than or equal to 0.65,
however, such rate will generally constitute an objective rate, described more
fully below. A variable rate will not be considered a qualified floating rate if
the variable rate is subject to a cap, floor, governor (I.E., a restriction on
the amount of increase or decrease in the stated interest rate) or similar
restriction that is reasonably expected as of the issue date to cause the yield
on the Note to be significantly more or less than the expected yield determined
without the restriction (other than a cap, floor or governor that is fixed
throughout the term of the Note).
Subject to certain exceptions, an "objective rate" is a rate (other than a
qualified floating rate) that is determined using a single fixed formula and
that is based on objective financial or economic information that is neither
within the control of the Company (or a related party) nor unique to the
circumstances of the Company (or a related party). For example, an objective
rate generally includes a rate that is based on one or more qualified floating
rates or on the yield of actively traded personal property (within the meaning
of Section 1092(d)(1) of the Code). Notwithstanding the first sentence of this
paragraph, a rate on a Note is not an objective rate if it is reasonably
expected that the average value of the rate during the first half of the Note's
term will be either significantly less than or significantly greater than the
average
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value of the rate during the final half of the Note's term. An objective rate is
a "qualified inverse floating rate" if (a) the rate is equal to a fixed rate
minus a qualified floating rate and (b) the variations in the rate can
reasonably be expected to reflect inversely contemporaneous variations in the
cost of newly borrowed funds (disregarding any caps, floors, governors or
similar restrictions that would not, as described above, cause a rate to fail to
be a qualified floating rate).
If interest on a Note is stated at a fixed rate for an initial period of one
year or less, followed by a variable rate that is either a qualified floating
rate or an objective rate for a subsequent period, and the value of the variable
rate on the issue date is intended to approximate the fixed rate, the fixed rate
and the variable rate together constitute a single qualified floating rate or
objective rate.
ORIGINAL ISSUE DISCOUNT
Original issue discount ("OID") with respect to a Note is the excess, if
any, of the Note's "stated redemption price at maturity" over the Note's "issue
price." A Note's "stated redemption price at maturity" is the sum of all
payments provided by the Note (whether designated as interest or as principal)
other than payments of qualified stated interest. The "issue price" of a Note is
the first price at which a substantial amount of the Notes in the issuance that
includes such Note is sold for money (excluding sales to bond houses, brokers or
similar persons or organizations acting in the capacity of underwriters,
placement agents or wholesalers).
As described more fully below, United States Holders of Notes with OID that
mature more than one year from their issue date generally will be required to
include such OID in income as it accrues in accordance with the constant yield
method described below, irrespective of the timing of receipt of the related
cash payments. A United States Holder's tax basis in a Note is increased by each
accrual of OID and decreased by each payment other than a payment of qualified
stated interest.
The amount of OID with respect to a Note will be treated as zero if the OID
is less than an amount equal to .0025 multiplied by the product of the stated
redemption price at maturity and the number of complete years to maturity (or,
in the case of a Note that provides for payment of any amount other than
qualified stated interest prior to maturity, the weighted average maturity of
the Note). If the amount of OID with respect to a Note is less than that amount,
the de minimis OID that is not included in payments of stated interest is
generally included in income as capital gain as principal payments are made. The
amount includible with respect to a principal payment equals the product of the
total amount of de minimis OID and a fraction, the numerator of which is the
amount of such principal payment and the denominator of which is the stated
principal amount of the Note.
FIXED RATE NOTES
In the case of OID with respect to a Fixed Rate Note, the amount of OID
includible in the income of a United States Holder for any taxable year is
determined under the constant yield method, as follows. First, the "yield to
maturity" of the Note is computed. The yield to maturity is the discount rate
that, when used in computing the present value of all interest and principal
payments to be made under the Note (including payments of qualified stated
interest), produces an amount equal to the issue price of the Note. The yield to
maturity is constant over the term of the Note and, when expressed as a
percentage, must be calculated to at least two decimal places.
Second, the term of the Note is divided into "accrual periods." Accrual
periods may be of any length and may vary in length over the term of the Note,
provided that each accrual period is no longer than one year and that each
scheduled payment of principal or interest occurs either on the final day of an
accrual period or on the first day of an accrual period.
Third, the total amount of OID on the Note is allocated among accrual
periods. In general, the OID allocable to an accrual period equals the product
of the "adjusted issue price" of the Note at the beginning
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of the accrual period and the yield to maturity of the Note, less the amount of
any qualified stated interest allocable to the accrual period. The adjusted
issue price of a Note at the beginning of the first accrual period is its issue
price. Thereafter, the adjusted issue price of the Note is its issue price,
increased by the amount of OID previously includible in the gross income of any
holder and decreased by the amount of any payment previously made on the Note
other than a payment of qualified stated interest. For purposes of computing the
adjusted issue price of a Note, the amount of OID previously includible in the
gross income of any holder is determined without regard to "premium," and
"acquisition premium." as those terms are defined below under "Premium and
Acquisition Premium."
Fourth, the "daily portions" of OID are determined by allocating to each day
in an accrual period its ratable portion of the OID allocable to the accrual
period.
A United States Holder includes in income in any taxable year the daily
portions of OID for each day during the taxable year that such Holder held
Notes. In general, under the constant yield method described above, United
States Holders will be required to include in income increasingly greater
amounts of OID in successive accrual periods.
FLOATING RATE NOTES THAT ARE VRDIS
The taxation of OID (including interest that does not constitute qualified
stated interest) on a Floating Rate Note will depend on whether the Note is a
"VRDI," as that term is defined above under "Taxation of Interest--DEFINITION OF
VARIABLE RATE DEBT INSTRUMENT (VRDI), QUALIFIED FLOATING RATE AND OBJECTIVE
RATE."
In the case of a VRDI that provides for qualified stated interest (as
described above under "Taxation of Interest--Floating Rate Notes"), the amount
of qualified stated interest and the amount of OID, if any, includible in income
during a taxable year are determined under the rules applicable to Fixed Rate
Notes (described above) by assuming that the variable rate is a fixed rate equal
to (i) in the case of a qualified floating rate or a qualified inverse floating
rate, the value, as of the issue date, of the qualified floating rate or
qualified inverse floating rate, or (ii) in the case of an objective rate (other
than a qualified inverse floating rate), the rate that reflects the yield that
is reasonably expected for the Note. Qualified stated interest allocable to an
accrual period is increased (or decreased) if the interest actually paid during
an accrual period exceeds (or is less than) the interest assumed to be paid
during the accrual period.
If a Note that is a VRDI does not provide for qualified stated interest as
described above, the amount of interest and OID accruals are determined by
constructing an equivalent fixed rate debt instrument, as follows.
First, in the case of a Note that provides for interest at one or more
qualified floating rates or at a qualified inverse floating rate and, in
addition, at a single fixed rate, replace the fixed rate with a qualified
floating rate (or qualified inverse floating rate) such that the fair market
value of the Note, so modified, as of the issue date would be approximately the
same as the fair market value of the unmodified Note.
Second, determine the fixed rate substitute for each variable rate provided
by the Note. The fixed rate substitute for each qualified floating rate provided
by the Note is the value of that qualified floating rate on the issue date. If
the Note provides for two or more qualified floating rates with different
intervals between interest adjustment dates (for example, the 30-day Commercial
Paper Rate and quarterly LIBOR), the fixed rate substitutes are based on
intervals that are equal in length (for example, the 90-day Commercial Paper
Rate and quarterly LIBOR, or the 30-day Commercial Paper Rate and monthly
LIBOR). The fixed rate substitute for an objective rate that is a qualified
inverse floating rate is the value of the qualified inverse floating rate on the
issue date. The fixed rate substitute for an objective rate (other than a
qualified inverse floating rate) is a fixed rate that reflects the yield that is
reasonably expected for the Note.
Third, construct an equivalent fixed rate debt instrument that has terms
that are identical to those provided under the Note, except that the equivalent
fixed rate debt instrument provides for the fixed rate
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substitutes determined in the second step, in lieu of the qualified floating
rates or objective rate provided by the Note.
Fourth, determine the amount of qualified stated interest and OID for the
equivalent fixed rate debt instrument under the rules (described above) for
Fixed Rate Notes. These amounts are taken into account as if the United States
Holder held the equivalent fixed rate debt instrument. See "Taxation of
Interest" and "Original Issue Discount--FIXED RATE NOTES," above.
Fifth, make appropriate adjustments for the actual values of the variable
rates. In this step, qualified stated interest or OID allocable to an accrual
period is increased (or decreased) if the interest actually accrued or paid
during the accrual period exceeds (or is less than) the interest assumed to be
accrued or paid during the accrual period under the equivalent fixed rate debt
instrument.
FLOATING RATE NOTES THAT ARE NOT VRDIS
The tax treatment of Floating Rate Notes that are not VRDIs ("Contingent
Notes") is as follows. First, the Company is required to determine, as of the
issue date, the comparable yield for the Contingent Note. The comparable yield
is generally the yield at which the Company would issue a fixed rate debt
instrument with terms and conditions similar to those of the Contingent Note
(including the level of subordination, term, timing of payments and general
market conditions, but not taking into consideration the riskiness of the
contingencies or the liquidity of the Contingent Note), but not less than the
applicable federal rate (the "AFR"), announced monthly by the IRS, based on the
overall maturity of the Contingent Note. In certain cases where Contingent Notes
are marketed or sold in substantial part to tax-exempt investors or other
investors for whom the prescribed inclusion of interest is not expected to have
a substantial effect on their U.S. tax liability, the comparable yield for the
Contingent Note, without proper evidence to the contrary, is presumed to be the
AFR.
Second, solely for tax purposes, the Company constructs a projected schedule
of payments determined under the OID Regulations for the Contingent Note (the
"Schedule"). The Schedule is determined as of the issue date and generally
remains in place throughout the term of the Contingent Note. If a right to a
contingent payment is based on market information, the amount of the projected
payment is the forward price of the contingent payment. If a contingent payment
is not based on market information, the amount of the projected payment is the
expected value of the contingent payment as of the issue date. The Schedule must
produce the comparable yield determined as set forth above. Otherwise, the
Schedule must be adjusted under the rules set forth in the OID Regulations.
Third, under the usual rules applicable to OID and based on the Schedule,
the interest income on the Contingent Note for each accrual period is determined
by multiplying the comparable yield of the Contingent Note (adjusted for the
length of the accrual period) by the Contingent Note's adjusted issue price at
the beginning of the accrual period (determined under rules set forth in the OID
Regulations). The amount so determined is then allocated on a ratable basis to
each day in the accrual period that the United States Holder held the Contingent
Note.
Fourth, appropriate adjustments are made to the interest income determined
under the foregoing rules to account for any differences between the Schedule
and actual contingent payments. Under the rules set forth in the OID
Regulations, differences between the actual amounts of any contingent payments
made in a calendar year and the projected amounts of such payments are generally
aggregated and taken into account, in the case of a positive difference, as
additional interest income, or, in the case of a negative difference, first as a
reduction in interest income for such year and thereafter, subject to certain
limitations, as ordinary loss.
The Company is required to provide each holder of a Contingent Note with the
Schedule described above. If the Company does not create a Schedule or the
Schedule is unreasonable, a United States Holder must set its own projected
payment schedule and explicitly disclose the use of such schedule and the reason
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therefor. Unless otherwise prescribed by the IRS, the United States Holder must
make such disclosure on a statement attached to the United States Holder's
timely filed federal income tax return for the taxable year in which the
Contingent Note was acquired, in which case the market discount will be
considered to be zero.
Prospective holders of Contingent Notes should carefully examine the
applicable Pricing Supplement and should consult their tax advisors regarding
the federal income tax consequences of the ownership and disposition of such
Notes. See also the discussion regarding Contingent Notes under "Sale, Exchange
or Retirement of the Notes" below.
OTHER RULES
Certain Notes having OID may be redeemed prior to maturity or may be
repayable at the option of the holder. Such Notes may be subject to rules that
differ from the general rules discussed above relating to the tax treatment of
OID. Purchasers of such Notes with a redemption feature should consult their tax
advisors with respect to such feature since the tax consequences with respect to
OID will depend, in part, on the particular terms and the particular features of
the purchased Note.
The Treasury Regulations relating to the tax treatment of OID contain
certain language ("aggregation rules") stating in general that, with some
exceptions, if more than one type of Note is issued in connection with the same
transaction or related transactions, such Notes may be treated as a single debt
instrument with a single issue price, maturity date, yield to maturity and
stated redemption price at maturity for purposes of calculating and accruing any
OID. Unless otherwise provided in the applicable Prospectus Supplement, the
Company does not expect to treat different types of Notes as being subject to
the aggregation rules for purposes of computing OID.
MARKET DISCOUNT
If a United States Holder acquires a Note having a maturity date of more
than one year from the date of its issuance and has a tax basis in the Note that
is, in the case of a Note that does not have OID, less than its stated
redemption price at maturity, or, in the case of a Note that has OID, less than
its adjusted issue price (as defined above under "Original Issue Discount--Fixed
Rate Notes"), the amount of such difference is treated as "market discount" for
federal income tax purposes, unless such difference is less than 1/4 of one
percent of the stated redemption price at maturity multiplied by the number of
complete years to maturity (from the date of acquisition).
Under the market discount rules of the Code, a United States Holder is
required to treat any principal payment (or, in the case of a Note that has OID,
any payment that does not constitute a payment of qualified stated interest) on,
or any gain on the sale, exchange, retirement or other disposition of, a Note as
ordinary income to the extent of the accrued market discount that has not
previously been included in income under the election described in the following
paragraph. Thus, partial principal payments are treated as ordinary income to
the extent of accrued market discount that has not previously been included in
income. If such Note is disposed of by the United States Holder in certain
otherwise nontaxable transactions, accrued market discount will be includible as
ordinary income by the United States Holder as if such Holder had sold the Note
at its then fair market value.
With respect to Notes with market discount, a United States Holder may not
be allowed to deduct immediately a portion of the interest expense on any
indebtedness incurred or continued to purchase or to carry such Notes. A United
States Holder may elect to include market discount in income currently as it
accrues, in which case the interest deferral rule set forth in the preceding
sentence will not apply. Such an election will apply to all debt instruments
acquired by the United States Holder on or after the first day of the first
taxable year to which such election applies and is irrevocable without the
consent of the IRS. A United States Holder's tax basis in a Note will be
increased by the amount of market discount included in such Holder's income
under such an election.
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In general, the amount of market discount that has accrued is determined on
a ratable basis. A United States Holder may, however, elect to determine the
amount of accrued market discount on a constant yield to maturity basis. This
election is made on a Note-by-Note basis and is irrevocable.
The application of the foregoing rules may be different in the case of
Contingent Notes. Accordingly, prospective purchasers of Contingent Notes should
consult with their tax advisors with respect to the application of such rules to
such Notes.
PREMIUM AND ACQUISITION PREMIUM
If a United States Holder purchases a Note for an amount in excess of the
sum of all amounts payable on the Note after the date of acquisition (other than
payments of qualified stated interest), such Holder will be considered to have
purchased such Note with "amortizable bond premium" equal in amount to such
excess, and generally will not be required to include any OID in income.
Generally, a United States Holder may elect to amortize such premium as an
offset to qualified stated interest income, using a constant yield method
similar to that described above (SEE "--Original Issue Discount Notes"), over
the remaining term of the Note (where such Note is not redeemable prior to its
maturity date). In the case of Notes that may be redeemed prior to maturity, the
premium is calculated assuming that the Company or the United States Holder will
exercise or not exercise its redemption rights in a manner that maximizes the
United States Holder's yield. A United States Holder who elects to amortize bond
premium must reduce such Holder's tax basis in the Note by the amount of the
premium used to offset qualified stated interest income as set forth above. An
election to amortize bond premium applies to all taxable debt obligations then
owned and thereafter acquired by such Holder and may be revoked only with the
consent of the IRS.
If a United States Holder purchases a Note issued with OID at an
"acquisition premium," the amount of OID that the United States Holder includes
in gross income is reduced to reflect the acquisition premium. A Note is
purchased at an acquisition premium if its adjusted tax basis, immediately after
its purchase, is (a) less than or equal to the sum of all amounts payable on the
Note after the purchase date other than payments of qualified stated interest
and (b) greater than the Note's "adjusted issue price" (as described above under
"Original Issue Discount--FIXED RATE NOTES").
If a Note is purchased at an acquisition premium, the United States Holder
reduces the amount of OID otherwise includible in income during an accrual
period by an amount equal to (i) the amount of OID otherwise includible in
income multiplied by (ii) a fraction, the numerator of which is the excess of
the adjusted tax basis of the Note immediately after its acquisition by the
purchaser over the adjusted issue price of the Note and the denominator of which
is the excess of the sum of all amounts payable on the Note after the purchase
date, other than payments of qualified stated interest, over the Note's adjusted
issue price.
As an alternative to reducing the amount of OID otherwise includible in
income by this fraction, the United States Holder may elect to compute OID
accruals by treating the purchase as a purchase at original issuance and
applying the constant yield method described above.
The application of the foregoing rules may be different in the case of
Contingent Notes. Accordingly, prospective purchasers of Contingent Notes should
consult with their tax advisors with respect to the application of such rules to
such Notes.
SHORT-TERM NOTES
In the case of a Short-Term Note, no interest is treated as qualified stated
interest, and therefore all interest is included in OID. United States Holders
that report income for federal income tax purposes on an accrual method and
certain other United States Holders, including banks and dealers in securities,
are required to include OID in income on such Short-Term Notes on a
straight-line basis, unless an election is made to accrue the OID according to a
constant yield method based on daily compounding.
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Any other United States Holder of a Short-Term Note is not required to
accrue OID for federal income tax purposes (unless it elects to do so) with the
consequence that the reporting of such income is deferred until it is received.
In the case of a United States Holder that is not required, and does not elect,
to include OID in income currently, any gain realized on the sale, exchange or
retirement of a Short-Term Note is ordinary income to the extent of the OID
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, United States Holders that are not required, and do not
elect, to include OID in income currently are required to defer deductions for
any interest paid on indebtedness incurred or continued to purchase or carry a
Short-Term Note in an amount not exceeding the deferred interest income with
respect to such Short-Term Note (which includes both the accrued OID and accrued
interest that are payable but that have not been included in gross income),
until such deferred interest income is realized. A United States Holder of a
Short-Term Note may elect to apply the foregoing rules (except for the rule
characterizing gain on sale, exchange or retirement as ordinary) with respect to
"acquisition discount" rather than OID. Acquisition discount is the excess of
the stated redemption price at maturity of the Short-Term Note over the United
States Holder's tax basis in the Short-Term Note. This election applies to all
obligations acquired by the taxpayer on or after the first day of the first
taxable year to which such election applies, unless revoked with the consent of
the IRS. A United States Holder's tax basis in a Short-Term Note is increased by
the amount included in such Holder's income on such a Note.
ELECTION TO TREAT ALL INTEREST AS OID
United States Holders may elect to include in gross income all interest that
accrues on a Note, including any stated interest, acquisition discount, OID,
market discount, DE MINIMIS OID, de minimis market discount and unstated
interest (as adjusted by amortizable bond premium and acquisition premium), by
using the constant yield method described above under "Original Issue Discount."
Such an election for a Note with amortizable bond premium will result in a
deemed election to amortize bond premium for all debt instruments owned and
later acquired by the United States Holder with amortizable bond premium and may
be revoked only with the permission of the IRS. Similarly, such an election for
a Note with market discount will result in a deemed election to accrue market
discount in income currently for such Note and for all other debt instruments
acquired by the United States Holder with market discount on or after the first
day of the taxable year to which such election first applies, and may be revoked
only with the permission of the IRS. A United States Holder's tax basis in a
Note will be increased by each accrual of the amounts treated as OID under the
constant yield election described in this paragraph.
EXTENDIBLE NOTES, RENEWABLE NOTES AND RESET NOTES
If so specified in an applicable Prospectus Supplement relating to a Note,
the Company or a holder may have the option to extend the maturity of a Note (an
"Extendible Note") or to renew such Note. See "Description of Notes--Extension
of Maturity" and "Description of Notes--Renewable Notes." In addition, the
Company may have the option to reset the interest rate, the Spread or the Spread
Multiplier with respect to a Note. See "Description of Notes--Reset Notes." The
treatment of a United States Holder of Notes to which such options apply will
depend, in part, on the terms established for such Notes by the Company pursuant
to the exercise of such option by the Company or a holder. Upon the exercise of
any such option, the United States Holder of such Notes may be treated for
federal income tax purposes as having exchanged such Notes (the "Old Notes") for
new Notes with revised terms (the "New Notes"). If such holder is treated as
having exchanged Old Notes for New Notes, such exchange may be treated as either
a taxable exchange or a tax-free recapitalization.
Regulations under Section 1001 of the Code (the "Section 1001 Regulations")
generally provide that the exercise of an option provided to an issuer or a
holder to change a term of a debt instrument (such as the maturity or the
interest rate) in a manner such as that contemplated for Extendible Notes,
Renewable
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Notes and Reset Notes will create a deemed exchange of Old Notes for New Notes
if such exercise modifies such terms to a degree that is "economically
significant." With respect to certain types of debt instruments, under the
Section 1001 Regulations a deemed exchange for tax purposes occurs if the
exercise of such an option alters the annual yield of the debt instrument by
more than the greater of (i) 25 basis points or (ii) 5 percent of the annual
yield of the debt instrument prior to modification. The exercise of an option
that changes the timing of payments under a debt instrument creates a deemed
exchange under the Section 1001 Regulations (whether or not the annual yield is
altered) if there is a "material deferral" of scheduled payments. In this
connection, the Section 1001 Regulations generally provide that a deferral of
scheduled payments within a safe-harbor period which begins on the original due
date for the first deferred payment and extends for a period not longer than the
lesser of five years or 50 percent of the original term of the debt instrument
will not be considered to be a material deferral.
If the exercise of the option by the Company or a holder is not treated as
an exchange of Old Notes for New Notes, no gain or loss will be recognized by a
United States Holder as a result thereof. If the exercise of the option is
treated as a taxable exchange of Old Notes for New Notes, a United States Holder
will recognize gain or loss generally equal to the difference between the issue
price of the New Notes and such Holder's tax basis in the Old Notes. However, if
the exercise of the option is treated as a tax-free recapitalization, no loss
will be recognized by a United States Holder as a result thereof and gain, if
any, will be recognized to the extent of the fair market value of the excess, if
any, of the principal amount of securities received over the principal amount of
securities surrendered. In this regard, the meaning of the term "principal
amount" is not clear. Such term could be interpreted to mean "issue price" with
respect to securities that are received and "adjusted issue price" with respect
to securities that are surrendered. Legislation to that effect has been
introduced in the past. It is not possible to determine whether such legislation
will be enacted in the future, and, if enacted, whether it would apply to a
recapitalization occurring prior to the date of enactment.
The presence of such options may also affect the calculation of interest
income and OID, among other things. For purposes of determining the yield and
maturity of a Note, if the Company has an unconditional option or combination of
options to require payments to be made on the Note under an alternative payment
schedule or schedules (e.g., an option to extend or an option to call the Note
at a fixed premium), it will be deemed to exercise or not exercise the option or
combination of options in a manner that minimizes the yield on the Note.
Conversely, a holder having such option or a combination of such options will be
deemed to exercise or not exercise such option or combination of options in a
manner that maximizes the yield on such Note. If both the Company and the holder
have options, the foregoing rules are applied to the options in the order that
they may be exercised. Thus, the deemed exercise of one option may eliminate
other options that are later in time. If the exercise of such option or options
actually occurs or does not occur, contrary to what is deemed to occur pursuant
to the foregoing rules, then, solely for purposes of the accrual of OID, the
yield and maturity of the Note are redetermined by treating the Note as having
been retired and then reissued on the date of the occurrence or non-occurrence
of the exercise for an amount equal to its adjusted issue price on that date.
Depending on the terms of the options described above, the presence of such
options may instead cause the Notes to be taxable as Contingent Notes under the
OID Regulations. See "Original Issue Discount--FLOATING RATE NOTES THAT ARE NOT
VRDIS."
THE FOREGOING DISCUSSION OF EXTENDIBLE NOTES, RENEWABLE NOTES AND RESET
NOTES IS PROVIDED FOR GENERAL INFORMATION ONLY. ADDITIONAL TAX CONSIDERATIONS
MAY ARISE FROM THE OWNERSHIP OF SUCH NOTES IN LIGHT OF THE PARTICULAR FEATURES
OR COMBINATION OF FEATURES OF SUCH NOTES AND, ACCORDINGLY, PERSONS CONSIDERING
THE PURCHASE OF SUCH NOTES ARE ADVISED AND EXPECTED TO CONSULT WITH THEIR OWN
LEGAL AND TAX ADVISERS REGARDING THE TAX CONSEQUENCES OF THE OWNERSHIP AND
DISPOSITION OF SUCH NOTES.
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INTEGRATION OF NOTES WITH OTHER FINANCIAL INSTRUMENTS
Any United States Holder of Notes that also acquires or has acquired any
financial instrument which, in combination with such Notes, would permit the
calculation of a single yield to maturity or could generally constitute a VRDI
of an equivalent term, may in certain circumstances treat such Notes and such
financial instrument as an integrated debt instrument for purposes of the Code,
with a single determination of issue price and the character and timing of
income, deductions, gains and losses. (For purposes of determining OID, none of
the payments under the integrated debt instrument will be treated as qualified
stated interest.) Moreover, under the OID Regulations, the IRS may require in
certain circumstances that a United States Holder who owns Notes integrate such
Notes with a financial instrument held or acquired by such Holder or a related
party. United States Holders should consult their tax advisors as to such
possible integration.
SALE, EXCHANGE, REDEMPTION OR RETIREMENT OF NOTES
A United States Holder generally will recognize gain or loss upon the sale,
exchange, redemption or retirement of a Note equal to the difference between the
amount realized upon such sale, exchange, redemption or retirement and the
United States Holder's adjusted tax basis in the Note. Such adjusted basis in
the Note generally will equal the cost of the Note, increased by OID,
acquisition discount or market discount previously included in respect thereof,
and reduced (but not below zero) by any payments on the Note other than payments
of qualified stated interest and by any premium that the United States Holder
has taken into account. To the extent attributable to accrued but unpaid
qualified stated interest, the amount realized by the United States Holder will
be treated as a payment of interest, taxable as ordinary income. Generally, any
gain or loss will be capital gain or loss if the Note was held as a capital
asset, except as provided under "Market Discount" and "Short-Term Notes". The
maximum tax rate for non-corporate taxpayers on adjusted net capital gain is
20%. Adjusted net capital gain is generally the excess of net long-term capital
gain (the net gain on capital assets held for more than 12 months) over net
short-term capital loss (the net loss on capital assets held for 12 months or
less). Net short-term capital gain (net gain on assets held for 12 months or
less) is subject to tax at the same rates as ordinary income. Capital losses are
deductible by non-corporate taxpayers only to the extent of capital gains for
the taxable year plus $3,000. Capital gains are subject to tax at the same rates
as ordinary income for corporate taxpayers. Capital losses of corporate
taxpayers are deductible only against capital gains.
The sale, exchange, redemption or retirement of a Contingent Note may be
subject to special rules different than those described in the preceding
paragraph and under which, except in certain circumstances, gain or loss on the
sale, exchange or retirement will be ordinary income or loss. United States
Holders of Contingent Notes should consult their tax advisors regarding the
application of these rules to their particular situations.
NON-UNITED STATES HOLDERS
Under current United States federal income tax law, and subject to the
discussion of backup withholding in the following section, payments of principal
and interest (including OID) with respect to a Note by the Company or by any
paying agent to any beneficial owner of a Note that is not a United States
Holder (hereinafter, a Non-United States Holder) will not be subject to the
withholding of United States federal income tax, provided, in the case of
interest (including OID), that (i) such Holder does not actually or
constructively (under the applicable attribution rules of the Code) own 10% or
more of the total combined voting power of all classes of stock of the Company
entitled to vote, (ii) such Holder is not for federal income tax purposes a
controlled foreign corporation related, directly or indirectly, to the Company
through stock ownership, (iii) such Holder is not a bank receiving interest
described in Section 881(c)(3)(A) of the Code and (iv) either (A) the beneficial
owner of the Note certifies, under penalties of perjury, to the Company or
paying agent, as the case may be, that such Holder is a Non-United States Holder
and provides such Holder's name and address, or (B) a securities clearing
organization, bank or
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other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "financial institution") and holds the Note,
certifies, under penalties of perjury, to the Company or paying agent, as the
case may be, that such certificate has been received from the beneficial owner
by it or by a financial institution between it and the beneficial owner and
furnishes the payor with a copy thereof. A certificate described in this
paragraph is effective only with respect to payments of interest (including OID)
made to the certifying Non-United States Holder after the issuance of the
certificate in the calendar year of its issuance and the two immediately
succeeding calendar years. Under temporary Treasury Regulations, the foregoing
certification may be provided by the beneficial owner of a Note on IRS Form W-8.
On October 14, 1997, the IRS published in the Federal Register final
regulations (the "1997 Final Regulations") which affect the United States
taxation of Non-United States Holders. The 1997 Final Regulations are currently
expected to become effective for payments after December 31, 1999, regardless of
the issue date of the instrument with respect to which such payments are made,
subject to certain transition rules (see below). The discussion under this
heading and under "Backup Withholding and Information Reporting," below, is not
intended to be a complete discussion of the provisions of the 1997 Final
Regulations, and prospective purchasers of the Notes are urged to consult their
tax advisors concerning the tax consequences of their acquiring, holding and
disposing of the Notes in light of the 1997 Final Regulations.
The 1997 Final Regulations provide documentation procedures designed to
simplify compliance by withholding agents. The 1997 Final Regulations generally
do not affect the documentation rules described above, but add other
certification options. Under one such option, a withholding agent will be
allowed to rely on an intermediary withholding certificate furnished by a
"qualified intermediary" (as defined below) on behalf of one or more beneficial
owners (or other intermediaries) without having to obtain the beneficial owner
certificate described above. "Qualified intermediaries" include: (i) foreign
financial institutions or foreign clearing organizations (other than a United
States branch or United States office of such institution or organization) or
(ii) foreign branches or offices of United States financial institutions or
foreign branches or offices of United States clearing organizations, which, as
to both (i) and (ii), have entered into withholding agreements with the IRS. In
addition to certain other requirements, qualified intermediaries must obtain
withholding certificates, such as revised IRS Form W-8 (see below), from each
beneficial owner. Under another option, an authorized foreign agent of a United
States withholding agent will be permitted to act on behalf of the United States
withholding agent, provided certain conditions are met.
For purposes of the certification requirements, the 1997 Final Regulations
generally treat, as the beneficial owners of payments on a Note, those persons
that, under general United States federal income tax principles, are the actual
taxpayers with respect to such payments, rather than persons such as nominees or
agents legally entitled to such payments. In the case of payments to an entity
classified as a foreign partnership under United States federal income tax
principles, the partners, rather than the partnership, generally will be
required to provide the required certifications to qualify for the withholding
exemption described above. A payment to a United States partnership, however, is
treated for these purposes as payment to a United States payee, even if the
partnership has one or more foreign partners. The 1997 Final Regulations provide
certain presumptions with respect to withholding for holders not furnishing the
required certifications to qualify for the withholding exemption described
above. In addition, the 1997 Final Regulations will replace a number of current
tax certification forms (including IRS Form W-8 and IRS Form 4224, discussed
below) with a single, revised IRS Form W-8 (which, in certain circumstances,
requires information in addition to that previously required). Under the 1997
Final Regulations, this Form W-8 will remain valid until the last day of the
third calendar year following the year in which the certificate is signed.
The 1997 Final Regulations provide transition rules concerning existing
certificates, such as IRS Form W-8 and IRS Form 4224. Valid withholding
certificates that are held on December 31, 1998 will generally remain valid
until the earlier of December 31, 1999 or the date of expiration of the
certificate under the
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law in effect prior to January 1, 1999. Further, certificates dated prior to
January 1, 1998 will generally remain valid until the end of 1998, irrespective
of the date that their validity expires during 1998. The IRS has announced that
the 1997 Final Regulations will be amended to provide that valid withholding
certificates that are held on December 31, 1999, will generally remain valid
until the earlier of December 31, 2000, or the expiration of the certificate
under the law in effect prior to January 1, 2000.
Notwithstanding the foregoing, interest described in Section 871(h)(4) of
the Code will be subject to United States withholding tax at a 30% rate (or such
lower rate as may be provided by an applicable income tax treaty). In general,
interest described in Section 871(h)(4) of the Code includes (subject to certain
exceptions) any interest the amount of which is determined by reference to
receipts, sales or other cash flow of the issuer or a related person, any income
or profits of the issuer or a related person, any change in the value of any
property of the issuer or a related person or any dividends, partnership
distribution or similar payments made by the issuer or a related person.
Interest described in Section 871(h)(4) of the Code may include other types of
contingent interest identified by the IRS in future Treasury Regulations.
If a Non-United States Holder is engaged in a trade or business in the
United States and interest (including OID) on the Note is effectively connected
with the conduct of such trade or business, the Non-United States Holder,
although exempt from the withholding tax discussed above, will be subject to
United States federal income tax on such interest (including OID) in the same
manner as if it were a United States Holder. In lieu of the certificate
described above, such Holder will be required to provide a properly executed IRS
Form 4224 in order to claim an exemption from withholding tax. In addition, if
such Holder is a foreign corporation, it may be subject to a branch profits tax
equal to 30% (or such lower rate as may be specified by an applicable income tax
treaty) of its effectively connected earnings and profits for the taxable year,
subject to various adjustments. For this purpose, interest (including OID) and
gain (see below) on a Note will be included in the earnings and profits of such
Holder if such interest (including OID) is effectively connected with the
conduct by such Holder of a trade or business in the United States.
Generally, any gain or income (other than that attributable to accrued
interest or OID) realized upon the sale, exchange, redemption, retirement or
other disposition of a Note will not be subject to United States federal income
tax unless (i) such gain or income is effectively connected with a trade or
business in the United States of the Non-United States Holder or (ii) in the
case of a Non-United States Holder who is a nonresident alien individual, the
Non-United States Holder is present in the United States for periods aggregating
183 days or more in the taxable year of such sale, exchange, retirement or other
disposition and either (a) such individual has a "tax home" (as defined in
Section 911(d)(3) of the Code) in the United States and certain other
requirements are met or (b) the gain is attributable to an office or other fixed
place of business maintained by such individual in the United States.
Under the 1997 Final Regulations, withholding of United States federal
income tax with respect to accrued OID may apply to payments on a taxable sale
or other disposition of a Note by a Non-United States Holder who does not
provide appropriate certification to the withholding agent with respect to such
transaction.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current United States federal income tax law, information reporting
requirements apply to interest (including OID) and principal payments made to,
and to the proceeds of sales before maturity by, certain non-corporate United
States Holders with respect to Notes. In addition, a 31% backup withholding tax
will apply if (i) the non-corporate United States Holder fails to furnish such
holder's Taxpayer Identification Number ("TIN") (which, for an individual, would
be his or her Social Security Number) to the payor in the manner required, (ii)
the non-corporate United States Holder furnishes an incorrect TIN and the payor
is so notified by the IRS, (iii) the payor is notified by the IRS that the
non-corporate United States Holder has failed properly to report payments of
interest and dividends or (iv) in certain
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circumstances, the non-corporate United States Holder fails to certify, under
penalties of perjury, that it has not been notified by the IRS that it is
subject to backup withholding for failure properly to report interest and
dividend payments. Backup withholding will not apply with respect to payments
made to certain exempt recipients, including corporations, tax-exempt
organizations, qualified pension and profit-sharing trusts and individual
retirement accounts, provided that they establish entitlement to an exemption.
In the case of a Non-United States Holder, under current Treasury
Regulations, backup withholding and information reporting will not apply to
payments of principal, premium and interest (including OID) made by the Company
or any paying agent thereof on a Note with respect to which such holder has
provided the required certification under penalties of perjury that it is a
Non-United States Holder or has otherwise established an exemption.
Under current Treasury Regulations, (i) principal or interest payments
(including OID) on a Note collected outside the United States by a foreign
office of a custodian, nominee or other agent acting on behalf of a beneficial
owner of a Note and (ii) payments on the sale, exchange, redemption, retirement
or other disposition of a Note to or through a foreign office of a broker are
generally not subject to backup withholding or information reporting. However,
if such custodian, nominee, agent or broker is a United States person, a
controlled foreign corporation for United States federal income tax purposes, or
a foreign person 50% or more of whose gross income is effectively connected with
the conduct of a United States trade or business for a specified three-year
period, such custodian, nominee, agent or broker may be subject to certain
information reporting (but not backup withholding) requirements with respect to
such payments unless such custodian, nominee, agent or broker has in its records
documentary evidence that the beneficial owner is not a United States person and
certain other conditions are met or the beneficial owner otherwise establishes
an exemption.
In general, the 1997 Final Regulations do not significantly alter the
substantive backup withholding and information reporting requirements described
above. As under current law, backup withholding and information reporting will
not apply to payments to a Non-United States Holder of principal, premium and
interest (including OID) on a Note if such Non-United States Holder provides the
required certification to establish an exemption from the withholding of United
States federal income tax or otherwise establishes an exemption. Similarly,
unless the payor has actual knowledge that the payee is a United States Holder,
backup withholding will not apply to (i) payments of interest (including OID, if
any) made outside the United States to certain offshore accounts and (ii)
payments on the sale, exchange, redemption, retirement or other disposition of a
Note effected outside the United States. However, information reporting (but not
backup withholding) will apply to (i) payments of interest made by a payor
outside the United States and (ii) payments on the sale, exchange, redemption,
retirement or other disposition of a Note effected outside the United States if
payment is made by a broker that is, for United States federal income tax
purposes, (a) a United States person, (b) a controlled foreign corporation, (c)
a United States branch of a foreign bank or foreign insurance company, (d) a
foreign partnership controlled by United States persons or engaged in a United
States trade or business or (e) a foreign person 50% or more of whose gross
income is effectively connected with the conduct of a United States trade or
business for a specified three-year period, unless such payor or broker has in
its records documentary evidence that the beneficial owner is not a United
States Holder and certain other conditions are met or the beneficial owner
otherwise establishes an exemption.
Backup withholding tax is not an additional tax. Rather, any amounts
withheld from a payment to a holder under the backup withholding rules will be
allowed as a refund or a credit against such holder's United States federal
income tax, provided that the required information is furnished to the IRS.
Holders should consult their tax advisors regarding the application of
information reporting and backup withholding to their particular situations, the
availability of an exemption therefrom, and the procedure for obtaining such an
exemption, if available.
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PLAN OF DISTRIBUTION
The Company may sell the Notes in and/or outside the United States: (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
with respect to the Notes being offered (the "Offered Notes") will set forth the
terms of the offering of the Offered Notes, including the name or names of any
underwriters or agents, the purchase price of the Offered Notes and the proceeds
to the Company from such sale, any underwriting discounts and other items
constituting underwriters' 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.
If underwriters are used in the sale, the Offered Notes 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 sale. The Notes
may be offered to the public either through underwriting syndicates represented
by one or more managing underwriters or directly by one or more underwriters.
The underwriter or underwriters with respect to a particular underwritten
offering of Notes, or, if an underwriting syndicate is used, the managing
underwriter or underwriters, will be set forth on the cover of the applicable
Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement
relating thereto, the obligations of the underwriters to purchase the Offered
Notes will be subject to conditions precedent and the underwriters will be
obligated to purchase all of the Offered Notes if any are purchased.
If dealers are utilized in the sale of Offered Notes in respect of which
this Prospectus is delivered, and if so specified in the applicable Prospectus
Supplement, the Company will sell such Offered Notes to the dealers as
principals. The dealers may then resell such Offered Notes to the public at
varying prices to be determined by such dealers at the time of resale. The names
of the dealers and the terms of the transaction will be set forth in the
applicable Prospectus Supplement.
The Notes may be sold directly by the Company or through agents designated
by the Company from time to time. Any agent involved in the offer or sale of the
Offered Notes in respect to which this Prospectus is delivered will be named,
and any commissions payable by the Company to such agent will be set forth, in
the Prospectus Supplement.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which the underwriters, dealers or agents may be
required to make in respect thereof. Underwriters, dealers and agents may be
customers of, may engage in transactions with, or perform services for, the
Company in the ordinary course of business.
LEGAL MATTERS
Legal matters with respect to the Notes will be passed upon for the Company
by Stafford, Rosenbaum, Rieser & Hansen, Madison, Wisconsin, and by Sidley &
Austin, Chicago, Illinois, and for any underwriters, dealers, purchasers or
agents by Jones, Day, Reavis & Pogue, Chicago, Illinois. The Company is advised
that as of July 21, 1998, an attorney at the firm of Stafford, Rosenbaum, Rieser
& Hansen, who has participated in the preparation of this Prospectus and the
Registration Statement, and who will participate in the rendition of the firm's
opinions with respect to the Notes and Bonds, owned beneficially 6,525 shares of
the Company's common stock.
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company and its subsidiaries included (or incorporated by reference) in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997,
incorporated by reference herein, have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as indicated in their report with respect thereto, and
are so incorporated by reference herein in reliance upon the authority of said
firm as experts in accounting and auditing matters.
39
<PAGE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS OR ANY ACCOMPANYING PRICING SUPPLEMENT OR PROSPECTUS SUPPLEMENT AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITERS OR AGENTS. THIS
PROSPECTUS OR ANY ACCOMPANYING PRICING SUPPLEMENT OR PROSPECTUS SUPPLEMENT DO
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS OR ANY
ACCOMPANYING PRICING SUPPLEMENT OR PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR ANY ACCOMPANYING PRICING SUPPLEMENT OR PROSPECTUS SUPPLEMENT, NOR
ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF MADISON GAS AND
ELECTRIC COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN OR THEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus
Available Information........................ 2
Incorporation of Certain Documents by
Reference.................................. 2
The Company.................................. 3
Use of Proceeds.............................. 3
Ratios of Earnings to Fixed Charges.......... 3
Description of Notes......................... 4
United States Federal Income Tax
Consequences............................... 23
Plan of Distribution......................... 34
Legal Matters................................ 34
Experts...................................... 34
</TABLE>
MADISON GAS AND
ELECTRIC COMPANY
MEDIUM-TERM NOTES
DUE FROM NINE MONTHS TO 30
YEARS FROM DATE OF ISSUE
---------------------
PROSPECTUS
---------------------
, 1998
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<PAGE>
SUBJECT TO COMPLETION, DATED JULY 22, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
MADISON GAS AND ELECTRIC COMPANY
INVESTORS PLUS PLAN
COMMON STOCK $1 PAR VALUE
------------------
Madison Gas and Electric Company (the "Company") hereby offers participation
in its Investors Plus Plan (the "Plan") which amends and restates in its
entirety the Madison Gas and Electric Company Automatic Dividend Reinvestment
and Stock Purchase Plan. The Plan is designed to provide investors with a
convenient way to purchase shares of the Company's Common Stock, $1 par value
("Common Stock"), and to reinvest all or a portion of the cash dividends paid in
Common Stock. Prospectus Supplements to this Prospectus will set forth the
number of shares of Common Stock being offered hereunder from time to time. The
aggregate price paid for shares of Common Stock offered under this Prospectus
and the initial public offering price of Medium-Term Notes and shares of Common
Stock offered by separate prospectuses under the registration statement referred
to below of which this Prospectus is a part, will not exceed $65,000,000.
Participants in the Plan may:
- Make a direct Initial Investment in Common Stock with a cash payment of no
less than $50 and no more than $25,000 per account.
- Increase their investment in Common Stock by making Optional Cash Payments
of no less than $25 per payment and no more than $25,000 for each calendar
quarter per account.
- Reinvest all or a portion of cash dividends paid on Common Stock
registered in their names or on Common Stock credited to their Plan
accounts in additional shares of Common Stock.
- Receive cash dividends on any or all shares of Common Stock by check or
electronic deposit to a designated account.
- Receive, upon written request, certificates for whole shares of Common
Stock credited to their Plan account.
- Sell Common Stock credited to their Plan account through the Plan.
- Deposit certificates representing shares of Common Stock into the Plan for
safekeeping.
Shares acquired under the Plan will be either shares purchased on the open
market by an independent agent (the "Agent") selected by the Company, newly
issued shares, or treasury shares. The purchase price of shares purchased on the
open market will be the weighted average purchase price, including normal
brokerage commissions, carried to four decimal places, of shares acquired on the
open market by the Agent. The purchase price of newly issued shares or treasury
shares will be the average of the quoted closing prices, carried to four decimal
places, for the Common Stock as reported on the Nasdaq National Market for the
period of five trading days ending on the Dividend Date or Investment Date (each
as defined herein). The sale price to participants of shares sold through the
Plan will be the market price, including normal brokerage commissions, carried
to four decimal places, of shares purchased by the Agent. The Company will pay
all costs of administration of the Plan, excluding normal brokerage commissions.
The Common Stock is quoted on the Nasdaq National Market under the symbol
"MDSN."
Shares of Common Stock offered under the Plan are offered through a
registered broker-dealer selected by the Company.
------------------------
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 SUCH STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Company has filed
with the Commission a registration statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the shares of Common Stock offered hereby and certain other
securities. This Prospectus does not contain all information set forth in the
Registration Statement and reference is hereby made to the Registration
Statement and the exhibits thereto for further information with respect to the
Company and the shares of Common Stock offered hereby. Such reports, proxy
statements, Registration Statement and exhibits and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
its Northeast Regional Office located at 7 World Trade Center, Suite 1300, New
York, New York 10048 and Midwest Regional Office located at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Company
is subject to the electronic filing requirements of the Commission. Accordingly,
pursuant to the rules and regulations of the Commission, certain documents,
including annual and quarterly reports and proxy statements, filed by the
Company with the Commission have been and will be filed electronically. The
Commission maintains a World Wide Web site that contains reports, proxy and
information statements and other information regarding registrants (including
the Company) that file electronically with the Commission at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report of the Company on Form 10-K, as amended, for the year
ended December 31, 1997 and the Quarterly Report of the Company on Form 10-Q for
the quarter ended March 31, 1998 are incorporated by reference into this
Prospectus. All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering of the shares of Common Stock contemplated
hereby shall be deemed to be incorporated by reference into this Prospectus and
to be made a part hereof from the respective dates of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference in this Prospectus shall be deemed to be modified or superseded for
purposes of the Registration Statement and this Prospectus to the extent that a
statement contained in this Prospectus, in the applicable Prospectus Supplement
or in any subsequently filed document which also is or is deemed to be
incorporated by reference in this Prospectus 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 the Registration
Statement or this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon written
or oral request of such person, a copy of any or all of the documents referred
to above which have been incorporated in this Prospectus by reference, other
than certain exhibits to such documents. Such requests should be directed to
Terry A. Hansen, Vice President-- Finance, Madison Gas and electric Company,
Post Office Box 1231, Madison, Wisconsin 53701-1231 (Telephone: (608) 252-7923).
2
<PAGE>
THE COMPANY
The Company, a Wisconsin corporation organized as such in 1896, is a public
utility located in Madison, Wisconsin. It is engaged in generating and
transmitting electric energy and distributing it to approximately 117,000
customers throughout 250 square miles in Dane County. The Company also
distributes and transports natural gas to approximately 97,000 customers
throughout 975 square miles in Dane, Columbia, Iowa, Juneau, Monroe and Vernon
counties. The principal executive offices of the Company are located at 133
South Blair Street, Post Office Box 1231, Madison, Wisconsin 53701-1231, and its
telephone number is (608) 252-7000.
DESCRIPTION OF THE PLAN
PURPOSE
1. What is the purpose of the Plan?
The purpose of the Plan is to provide participants a simple and convenient
method of purchasing shares of the Company's Common Stock with Initial
Investments, dividends, and Optional Cash Payments. If such shares are purchased
from the authorized but unissued shares of the Company or from the Company's
treasury, the Company will receive additional funds which will be used for
general corporate purposes.
ADVANTAGES AND DISADVANTAGES
2. What are the advantages of the Plan?
- Persons and entities not presently owning shares of Common Stock may
become shareholders by making an initial direct investment of no less than
$50 and no more than $25,000 per account ("Initial Investment") (see
Question 15).
- Additional investments in Common Stock ("Optional Cash Payment") may be
made by participants for as little as $25 per payment, up to $25,000 per
calendar quarter per account (see Question 15).
- All or a portion of Common Stock dividends may be automatically reinvested
in additional shares of Common Stock (see Question 9).
- Full investment of funds is possible under the Plan because the Plan
permits fractional shares to be credited to participants' accounts.
- Company employees who participate in the Plan may arrange for Optional
Cash Payments to be made through payroll deductions (see Question 15).
- Shares purchased are credited to an account in the participant's name, and
a statement is furnished following each transaction, thereby providing a
simplified method of recordkeeping (see Questions 9 and 17).
- Participants may deposit Common Stock certificates into their Plan
accounts for safekeeping, whether or not the Common Stock represented by
such certificates was purchased through the Plan. This convenience is
provided at no cost to the participant and eliminates the possibility of
loss, inadvertent destruction, or theft of certificates (see Question 23).
- Participants may transfer shares held in their Plan account to another
individual or entity at no cost. The normal transfer requirements will
apply.
- Participants may receive cash dividends on any or all shares of Common
Stock by check or electronic deposit to a designated account (see
Questions 9 and 20).
3
<PAGE>
3. What are the disadvantages of the Plan?
- Participants have no control over the price at which shares are purchased
or sold through the Plan or the timing of such purchases or sales. A
participant bears the market risk associated with fluctuations in the
price of the Common Stock pending the execution of a purchase or sale of
shares for the participant's account (see Question 25).
- No interest is paid on funds pending investment (see Question 14).
- Requests for issuance of certificates or the sale of shares from a Plan
account (withdrawals) may be delayed during the dividend processing
period. Requests for other changes in Plan participation may also be
delayed during this period (see Question 25).
COSTS
4. Are there any expenses to participants under the Plan?
When shares of Common Stock purchased under the Plan are newly issued or
treasury shares, rather than shares purchased on the open market, there are no
expenses to participants because shares are purchased from the Company and no
brokerage commission is incurred. When shares of Common Stock are purchased on
the open market under the Plan, the price per share paid by the participant
includes normal brokerage commissions incurred to acquire the shares. Because
purchases are consolidated, a participant's proportionate share of brokerage
commissions resulting from open market purchases should be lower than the
commissions for individual purchases. Shares sold through the Plan will incur
normal brokerage commissions (see Question 25).
The Company will pay all costs of administration of the Plan, excluding
normal brokerage commissions incurred to purchase shares on the open market or
to sell shares. Participants will receive advance notice if the Company
determines not to pay all administrative costs.
ADMINISTRATION
5. How will the Plan be administered?
The Company administers the Plan, performing only clerical and ministerial
functions such as keeping a continuing record of participants' accounts,
advising them of purchases and other transactions, and performing other duties
relating to the Plan. The Company believes that its serving as administrator
rather than a registered broker-dealer or a federally insured banking
institution poses no material risks to participants because of the
administrative nature of the functions the Company will perform. In addition,
Initial Investments and Optional Cash Investments will be transmitted promptly
to a segregated escrow account at a bank (the "Escrow Account") or to the Agent
and will not be subject to any liens or claims of any creditors of the Company.
Purchases of Common Stock for the accounts of participants will be registered in
the name of the Plan Nominee (a Bank) as custodian for participants in the Plan
(the "Nominee").
PARTICIPATION
6. Who is eligible to participate?
Any interested person or entity making an Initial Investment of at least $50
and all registered shareholders are eligible to participate. Beneficial owners
of Common Stock registered in others' names, such as brokers or bank trustees
and nominees, who want to participate by reinvesting dividends paid on these
shares may be required by their brokers or banks to withdraw their shares from
the beneficial accounts and register the shares in their own names.
4
<PAGE>
7. How do eligible investors participate?
After receiving a Prospectus, investors may join the Plan by signing an
Enrollment Form and returning it to Madison Gas and Electric Company,
Shareholder Services Department, Post Office Box 1231, Madison, WI 53701-1231.
Enrollment Forms may be obtained at any time by written request to the Company
or by telephoning the Company at the appropriate toll-free number listed on page
15 of this Prospectus (see Question 9). Investors making first-time purchases of
Common Stock must submit the Enrollment Form with the Initial Investment to
purchase Common Stock or arrange for the Initial Investment to be made through a
payroll deduction (see Questions 14 and 15). A person who is a current owner of
Common Stock must sign an Enrollment Form exactly as such person's name appears
on his or her Common Stock certificate. If the Common Stock is registered to
more than one person, each person must sign the Enrollment Form. A person or
persons who are making an Initial Investment must specify exactly how the shares
to be purchased are to be registered and sign their names accordingly.
Shareholders who are already enrolled in the Plan are eligible to
participate in the new features of the Plan. Such shareholders should carefully
review the participation options, particularly the "No Reinvestment" and
"Partial Reinvestment" options. These options have been modified in the Plan
(see Question 9). Unless such a shareholder submits a new Enrollment Form
designating a different participation option, each shareholder's current
participation in the Plan will remain unchanged.
8. When may an eligible investor join the Plan?
Eligible investors may join the Plan at any time. Participation for
reinvestment of dividends will commence with the next Common Stock cash dividend
date (the "Dividend Date," currently on or about March 15, June 15, September
15, and December 15) after the Company receives, at least 15 days prior to the
Dividend Date, a properly completed Enrollment Form. If the Enrollment Form is
not received in time, participation through reinvestment of dividends will be
delayed until the following Dividend Date.
Optional Cash Payments received by the Company prior to the close of
business on the "Investment Date," defined as the 15th day of each month (or the
next business day thereafter if the 15th day of the month is not a business day)
and Initial Investments with a properly completed Enrollment Form received at
least three business days prior to the Investment Date will be invested monthly
on the Investment Date.
9. What does an Enrollment Form authorize?
An Enrollment Form authorizes the Company in its capacity as administrator
of the Plan to enroll participants under the following dividend options:
- Full Dividend Reinvestment--Reinvest all dividends: dividends paid on
shares held by the participant, dividends on shares held in the
participant's Plan account, and any Initial Investment and Optional Cash
Payments will be invested in Common Stock and credited to the
participant's Plan account.
- Partial Dividend Reinvestment--Reinvest a portion of dividends:
participants may request cash dividends on a designated percentage of
shares held by the participant and held in the participant's Plan account,
as indicated by the participant on the Enrollment Form. Dividends paid on
remaining shares and any Optional Cash Payments will be invested in Common
Stock and credited to the participant's Plan account.
- No Dividend Reinvestment--Pay all cash dividends: receive all cash
dividends on shares held by the participant and in the participant's Plan
account. Participants may purchase shares through the Plan with an Initial
Investment and Optional Cash Payments.
The Enrollment Form also allows participants to take advantage of
certificate safekeeping services (see Question 23).
5
<PAGE>
If the Enrollment Form is incomplete upon receipt by the Company, the
Company will return the Enrollment Form and any payment for stock purchase to
the participant.
SOURCE OF SHARES AND USE OF PROCEEDS
10. What is the source of and use of proceeds from Common Stock purchased under
the Plan?
Shares purchased under the Plan will be either shares purchased on the open
market by the Agent, newly issued shares, or treasury shares. The Company will
not change its determination regarding the source of shares more than once in
any three-month period. The Company will not exercise its right to change the
source of shares absent a determination by the Company's board of directors that
the Company's need to raise additional capital has changed, or that there is
another valid reason for such change.
Initially, shares purchased under the Plan will be shares purchased on the
open market and the Company will not receive any additional funds from such
purchases. In the event the Company determines that shares to be purchased under
the Plan will be either newly issued or treasury shares, the Company will be
required to request an order from the Public Service Commission of Wisconsin
approving such purchases. If shares purchased under the Plan are newly issued or
treasury shares, the Company will receive additional funds from such purchases
to be used for general corporate purposes, including the financing of capital
expenditures, the refinancing of indebtedness, and possible investments and
acquisitions.
PURCHASES
11. How many shares of Common Stock will be purchased for participants?
The number of shares to be purchased depends on the amount of a
participant's Initial Investment, Optional Cash Payment, dividend, or a
combination thereof, and the price of the shares. Each participant's account
will be credited with that number of shares, including fractions computed to
four decimal places, equal to the total amount invested divided by the purchase
price.
12. What will be the price of shares of Common Stock purchased under the Plan?
When shares are purchased on the open market, the price per share to
participants will be the weighted average purchase price, including normal
brokerage commissions, carried to four decimal places, of shares acquired on the
open market by the Agent. Because purchases are consolidated, a participant's
proportionate share of brokerage commissions resulting from open market
purchases should be lower than the commissions for individual purchases. The
Agent is a securities broker-dealer registered as such under the Exchange Act
who is a market maker in the Common Stock and will purchase shares of Common
Stock as Agent for the participants in the Plan. The purchases will be made in
over-the-counter market purchases or negotiated transactions on terms determined
by the Agent.
When shares are purchased from authorized but unissued shares of Common
Stock or from the Company's treasury, the price per share of shares to
participants will be the average of the quoted closing prices for the Common
Stock as reported on the Nasdaq National Market for the period of five trading
days ending on the Dividend Date or Investment Date (or the period of five
trading days immediately preceding the Dividend Date or the Investment Date if
the Nasdaq National Market is closed on such date). In each case, the price will
be calculated to four decimal places. No newly issued or treasury shares will be
sold for less than par value ($8 per share).
The Company will pay all costs of administration of the Plan, excluding
normal brokerage commissions incurred to purchase shares on the open market or
to sell shares.
13. When will dividend funds be invested?
6
<PAGE>
On each Dividend Date, the dividends on any designated shares registered in
the names of the participants, as well as on the Common Stock held in the Plan
accounts of the participants, will be invested in Common Stock as of such
Dividend Date, along with Optional Cash Payments received prior to the close of
business on such Dividend Date (see Question 8). Dividends that are not invested
within 30 days of the Dividend Date will be paid to the shareholder. For
administrative purposes, the actual crediting of the Common Stock to a
participant's account and the purchase of shares through the Plan may take place
several days after each Dividend Date.
INITIAL INVESTMENTS AND OPTIONAL CASH PAYMENTS
14. When must the Initial Investments and Optional Cash Payments be made?
Initial Investments must be received with a properly completed Enrollment
Form at least three business days prior to the Investment Date (see Question 8
for definition of Investment Date). On each Investment Date, the Company will
invest any Optional Cash Payments received prior to the close of business on the
Investment Date and Initial Investments in Common Stock for the account of such
participant. If received after the Investment Date, the Company may hold the
investment until the next Investment Date. Initial Investments and Optional Cash
Payments that are not invested within 35 days of receipt will be returned to the
participant. Only participants who have properly completed, signed, and returned
an Enrollment Form as provided in Questions 8 and 9 are eligible to make an
Initial Investment and Optional Cash Payments.
A participant may withdraw an Initial Investment or Optional Cash Payment by
notifying the Company's Shareholder Services Department in writing not less than
two business days before an Investment Date. Any withdrawn amount will be
returned as promptly as practicable without interest.
The Company will acknowledge receipt of all Initial Investments and Optional
Cash Payments. No interest will be paid on Initial Investments and Optional Cash
Payments held by the Company pending investment. Participants are requested not
to send cash.
15. How are Initial Investments and Optional Cash Payments made?
Participants may make Initial Investments of not less than $50 and Optional
Cash Payments of not less than $25 per payment nor more than $25,000 for each
calendar quarter per account. When enrolling in the Plan, an Initial Investment
and Optional Cash Payment may be made by the participant by enclosing with the
Enrollment Form a check or money order payable to the order of Madison Gas and
Electric Company. Thereafter, Optional Cash Payments may be made through the use
of the Remittance Form for Optional Cash Payments sent to participants by the
Company. The Company will promptly transmit all Initial Investments and Optional
Cash Payments to the segregated Escrow Account at a bank or to the Agent.
It is recommended that all payments be made so as to reach the Company at
least five business days prior to the Investment Date. Each payment by a
participant must be made by check or money order payable to the order of Madison
Gas and Electric Company and the same amount of money need not be sent each
time, subject to the minimum and maximum payment levels. There is no obligation
to make Optional Cash Payments.
Employees of the Company or its subsidiaries participating in the Plan may
arrange for an Initial Investment or Optional Cash Payments to be made through
payroll deductions. The $50 and $25 minimum payment requirement for Initial
Investments and Optional Cash Payments, respectively, will not apply to payments
made through payroll deductions. Application forms for such employee payroll
deductions are available from the Company's Shareholder Services Department.
Commencement, revision, or termination of payroll deductions will become
effective as soon as practicable after receipt of the request.
16. What happens if a check is returned unpaid by a participant's financial
institution?
7
<PAGE>
In the event that any check is returned unpaid for any reason and the
Company is unable to collect funds from the participant, the Company will
consider the request for investment of such funds null and void. The Company
shall remove from the participant's account any shares purchased upon the prior
credit of such funds. Those shares may be sold to satisfy any uncollected
amount. If the net proceeds of such sale are insufficient to satisfy the balance
of such uncollected amount, additional shares may be sold from the participant's
account as necessary to satisfy the uncollected balance.
REPORTS TO PARTICIPANTS
17. What kind of reports will be sent to participants in the Plan?
Each participant will receive a statement of account following each purchase
or sale of Common Stock for the participant's account under the Plan. Statements
of account will be issued quarterly for all Plan participants and for each month
when the participant purchases or sells shares. Quarterly statements of account
are cumulative, showing activity for all three months of the quarter and
calendar year to date. Account statements are the participant's continuing
record of purchases and should be retained for income tax purposes. The final
statement of the calendar year will indicate the total dividends credited to the
participant's account for the year for the participant's Plan account, and a
Form 1099-DIV will be issued to each participant for use in reporting dividends
received for income tax purposes.
For participants who are not making Optional Cash Payments or reinvesting
dividends but have shares held in the Plan, information regarding share balances
and year-to-date dividends will accompany their dividend check.
18. What other communications will participants receive from the Company?
Each participant will receive the same communications as every other
shareholder of record, including Quarterly Reports, the Annual Report, the
Notice of Annual Meeting of Shareholders and the Proxy Statement, Proxy, and
income tax information, including 1099 forms for reporting dividends and sale
proceeds received by the participant. See Question 29 regarding voting of
proxies.
DIVIDENDS ON FRACTIONS OF SHARES AND ELECTRONIC DEPOSIT
19. Will participants be paid or credited with dividends on fractions of shares?
Yes.
20. Will the Company automatically deposit dividends which are not reinvested
directly into a participant's designated account?
In lieu of receiving dividends by check, a participant may receive dividends
by electronic deposit to a designated account. A participant must complete and
sign a direct deposit authorization form and return it to Madison Gas and
Electric Company, Shareholder Services Department, Post Office Box 1231,
Madison, WI 53701-1231. Direct deposit will become effective as soon as
practicable after receipt of a properly completed direct deposit authorization
form. Changes in direct deposit instructions may be made by delivering a new
properly completed direct deposit authorization form.
CERTIFICATES FOR SHARES
21. Will certificates be issued for the Common Stock purchased?
Normally, certificates for Common Stock purchased under the Plan will not be
issued to participants. Instead, the Common Stock purchased for each participant
will be credited to the participant's Plan account by the Company and will be
shown on the participant's statement of account. This convenience protects
against loss, theft, or destruction of Common Stock certificates. See Question
17 regarding issuance of statements of account.
8
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Certificates for any number of whole shares credited to an account under the
Plan will be issued in the participant's name upon the written request of a
participant. A participant must furnish separate written instructions to the
Company each time the issuance of certificates is desired. Requests should be
mailed to Madison Gas and Electric Company, Shareholder Services Department,
Post Office Box 1231, Madison, WI 53701-1231. Requests for certificates will be
handled without charge to participants, but participants are restricted to one
request per quarter.
Certificates for fractions of shares will not be issued to a participant
under any circumstances. See Questions 24 and 25 regarding withdrawal of
fractional shares from the Plan.
Common Stock credited to the account of a participant under the Plan may not
be pledged. A participant who wishes to pledge Common Stock must request that
certificates for such Common Stock be issued in his or her name.
22. In whose name will certificates be registered when issued?
Accounts in the Plan will be maintained in a participant's name as shown on
the Company's shareholder records. Certificates for whole shares will be
similarly registered when issued.
Upon written request, certificates can also be registered and issued in
names other than that of a participant, subject to compliance with any
applicable laws and to payment by the participant of any applicable taxes, and
provided that the request, in proper form, bears the signature of the
participant and the signature is guaranteed by an eligible financial institution
acceptable to the Company's transfer agent.
SAFEKEEPING OF CERTIFICATES
23. Can certificates be sent to the Company for safekeeping?
Participants who wish to have the Company hold their certificated shares in
safekeeping may send the certificate(s) to the Company for deposit to a Plan
account in the participant's name. Send the certificate, unsigned, with an
Enrollment Form to Madison Gas and Electric Company, Shareholder Services
Department, Post Office Box 1231, Madison, WI 53701-1231. Enrollment Forms may
be obtained at any time by writing to the Company or telephoning the Company at
the appropriate toll-free number listed on page 15. It is recommended the
certificate(s) be sent by registered or certified mail, return receipt
requested. Participants bear all risk of loss in sending certificates for
safekeeping. Certificates received for safekeeping will be canceled and
registered in the name of the Nominee as custodian for participants in the Plan.
Participants using safekeeping services must advise the Company as to their
choice of dividend payment options by indicating their choice on the Enrollment
Form under "Participation."
WITHDRAWAL
24. What are the options for withdrawal of Common Stock from the Plan?
When a participant withdraws all or a portion of his or her Common Stock
from the Plan, the participant has five options. A participant may elect (i) to
have a certificate issued for all of the whole shares credited to the
participant's Plan account and receive a cash payment for any fraction of a
share, (ii) to have the Company sell all of the participant's Plan shares and
receive a check for the proceeds, (iii) to have a certificate issued for a
specified number of whole shares to be withdrawn from the Plan, leaving the
remaining shares in the Plan, (iv) to have the Company sell a specified number
of Plan shares and receive a check for the proceeds, leaving the remaining
shares in the Plan, or (v) to discontinue reinvestment of dividends but continue
to have shares held in safekeeping.
25. When and how may participants withdraw all or a portion of their Common
Stock from the Plan?
A participant may withdraw from the Plan at any time by sending a written
request to Madison Gas and Electric Company, Shareholder Services Department,
Post Office Box 1231, Madison, WI 53701-1231.
9
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When a participant requests to withdraw all of his or her Common Stock from
the Plan, termination of participation in the Plan will be effective upon the
issuance of a certificate or sale of his or her Common Stock. If a participant
withdraws all of his or her Common Stock from the Plan and requests a
certificate for the shares, a certificate for all of the whole shares credited
to the participant's Plan account will be issued and a cash payment representing
any fraction of a share will be mailed directly to the participant. The cash
payment to each such participant will be based on the actual sales price when
accumulated fractional sales of withdrawing participants are sold through the
Plan.
If a request for withdrawal is received less than 30 days preceding a
Dividend Date, the request may be held until dividend processing is complete.
Sales of whole shares and any fractional shares will be made directly to the
Agent. The sale price to participants of shares sold through the Plan will be
the market price, including normal brokerage commissions, carried to four
decimal places, of shares purchased by the Agent. Sale proceeds will be mailed
to the participant. Sales of whole and fractional shares may be accumulated;
sales transactions will, however, normally occur weekly and at least every 30
days. Participants will receive certificates for shares or cash for shares which
are sold no later than 30 days after the Company's receipt of the written notice
of withdrawal.
The Company cannot guarantee that shares will be sold on any specific day or
at any specific price.
26. When may former participants rejoin the Plan?
Generally, a former participant may again become a participant at any time
(see Question 8). However, the Company reserves the right to reject any
Enrollment Form from a previous participant on grounds of excessive joining and
termination. Such reservation is intended to minimize unnecessary administrative
expense and to encourage use of the Plan as a long-term investment service.
OTHER INFORMATION
27. When and how may participants change their status concerning dividend
reinvestment in the Plan?
Participants may change their status at any time by indicating a new
designation on an Enrollment Form. However, if a participant's request to change
is received less than 30 days preceding a Dividend Date, the dividend paid on
such date may, at the option of the Company, be processed under the
participant's previous designation. All requests to change will be processed as
promptly as possible.
28. What happens if the Company issues a stock dividend or declares a stock
split?
Any stock dividends or split shares distributed by the Company on Common
Stock held in the Plan for a participant will be credited to the participant's
Plan account. Stock dividends or split shares distributed on certificated shares
registered in the name of a participant will be registered in the participant's
name and may be issued in certificate form.
29. How will participants' Common Stock be voted at meetings of shareholders?
The Common Stock credited to a participant's account may only be voted in
accordance with the participant's instructions given on a proxy form which will
be furnished to all shareholders.
30. What is the responsibility of the Company and the Nominee under the Plan?
Neither the Company, the Agent, the Nominee, nor any agents, in
administering the Plan, will be liable for any act done in good faith, or for
any omission to act in good faith, including, without limitation, any act giving
rise to a claim of liability arising out of failure to terminate a participant's
account upon such participant's death prior to the receipt of notice in writing
of such death.
A participant should recognize that neither the Company, the Agent, the
Nominee, nor any agents can assure a profit or protect against a loss on the
Common Stock purchased or sold under the Plan.
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The foregoing does not affect a participant's right to bring a cause of
action based on alleged violations of federal securities laws.
31. What provision is made for shareholders whose dividends are subject to tax
withholding?
In the case of participating shareholders whose dividends are subject to tax
withholding, the Company will invest an amount equal to the cash dividend
declared by the Company less the amount of tax required to be withheld. Only the
net dividend will be applied by the Company to the purchase of Common Stock. The
Company's quarterly statements for such participants will indicate the amount of
tax withheld and the net dividend reinvested by the Company.
32. Can the Plan be changed or discontinued?
The Company reserves the right to suspend, modify, or terminate the Plan at
any time. Notice of any such suspension, modification, or termination will be
sent to all affected participants.
33. Who interprets and regulates the Plan?
The Company reserves the right to interpret and regulate the Plan.
34. Which law governs the Plan?
The Plan is governed by and construed in accordance with the laws of the
State of Wisconsin.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax information in Questions 35 through 37 is provided
only as a guide to noncorporate participants who hold shares of Common Stock as
a capital asset. All participants are urged to consult with their own tax
advisors for more specific information on rules regarding the tax consequences
of the Plan under federal and state income tax laws and the tax basis of shares
held under the Plan in special cases, such as the death of a participant or a
gift of such shares and for other tax consequences.
Because state income tax laws vary between states, information on state tax
consequences is not discussed in this Prospectus. Plan participants are urged to
consult with their own tax advisors regarding the tax consequences of Plan
participation under the specific state and local income tax laws to which they
are subject.
35. What are the federal income tax consequences of participation in the Plan?
Participants in the Plan will be subject to federal income tax on dividends
they elect to have reinvested under the Plan even though such Participants will
not actually receive cash. If the shares purchased with such reinvested
dividends are purchased on the open market, the participant will be treated for
federal income tax purposes as having received the cash dividend used to
purchase such shares. If the shares purchased with such reinvested dividends are
newly issued or treasury shares, the participant will be treated as having
received a taxable dividend in an amount equal to the fair market value of such
shares on the Dividend Date.
Generally, any dividends described above will be taxable to participants as
ordinary dividend income to the extent of the Company's current or accumulated
earnings and profits for federal income tax purposes. The amount of any
dividends in excess of such earnings and profits will reduce a participant's tax
basis in the Common Stock with respect to which such dividend was received, and,
to the extent in excess of such basis, result in capital gain.
Participants in the Plan will not recognize any income for federal income
tax purposes upon the purchase of shares of Common Stock with Initial
Investments and Optional Cash Payments. See Question 36 regarding the tax basis
of such shares.
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36. What is the federal income tax basis and holding period of shares of Common
Stock acquired under the Plan?
As a general rule, the tax basis of shares (or any fraction of a share) of
Common Stock acquired under the Plan will equal (i) in the case of shares
purchased on the open market, the purchase price for such shares (or fractional
share), including any brokerage commissions, and (ii) in the case of newly
issued shares or treasury shares, the fair market value of such shares on the
Dividend Date.
The holding period for shares of Common Stock acquired under the Plan (or a
fraction thereof) will begin on the day following the purchase date.
37. What are the federal income tax consequences of a sale of Common Stock
acquired under the Plan?
A participant will not be subject to any federal income tax upon receipt of
certificates for whole shares of Common Stock previously credited to the
participant's account, whether upon request, withdrawal from the Plan, or the
Company's termination thereof. However, gain or loss will be realized when
shares are sold and with respect to any cash payment by the Company in lieu of
issuance of a fractional share of Common Stock. The gain or loss will be equal
to the difference between the amount received for such shares and the
participant's tax basis therefor. If shares of Common Stock acquired under the
Plan are held for more than one year, the gain or loss realized upon the sale
thereof generally will be long-term capital gain or loss; if such shares are
held for a shorter period, such gain or loss will be short-term capital gain or
loss.
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<PAGE>
DESCRIPTION OF COMMON STOCK
GENERAL
The Company is authorized by its Restated Articles of Incorporation, as
amended (the "Articles"), to issue 50,000,000 shares of Common Stock ($1 par
value), of which 16,079,718 shares were issued and outstanding as of March 31,
1998, and 1,175,000 shares of $25 par value redeemable preferred stock,
cumulative, no shares of which are outstanding. None of the Common Stock has
been redeemed or is held as treasury stock.
The following statements are summaries relating to the Common Stock of
certain provisions of the Articles, of the Wisconsin Business Corporation Law,
and of the Company's Indenture of Mortgage and Deed Trust (the "Indenture").
VOTING RIGHTS NONCUMULATIVE VOTING
Except as described below under "Limitation of Voting Rights of Substantial
Shareholders," each share of Common Stock entitles the holder thereof to one
vote for each share held on each matter submitted to a vote at a meeting of
shareholders and in all elections of directors. Since the Common Stock does not
have cumulative voting rights, the holders of more than 50% of the shares, if
they choose to do so, can elect all of the directors. The holders of Common
Stock exclusively possess the full voting power of the Company.
LIMITATION OF VOTING RIGHTS OF SUBSTANTIAL SHAREHOLDERS
The Company's Articles provide that so long as any person is a Substantial
Shareholder (as defined), the record holders of the shares of the Company's
Voting Stock (as defined) beneficially owned by such Substantial Shareholder
have limited voting rights. These provisions may render more difficult or
discourage a merger or takeover of the Company, the acquisition of control of
the Company by a Substantial Shareholder, and the removal of incumbent
management. "Voting Stock" is defined to include Common Stock and any class or
series of preferred or preference stock then outstanding entitling the holder
thereof to vote on the matter with respect to which a determination is being
made, unless the shareholders or Board of Directors expressly exempt such class
or series from such provisions.
A "Substantial Shareholder" is defined as any person or entity (other than
the Company or a subsidiary and other than employee benefit plans of the Company
or any subsidiary and the trustees thereof), or any group formed for the purpose
of acquiring, holding, voting, or disposing of shares of Voting Stock, that is
the beneficial owner of Voting Stock representing 10% or more of the votes
entitled to be cast by the holders of all the then outstanding shares of Voting
Stock. For purposes of the Articles, a person is deemed to be a "beneficial
owner" of any shares of Voting Stock which such person (or any of its affiliates
or associates) beneficially owns, directly or indirectly, or has the right to
acquire or to vote, or which are beneficially owned, directly or indirectly, by
any other person with which such person (or any of its affiliates or associates)
has an agreement, arrangement, or understanding for the purpose of acquiring,
holding, voting, or disposing of Voting Stock.
A Substantial Shareholder (including the shareholders of record of its
beneficially owned shares) is entitled to cast one vote per share (or such other
number of votes per share as may be specified in or pursuant to the Articles)
with respect to the shares of Voting Stock which would entitle such Substantial
Shareholder to cast up to 10% of the total number of votes entitled to be cast
in respect of all the outstanding shares of Voting Stock. With respect to shares
of Voting Stock that would entitle such Substantial Shareholder to cast more
than 10% of such total number of votes, however, the Substantial Shareholder is
entitled to only one/one-hundredth (1/100th) of the votes per share which it
would otherwise be entitled to cast. In addition, in no event may such
Substantial Shareholder exercise more than
13
<PAGE>
15% of the total voting power of the holders of Voting Stock (after giving
effect to the foregoing limitations).
If the shares of Voting Stock beneficially owned by a Substantial
Shareholder are held of record by more than one person, the aggregate voting
power of all such persons, as limited by the provisions described above, will be
allocated in proportion to the number of shares held. In addition, the Articles
provide that a majority of the voting power of all the outstanding shares of
Voting Stock (after giving effect to the foregoing limitations on voting rights)
constitutes a quorum at all meetings of shareholders.
The following is an example of how the foregoing provisions would operate if
the Company had 1,000 outstanding shares of Voting Stock. If a Substantial
Shareholder beneficially owned 600 of the shares, he or she would be entitled to
100 votes for his or her first 100 shares and, on the basis of the limitation on
voting rights with respect to shares in excess of 10%, an additional five votes
for his or her remaining 500 shares. These 105 votes would be out of a total of
505 votes then entitled to be cast (that is, 105 votes by the Substantial
Shareholder and 400 votes by all other shareholders). Then, because these 105
votes would constitute 21% of the total number of votes, the provisions of the
Articles would further limit the Substantial Shareholder to approximately 71
votes of a total of approximately 471 entitled to be cast by all shareholders
(15% of the total number of votes entitled to be cast). As a result of the
limitation of the Substantial Shareholder's voting rights, the voting power of
the other shareholders increases from 40% to 85%.
Accordingly, beneficial owners of more than 10% of the outstanding shares of
Voting Stock will be unable to exercise voting rights proportionate to their
equity interests.
Generally, Section 180.1150 of the Wisconsin Statutes states that the voting
power of shares of certain Wisconsin corporations, including the Company, held
by any person in excess of 20% of the voting power in the election of directors
is limited to 10% of his or her full voting power. In other words, a person
holding 500 shares of such a corporation with 1,000 shares outstanding would be
limited to 230 votes on any matter subjected to a shareholder vote. Full voting
power may be restored if a majority of the voting power shares represented at a
meeting are voted in favor of such a restoration.
DIVIDEND RIGHTS
Dividends may be paid upon the Common Stock as and when declared by the
Board of Directors out of any funds legally available therefor.
Under the terms of three supplemental indentures to the Indenture, so long
as any of the bonds authorized by any such Supplemental Indenture are
outstanding, dividends on the Common Stock cannot exceed retained income less
such dividends less the excess of the maintenance and replacement requirements
over the maintenance, repairs, and depreciation expenses, in each case
accumulated since December 31, 1945. No portion of retained income is so
restricted at this time.
Under the terms of all other supplemental indentures to the Indenture, so
long as any of the bonds authorized by any such Supplemental Indenture are
outstanding, dividends on the Common Stock cannot exceed retained income less
such dividends, in each case accumulated since December 31, 1945. No portion of
retained income is so restricted at this time.
LIQUIDATION RIGHTS
In the event the Company is liquidated or dissolved, after all of the
Company's liabilities have been paid, and after any holders of any other stock
having senior liquidation preferences to Common Stock have been paid or had
funds set aside in accordance with the Articles, the holders of the then
outstanding Common Stock are entitled to receive pro rata the remaining assets
available for distribution.
14
<PAGE>
PREEMPTIVE AND SUBSCRIPTION RIGHTS
No holder of any class of stock of the Company, including the Common Stock,
has any preemptive or subscription rights.
LIABILITY TO FURTHER CALLS OR TO ASSESSMENT
The shares of Common Stock, when issued and delivered by the Company and
paid for as herein contemplated, will be fully paid and nonassessable by the
Company. However, in accordance with Section 180.0622(2)(b) of the Wisconsin
Business Corporation Law, shareholders may be personally liable for an amount
equal to the par value for all debts owing to employees of the Company for
services performed, but not exceeding six months' service in any one case.
MISCELLANEOUS
The Company reserves the right to increase, decrease, or reclassify its
authorized capital stock, or any class or series thereof, and to amend or repeal
any provisions in the Articles or in any amendment thereto in the manner now or
hereafter prescribed by law, subject to the limitations in the Articles; and all
rights conferred on the holders of Common Stock in the Articles or any amendment
thereto are subject to this reservation. There are no conversion rights with
respect to any class of capital stock of the Company.
COMMON STOCK DIVIDENDS AND MARKET
The Company has paid dividends on Common Stock in varying amounts since it
became publicly held.
The Company's practice of paying dividends quarterly (in March, June,
September, and December), the time of payment, and the amount of future
dividends are necessarily dependent upon, the Company's earnings, financial
requirements, and other factors.
The Common Stock is traded in the over-the-counter market and is quoted on
the Nasdaq National Market under the symbol "MDSN."
Information and assistance with respect to the Plan may be obtained by
writing to Madison Gas and Electric Company, Shareholder Services Department,
Post Office Box 1231, Madison, WI 53701-1231, or by telephoning the Company at
the appropriate toll-free number:
252-4744 From Madison, Wisconsin
1-800-362-6423 All other Wisconsin calls
1-800-356-6423 Outside Wisconsin (continental U.S.)
A participant should include his or her name, address, account number,
telephone number during business hours, and taxpayer identification number with
all correspondence. Participants should notify the Company of any change in
address.
LEGAL MATTERS
Legal matters with respect to the Common Stock offered hereby will be passed
upon for the Company by Gary J. Wolter, Senior Vice President--Administration
and Secretary of the Company. Mr. Wolter beneficially owns shares of Common
Stock.
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company and its subsidiaries included (or incorporated by reference) in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997,
incorporated by reference herein, have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as indicated in their report with respect thereto, and
are so incorporated by reference herein in reliance upon the authority of said
firm as experts in accounting and auditing matters.
15
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information........................... 4
Incorporation of Certain Information by
Reference..................................... 4
The Company..................................... 5
Description of the Plan......................... 5
Description of Common Stock..................... 12
Common Stock Dividends and Market............... 14
Legal Matters................................... 14
Experts......................................... 14
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES OFFERED
BY THIS PROSPECTUS OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF, OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SINCE ITS DATE.
MADISON GAS AND
ELECTRIC COMPANY
INVESTORS PLUS PLAN
---------------------
PROSPECTUS
---------------------
, 1998
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<PAGE>
SUBJECT TO COMPLETION, DATED JULY 22, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
MADISON GAS AND ELECTRIC COMPANY
COMMON STOCK $1 PAR VALUE
Madison Gas and Electric Company (the "Company") may offer from time to
time, at prices and on terms to be determined at or prior to the time of sale,
shares of its Common Stock, $1 par value. ("Common Stock"). Prospectus
Supplements to this Prospectus will set forth the number of shares of Common
Stock being offered hereunder from time to time, the underwriters for the shares
being offered and the underwriting discounts and commissions, the net proceeds
to the Company and the specific terms and conditions of such offer and the
public offering price per share. The aggregate price paid for shares of Common
Stock offered pursuant to the Company's Investors Plus Plan under this
Prospectus and the initial public offering price of Medium-Term Notes and shares
of Common Stock offered by separate prospectuses under the registration
statement referred to below of which this Prospectus is a part, will not exceed
$65,000,000.
The Common Stock is quoted on the Nasdaq National Market under the symbol
"MDSN."
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 SUCH STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Company has filed
with the Commission a registration statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"),with respect to the shares of Common Stock offered hereby and certain
other securities. This Prospectus does not contain all information set forth in
the Registration Statement and reference is hereby made to the Registration
Statement and the exhibits thereto for further information with respect to the
Company and the shares of Common Stock offered hereby. Such reports, proxy
statements, Registration Statement and exhibits and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
its Northeast Regional Office located at 7 World Trade Center, Suite 1300, New
York, New York 10048 and Midwest Regional Office located at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Company
is subject to the electronic filing requirements of the Commission. Accordingly,
pursuant to the rules and regulations of the Commission, certain documents,
including annual and quarterly reports and proxy statements, filed by the
Company with the Commission have been and will filed electronically. The
Commission maintains a World Wide Web site that contains reports, proxy and
information statements and other information regarding registrants (including
the Company) that file electronically with the Commission at http://www.sec.gov.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Annual Report of the Company on Form 10-K for the year ended December
31, 1997 and the Quarterly Report of the Company on Form 10-Q for the quarter
ended March 31, 1998 are incorporated by reference into this Prospectus. All
documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this Prospectus and prior to the termination
of the offering of the Notes contemplated hereby shall be deemed to be
incorporated by reference into this Prospectus and to be made a part hereof from
the respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of the
Registration Statement and this Prospectus to the extent that a statement
contained in this Prospectus, in the applicable Prospectus Supplement or in any
subsequently filed document which also is or is deemed to be incorporated by
reference in this Prospectus 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 the Registration Statement or this
Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, 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 referred to above which have been or may be incorporated in this
Prospectus by reference, other than certain exhibits to such documents. Requests
for such copies should be directed to Terry A. Hansen, Vice President --
Finance, Madison Gas and Electric Company, Post Office Box 1231, Madison, WI
53701-1231, telephone: (608) 252-7000.
2
<PAGE>
THE COMPANY
The Company, a Wisconsin corporation organized as such in 1896, is a public
utility located in Madison, Wisconsin. It is engaged in generating and
transmitting electric energy and distributing it to approximately 117,000
customers throughout 250 square miles in Dane County. The Company also
distributes and transports natural gas to approximately 97,000 customers
throughout 975 square miles in Dane, Columbia, Iowa, Juneau, Monroe and Vernon
counties. The principal executive offices of the Company are located at 133
South Blair Street, Post Office Box 1231, Madison, Wisconsin 53701-1231, and its
telephone number is (608) 252-7000.
USE OF PROCEEDS
Except as may be set forth in the Prospectus Supplement, the Company intends
to use the net proceeds from the sale of shares of Common Stock for its general
corporate purposes, including the financing of capital expenditures, the
refinancing of indebtedness, possible business investments and acquisitions.
Pending such applications, the net proceeds would be temporarily invested in
marketable securities.
DESCRIPTION OF COMMON STOCK
GENERAL
The Company is authorized by its Restated Articles of Incorporation, as
amended (the "Articles"), to issue 50,000,000 shares of Common Stock ($1 par
value), of which 16,079,718 shares were issued and outstanding as of March 31,
1998, and 1,175,000 shares of $25 par value redeemable preferred stock,
cumulative, no shares of which are outstanding. None of the Common Stock has
been redeemed or is held as treasury stock.
The following statements are summaries relating to the Common Stock of
certain provisions of the Articles, of the Wisconsin Business Corporation Law,
and of the Company's Indenture of Mortgage and Deed Trust (the "Indenture").
VOTING RIGHTS NONCUMULATIVE VOTING
Except as described below under "Limitation of Voting Rights of Substantial
Shareholders," each share of Common Stock entitles the holder thereof to one
vote for each share held on each matter submitted to a vote at a meeting of
shareholders and in all elections of directors. Since the Common Stock does not
have cumulative voting rights, the holders of more than 50% of the shares, if
they choose to do so, can elect all of the directors. The holders of Common
Stock exclusively possess the full voting power of the Company.
LIMITATION OF VOTING RIGHTS OF SUBSTANTIAL SHAREHOLDERS
The Company's Articles provide that so long as any person is a Substantial
Shareholder (as defined), the record holders of the shares of the Company's
Voting Stock (as defined) beneficially owned by such Substantial Shareholder
have limited voting rights. These provisions may render more difficult or
discourage a merger or takeover of the Company, the acquisition of control of
the Company by a Substantial Shareholder, and the removal of incumbent
management. "Voting Stock" is defined to include Common Stock and any class or
series of preferred or preference stock then outstanding entitling the holder
thereof to vote on the matter with respect to which a determination is being
made, unless the shareholders or Board of Directors expressly exempt such class
or series from such provisions.
A "Substantial Shareholder" is defined as any person or entity (other than
the Company or a subsidiary and other than employee benefit plans of the Company
or any subsidiary and the trustees thereof), or any group formed for the purpose
of acquiring, holding, voting, or disposing of shares of
3
<PAGE>
Voting Stock, that is the beneficial owner of Voting Stock representing 10% or
more of the votes entitled to be cast by the holders of all the then outstanding
shares of Voting Stock. For purposes of the Articles, a person is deemed to be a
"beneficial owner" of any shares of Voting Stock which such person (or any of
its affiliates or associates) beneficially owns, directly or indirectly, or has
the right to acquire or to vote, or which are beneficially owned, directly or
indirectly, by any other person with which such person (or any of its affiliates
or associates) has an agreement, arrangement, or understanding for the purpose
of acquiring, holding, voting, or disposing of Voting Stock.
A Substantial Shareholder (including the shareholders of record of its
beneficially owned shares) is entitled to cast one vote per share (or such other
number of votes per share as may be specified in or pursuant to the Articles)
with respect to the shares of Voting Stock which would entitle such Substantial
Shareholder to cast up to 10% of the total number of votes entitled to be cast
in respect of all the outstanding shares of Voting Stock. With respect to shares
of Voting Stock that would entitle such Substantial Shareholder to cast more
than 10% of such total number of votes, however, the Substantial Shareholder is
entitled to only one/one-hundredth (1/100th) of the votes per share which it
would otherwise be entitled to cast. In addition, in no event may such
Substantial Shareholder exercise more than 15% of the total voting power of the
holders of Voting Stock (after giving effect to the foregoing limitations).
If the shares of Voting Stock beneficially owned by a Substantial
Shareholder are held of record by more than one person, the aggregate voting
power of all such persons, as limited by the provisions described above, will be
allocated in proportion to the number of shares held. In addition, the Articles
provide that a majority of the voting power of all the outstanding shares of
Voting Stock (after giving effect to the foregoing limitations on voting rights)
constitutes a quorum at all meetings of shareholders.
The following is an example of how the foregoing provisions would operate if
the Company had 1,000 outstanding shares of Voting Stock. If a Substantial
Shareholder beneficially owned 600 of the shares, he or she would be entitled to
100 votes for his or her first 100 shares and, on the basis of the limitation on
voting rights with respect to shares in excess of 10%, an additional five votes
for his or her remaining 500 shares. These 105 votes would be out of a total of
505 votes then entitled to be cast (that is, 105 votes by the Substantial
Shareholder and 400 votes by all other shareholders). Then, because these 105
votes would constitute 21% of the total number of votes, the provisions of the
Articles would further limit the Substantial Shareholder to approximately 71
votes of a total of approximately 471 entitled to be cast by all shareholders
(15% of the total number of votes entitled to be cast). As a result of the
limitation of the Substantial Shareholder's voting rights, the voting power of
the other shareholders increases from 40% to 85%.
Accordingly, beneficial owners of more than 10% of the outstanding shares of
Voting Stock will be unable to exercise voting rights proportionate to their
equity interests.
Generally, Section 180.1150 of the Wisconsin Statutes states that the voting
power of shares of certain Wisconsin corporations, including the Company, held
by any person in excess of 20% of the voting power in the election of directors
is limited to 10% of his or her full voting power. In other words, a person
holding 500 shares of such a corporation with 1,000 shares outstanding would be
limited to 230 votes on any matter subjected to a shareholder vote. Full voting
power may be restored if a majority of the voting power shares represented at a
meeting are voted in favor of such a restoration.
DIVIDEND RIGHTS
Dividends may be paid upon the Common Stock as and when declared by the
Board of Directors out of any funds legally available therefor.
Under the terms of three supplemental indentures to the Indenture, so long
as any of the bonds authorized by any such Supplemental Indenture are
outstanding, dividends on the Common Stock cannot
4
<PAGE>
exceed retained income less such dividends less the excess of the maintenance
and replacement requirements over the maintenance, repairs, and depreciation
expenses, in each case accumulated since December 31, 1945. No portion of
retained income is so restricted at this time.
Under the terms of all other supplemental indentures to the Indenture, so
long as any of the bonds authorized by any such Supplemental Indenture are
outstanding, dividends on the Common Stock cannot exceed retained income less
such dividends, in each case accumulated since December 31, 1945. No portion of
retained income is so restricted at this time.
LIQUIDATION RIGHTS
In the event the Company is liquidated or dissolved, after all of the
Company's liabilities have been paid, and after any holders of any other stock
having senior liquidation preferences to Common Stock have been paid or had
funds set aside in accordance with the Articles, the holders of the then
outstanding Common Stock are entitled to receive pro rata the remaining assets
available for distribution.
PREEMPTIVE AND SUBSCRIPTION RIGHTS
No holder of any class of stock of the Company, including the Common Stock,
has any preemptive or subscription rights.
LIABILITY TO FURTHER CALLS OR TO ASSESSMENT
The shares of Common Stock, when issued and delivered by the Company and
paid for as herein contemplated, will be fully paid and nonassessable by the
Company. However, in accordance with Section 180.0622(2)(b) of the Wisconsin
Business Corporation Law, shareholders may be personally liable for an amount
equal to the par value for all debts owing to employees of the Company for
services performed, but not exceeding six months' service in any one case.
MISCELLANEOUS
The Company reserves the right to increase, decrease, or reclassify its
authorized capital stock, or any class or series thereof, and to amend or repeal
any provisions in the Articles or in any amendment thereto in the manner now or
hereafter prescribed by law, subject to the limitations in the Articles; and all
rights conferred on the holders of Common Stock in the Articles or any amendment
thereto are subject to this reservation. There are no conversion rights with
respect to any class of capital stock of the Company.
COMMON STOCK DIVIDENDS AND MARKET
The Company has paid dividends on Common Stock in varying amounts since it
became publicly held.
The Company's practice of paying dividends quarterly (in March, June,
September, and December), the time of payment, and the amount of future
dividends are necessarily dependent upon, the Company's earnings, financial
requirements, and other factors.
The Common Stock is traded in the over-the-counter market and is quoted on
the Nasdaq National Market under the symbol "MDSN."
PLAN OF DISTRIBUTION
The Company may sell shares of Common Stock in and/or outside the United
States: (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 with the respect to the shares
of Common Stock being offered (the "Offered Shares") will set forth the terms of
the offering of the Offered Shares, including the name or names of any
underwriters or agents, the purchase price of the Offered Shares and the
proceeds
5
<PAGE>
to the Company from such sale, any underwriting discounts and other items
constituting underwriters' 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.
If underwriters are used in the sale, the Offered Shares 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 sale. The shares
of Common Stock may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more underwriters. The underwriter or underwriters with respect to a
particular underwritten offering of shares of Common Stock, or, if an
underwriting syndicate is used, the managing underwriter or underwriters, will
be set forth on the cover of the applicable Prospectus Supplement. Unless
otherwise set forth in the Prospectus Supplement relating thereto, the
obligations of the underwriters to purchase the Offered Shares will be subject
to conditions precedent and the underwriters will be obligated to purchase all
of the Offered Shares if any are purchased.
If dealers are utilized in the sale of Offered Shares in respect of which
this Prospectus is delivered, and if so specified in the applicable Prospectus
Supplement, the Company will sell such Offered Shares to the dealers as
principals. The dealers may then resell such Offered Shares to the public at
varying prices to be determined by such dealers at the time of resale. The names
of the dealers and the terms of the transaction will be set forth in the
applicable Prospectus Supplement.
The shares of Common Stock may be sold directly by the Company or through
agents designated by the Company from time to time. Any agent involved in the
offer or sale of the Offered Shares in respect to which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which the underwriters, dealers or agents may be
required to make in respect thereof. Underwriters, dealers and agents may be
customers of, may engage in transactions with, or perform services for, the
Company in the ordinary course of business.
LEGAL MATTERS
Legal matters with respect to the shares of Common Stock will be passed upon
for the Company by Stafford, Rosenbaum, Rieser & Hansen, Madison, Wisconsin, and
by Sidley & Austin, Chicago, Illinois, and for any underwriters, dealers,
purchasers or agents by Jones, Day, Reavis & Pogue, Chicago, Illinois. The
Company is advised that as of July 21, 1998, an attorney at the firm of
Stafford, Rosenbaum, Rieser & Hansen, who has participated in the preparation of
this Prospectus and the Registration Statement, and who will participate in the
rendition of the firm's opinions with respect to the shares of Common Stock,
owned beneficially 6,525 shares of the Common Stock.
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company and its subsidiaries included (or incorporated by reference) in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997,
incorporated by reference herein, have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as indicated in their report with respect thereto, and
are so incorporated by reference herein in reliance upon the authority of said
firm as experts in accounting and auditing matters.
6
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information........................... 2
Incorporation of Certain Information by
Reference..................................... 2
The Company..................................... 3
Use of Proceeds................................. 3
Description of Common Stock..................... 3
Common Stock Dividends and Market............... 5
Plan of Distribution............................ 5
Legal Matters................................... 6
Experts......................................... 6
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES OFFERED
BY THIS PROSPECTUS OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF, OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SINCE ITS DATE.
MADISON GAS AND
ELECTRIC COMPANY
COMMON STOCK
---------------------
PROSPECTUS
---------------------
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Fee--Securities and Exchange Commission.............................. $ 19,175
Public Service Commission of Wisconsin Fee........................................ 1,500
Accounting fees and expenses...................................................... 25,000
Printing expenses................................................................. 36,000
Trustee fees and expenses......................................................... 20,000
Legal fees and expenses........................................................... 80,000
Miscellaneous..................................................................... 18,325
---------
Total......................................................................... $ 200,000
---------
---------
</TABLE>
All of the above items except the Registration Fee are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to the provisions of the Wisconsin Business Corporation Law and
Article IX of the Registrant's By-Laws, directors and officers of the Registrant
are entitled to mandatory indemnification from the Registrant against certain
liabilities (which may include liabilities under the Securities Act of 1933) and
expenses (i) to the extent such officers or directors are successful in the
defense of a proceeding; and (ii) in proceedings in which the director or
officer is not successful in defense thereof, unless it is determined that the
director or officer breached or failed to perform his or her duties to the
Registrant and such breach or failure constituted: (a) a willful failure to deal
fairly with the Registrant or its shareholders in connection with a matter in
which the director or officer had a material conflict of interest; (b) a
violation of criminal law unless the director or officer had reasonable cause to
believe his or her conduct was lawful or had no reasonable cause to believe his
or her conduct was unlawful; (c) a transaction from which the director or
officer derived an improper personal profit; or (d) willful misconduct.
Additionally, under the Wisconsin Business Corporation Law, directors of the
Registrant are not subject to personal liability to the Registrant, its
shareholders, or any person asserting rights on behalf thereof, for certain
breaches or failures to perform any duty resulting solely from their status as
directors, except in circumstances paralleling those outlined above.
Directors and officers of the Registrant are insured, at the expense of the
Registrant, against certain liabilities which might arise out of their
employment and which might not be indemnified or indemnifiable under the
By-laws. The primary coverage is provided by a Directors and Officers Liability
Insurance Policy in customary form having a one-year term. The coverage also
applies to directors and officers of subsidiaries of the Registrant. No
deductibles or retentions apply to individual directors or officers.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Distribution Agreement for Medium Term Notes
1.2 Form of Terms Agreement for Medium Term Notes
1.3 Form of Underwriting Agreement for Common Stock
4.1* Restated Articles of Incorporation of the Company, filed as Exhibit 3.(i) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994, File No. 0-1125, is hereby incorporated by
reference.
4.2* By-laws of the Company, filed as Exhibit 3B to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991, File No. 0-1125, is hereby incorporated by reference.
4.3* Indenture of Mortgage and Deed of Trust between the Company and First Wisconsin Trust Company (now known
as Firstar Trust Company), as Trustee, dated as of January 1, 1946 (Exhibit 7-D to file No. 2-6059), and
the following indentures supplemental thereto, respectively, the Fifth Supplemental Indenture dated as of
June 1, 1966 (Exhibit 4-B-6 to file No. 2-25244), the Seventh Supplemental Indenture dated as of January
15, 1971 (Exhibit 2.08 to file No. 2-38980), the Tenth Supplemental Indenture dated as of November 1,
1976 (Exhibit 2.03 to file No. 2-60227), the Fourteenth Supplemental Indenture dated as of April 1, 1992
(Exhibit 4C to file No. 0-1125), the Fifteenth Supplemental Indenture dated as of April 1, 1992 (Exhibit
4D to file No. 0-1125), the Sixteenth Supplemental Indenture dated as of October 1, 1992 (Exhibit 4E to
file No. 0-1125), and the Seventeenth Supplemental Indenture dated as of February 1, 1993 (Exhibit 4F to
file No. 0-1125).
4.4 Form of Medium-Term Note Indenture.
4.5 Form of Global fixed Rate Note (included in Exhibit4.4)
4.6 Form of Fixed Rate Note (included in Exhibit 4.4)
4.7 Form of Global Floating Rate Note (included in Exhibit 4.4)
4.8 Form of Floating Rate Note (included in Exhibit 4.4)
4.9 Form of Interest Calculation Agency Agreement.
5.1 Opinion of Gary Wolter, Esq.
5.2 Opinion of Stafford, Rosenbaum, Rieser and Hansen
5.3 Opinion of Sidley & Austin
12* Statements regarding computation of ratios are hereby incorporated by reference to the Company's Annual
Reports on Form 10-K for the Years Ended December 31, 1997, 1996, 1995, 1994 and 1993, and the Company's
Quarterly Report on Form 10-Q for the Quarter ended March 31, 1998.
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Gary Wolter, Esq. (included in Exhibit 5.1)
23.3 Consent of Stafford, Rosenbaum, Rieser & Hansen (included in Exhibit 5.2)
23.4 Consent of Sidley & Austin (included in Exhibit 5.3).
24 Powers of Attorney (included on signature page).
25 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of Bank One,
N.A.
</TABLE>
- ------------------------
* The exhibits listed above and marked with an asterisk were filed as exhibits
to Registration Statements or Reports previously filed with the Commission
under the exhibit number and Registration or File number as shown after each
such exhibit, and they are hereby incorporated herein by reference.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
* * * * *
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Madison, State of Wisconsin, on this 17th day of July
1998.
MADISON GAS AND ELECTRIC COMPANY
By: /s/ DAVID C. MEBANE
-----------------------------------------
David C. Mebane
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated on this 17th day of July, 1998.
Each person whose signature appears below constitutes and appoints David C.
Mebane and Gary J. Wolter, and each of them, his or her true and lawful
attorney-in-fact and agent, with full power of substitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments to this Registration Statement (including post-effective
amendments), and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto such attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying all that such attorneys-in-fact
and agents, or any of them or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ ---------------------------
<C> <S>
Chairman, President and
/s/ DAVID C. MEBANE Chief Executive Officer
- ------------------------------ (Principal Executive
David C. Mebane Officer)
Vice President-Terry A.
/s/ TERRY A. HANSEN Hansen Finance (Principal
- ------------------------------ Financial Officer and
Terry A. Hansen Principal Accounting
Officer)
/s/ JEAN MANCHESTER BIDDICK Director
- ------------------------------
Jean Manchester Biddick
/s/ RICHARD E. BLANEY Director
- ------------------------------
Richard E. Blaney
/s/ REGINA M. MILLNER Director
- ------------------------------
Regina M. Millner
/s/ FREDERIC E. MOHS Director
- ------------------------------
Frederic E. Mohs
/s/ PHILLIP C. STARK Director
- ------------------------------
Phillip C. Stark
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ ---------------------------
<C> <S>
/s/ H. LEE SWANSON Director
- ------------------------------
H. Lee Swanson
/s/ FRANK C. VONDRASEK Director
- ------------------------------
Frank C. Vondrasek
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Distribution Agreement for Medium Term Notes
1.2 Form of Terms Agreement for Medium Term Notes
1.3 Form of Underwriting Agreement for Common Stock
4.1* Restated Articles of Incorporation of the Company, filed as Exhibit 3.(i) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994, File No. 0-1125, is hereby incorporated by
reference.
4.2* By-laws of the Company, filed as Exhibit 3B to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1991, File No. 0-1125, is hereby incorporated by reference.
4.3* Indenture of Mortgage and Deed of Trust between the Company and First Wisconsin Trust Company (now known
as Firstar Trust Company), as Trustee, dated as of January 1, 1946 (Exhibit 7-D to file No. 2-6059), and
the following indentures supplemental thereto, respectively, the Fifth Supplemental Indenture dated as of
June 1, 1966 (Exhibit 4-B-6 to file No. 2-25244), the Seventh Supplemental Indenture dated as of January
15, 1971 (Exhibit 2.08 to file No. 2-38980), the Tenth Supplemental Indenture dated as of November 1,
1976 (Exhibit 2.03 to file No. 2-60227), the Fourteenth Supplemental Indenture dated as of April 1, 1992
(Exhibit 4C to file No. 0-1125), the Fifteenth Supplemental Indenture dated as of April 1, 1992 (Exhibit
4D to file No. 0-1125), the Sixteenth Supplemental Indenture dated as of October 1, 1992 (Exhibit 4E to
file No. 0-1125), and the Seventeenth Supplemental Indenture dated as of February 1, 1993 (Exhibit 4F to
file No. 0-1125).
4.4 Form of Medium-Term Note Indenture.
4.5 Form of Global fixed Rate Note (included in Exhibit 4.4)
4.6 Form of Fixed Rate Note (included in Exhibit 4.4)
4.7 Form of Global Floating Rate Note (included in Exhibit 4.4)
4.8 Form of Floating Rate Note (included in Exhibit 4.4)
4.9 Form of Interest Calculation Agency Agreement.
5.1 Opinion of Gary Wolter, Esq.
5.2 Opinion of Stafford, Rosenbaum, Rieser and Hansen
5.3 Opinion of Sidley & Austin
12* Statements regarding computation of ratios are hereby incorporated by reference to the Company's Annual
Reports on Form 10-K for the Years Ended December 31, 1997, 1996, 1995, 1994 and 1993, and the Company's
Quarterly Report on Form 10-Q for the Quarter ended March 31, 1998.
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Gary Wolter, Esq. (included in Exhibit 5.1)
23.3 Consent of Stafford, Rosenbaum, Rieser & Hansen (included in Exhibit 5.2)
23.4 Consent of Sidley & Austin (included in Exhibit 5.3).
24 Powers of Attorney (included on signature page).
25 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of Bank One,
N.A.
</TABLE>
- ------------------------
* The exhibits listed above and marked with an asterisk were filed as exhibits
to Registration Statements or Reports previously filed with the Commission
under the exhibit number and Registration or File number as shown after each
such exhibit, and they are hereby incorporated herein by reference.
<PAGE>
EXHIBIT 1.1
MADISON GAS AND ELECTRIC COMPANY
MEDIUM-TERM NOTES DUE NOT LESS THAN
9 MONTHS FROM DATE OF ISSUE
DISTRIBUTION AGREEMENT
_______________, 1998
Agents
Addresses
Dear Sirs:
Madison Gas and Electric Company, a Wisconsin corporation (the
"Company"), confirms its agreement with ________________________________
___________________ (each, an "Agent" and, together, the "Agents") with
respect to the issue and sale by the Company of its Medium-Term Notes described
herein (the "Notes"). The Notes are to be issued pursuant to an indenture (the
"Indenture") dated as of _______________, 1998 between the Company and
Bank One, N.A., as trustee (the "Trustee"). As of the date hereof, the
Company has authorized the issuance and sale of up to $65,000,000 aggregate
principal amount of Notes through the Agents pursuant to the terms of this
Agreement. It is understood, however, that the Company from time to time may
reduce the maximum principal amount of Notes which it may issue and sell or
authorize the issuance of additional Notes and that such additional Notes may
be sold through or to the Agents pursuant to the terms of this Agreement, all
as though the issuance of such Notes were authorized as of the date hereof.
This Agreement provides both for the sale of Notes by the Company directly
to purchasers, in which case the Agents will act as agents of the Company in
soliciting Note purchases, and (as may from time to time be agreed to by the
Company and the Agents) to the Agents as principal for resale to purchasers.
The Company has filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form S-3 (No. 333- ) for the registration
of certain securities,
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including the Notes, under the Securities Act of 1933 (the "1933 Act") and
the offering thereof from time to time in accordance with Rule 415 of the
rules and regulations of the SEC under the 1933 Act (the "1933 Act
Regulations"). Such registration statement has been declared effective by
the SEC and the Indenture has been qualified under the Trust Indenture Act of
1939, as amended (the "1939 Act"). Such registration statement (and any
further registration statements which may be filed by the Company for the
purpose of registering additional Notes and in connection with which this
Agreement is included or incorporated by reference as an exhibit) and the
prospectus specifically relating to the Notes constituting a part thereof,
and any prospectus supplements (including pricing supplements) specifically
relating to the Notes, including all documents incorporated therein by
reference, as from time to time amended or supplemented by the filing of
documents pursuant to the Securities Exchange Act of 1934 (the "1934 Act") or
the 1933 Act or otherwise, are referred to herein as the "Registration
Statement" and the "Prospectus", respectively, except that if any revised
prospectus specifically relating to Notes shall be provided to the Agents by
the Company for use in connection with the offering of Notes which is not
required to be filed by the Company pursuant to Rule 424(b) of the 1933 Act
Regulations, the term "Prospectus" shall refer to such revised prospectus
from and after the time it is first provided to an agent for such use.
SECTION 1. APPOINTMENT AS AGENTS.
(a) APPOINTMENT OF AGENTS. Subject to the terms and conditions stated
herein and subject to the reservation by the Company of the right to sell Notes
directly on its own behalf, the Company hereby appoints each Agent as its agent
for the purpose of soliciting purchases of Notes from the Company by others and
agrees that, except as otherwise contemplated herein, whenever the Company
determines to sell Notes directly to an Agent or Agents as principal for resale
to others, it will enter into a Terms Agreement (hereafter defined) relating to
such sale in accordance with the provisions of Section 3(b) hereof. The Agents
are authorized to appoint sub-agents or to engage the services of any other
broker or dealer in connection with the offer or sale of Notes. The Company
agrees that, during the period any Agent is acting as the Company's Agent
hereunder, the Company will not contact or solicit potential investors
introduced to it by such Agent to purchase Notes. The Company may appoint, upon
one day prior written notice to the Agents, additional persons to serve as Agent
hereunder, but only if each such additional person agrees to be bound by all of
the terms of this Agreement as an agent.
(b) REASONABLE EFFORTS SOLICITATIONS; RIGHT TO REJECT OFFERS. Upon
receipt of instructions from the Company, the Agents will use
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their reasonable efforts to solicit purchases of such principal amount of
Notes as the Company and the Agents shall agree upon from time to time during
the term of this Agreement, it being understood that the Company shall not
approve the solicitation of purchases of Notes in excess of the amount which
shall be authorized by the Company from time to time or in excess of the
principal amount of Notes registered pursuant to the Registration Statement.
The Agents will have no responsibility for maintaining records with respect
to the aggregate principal amount of Notes sold, or of otherwise monitoring
the availability of Notes for sale under the Registration Statement. The
Agents will communicate to the Company, orally or in writing, each offer to
purchase Notes, other than those offers rejected by an Agent. Each Agent
shall have the right, in its discretion reasonably exercised, to reject any
proposed purchase of Notes, as a whole or in part, and any such rejection
shall not be deemed a breach of such Agent's agreement contained herein. The
Company may accept or reject any proposed purchase of Notes, in whole or in
part.
(c) SOLICITATIONS AS AGENT; PURCHASES AS PRINCIPAL. In soliciting
purchases of Notes on behalf of the Company, each Agent shall act solely as
agent for the Company and not as principal. Each Agent shall make reasonable
efforts to assist the Company in obtaining performance by each purchaser
whose offer to purchase Notes has been solicited by such Agent and accepted
by the Company. Such Agent shall not have any liability to the Company in
the event any such purchase is not consummated for any reason. Such Agent
shall not have any obligation to purchase Notes from the Company as
principal, but an Agent may agree from time to time to purchase Notes as
principal. Any such purchase of Notes by an Agent as principal shall be made
pursuant to a Terms Agreement in accordance with Section 3(b) hereof.
(d) RELIANCE. The Company and each Agent agree that any Notes the
placement of which such Agent arranges shall be placed by such Agent, and any
Notes purchased by such Agent shall be purchased, in reliance on the
representations, warranties, covenants and agreements of the Company contained
herein and on the terms and conditions and in the manner provided herein.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to each Agent as of the date
hereof, as of the date of each acceptance by the Company of an offer for the
purchase of Notes (whether through any Agent as agent or to any Agent as
principal), as of the date of each delivery of Notes (whether through such
Agent as agent or to such Agent as principal) (the date of each such delivery
to such Agent as principal being hereafter referred to as a "Settlement
Date"),
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and as of any time that the Registration Statement or the Prospectus shall be
amended or supplemented (other than by an amendment or supplement providing
solely for a change in the interest rates of Notes or similar changes) or
there is filed with the SEC any document incorporated by reference into the
Prospectus (other than any Current Report on Form 8-K relating exclusively to
the issuance of debt securities under the Registration Statement, unless the
Agents shall otherwise specify) (each of the times referenced above being
referred to herein as a "Representation Date") as follows:
(i) DUE INCORPORATION AND QUALIFICATION. The Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the state of Wisconsin with corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus; and the Company is not required to be
qualified as a foreign corporation to transact business in any other
jurisdiction.
(ii) SUBSIDIARIES. The Company has no significant subsidiaries, as
"significant subsidiary" is defined in Rule 405 of Regulation C of the 1933
Act Regulations.
(iii) REGISTRATION STATEMENT AND PROSPECTUS. At the time the
Registration Statement became effective, the Registration Statement
complied, and as of the applicable Representation Date will comply, in all
material respects, with the requirements of the 1933 Act and the 1933 Act
Regulations and the 1939 Act and the rules and regulations of the SEC
promulgated thereunder. The Registration Statement, at the time it became
effective, did not, and at each time thereafter at which any amendment to
the Registration Statement becomes effective or any Annual Report on Form
10-K is filed by the Company with the SEC and as of each Representation
Date, will not, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The Prospectus, as of the date hereof does not,
and as of each Representation Date will not, contain an untrue statement of
a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; PROVIDED, HOWEVER, that the representations and
warranties in this subsection shall not apply to statements in or omissions
from (A) the Statement of Eligibility and Qualification (Form T-1) of the
Trustee or (B) the Registration Statement or Prospectus made in reliance
upon and in conformity with
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<PAGE>
information furnished to the Company in writing by the Agents expressly
for use in the Registration Statement or Prospectus.
(iv) INCORPORATED DOCUMENTS. The documents incorporated by reference in
any preliminary prospectus or the Prospectus, at the time they were or
hereafter are filed with the SEC, complied or when so filed will comply, as
the case may be, in all material respects with the requirements of the 1934
Act and the rules and regulations promulgated thereunder ("1934 Act
Regulations"), and, when read together with the other information in the
Prospectus, did not and will at all times during the period specified in
Section 4(e) hereof not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were or are made, not misleading.
(v) ACCOUNTANTS. The accountants who issued their reports on the
financial statements included or incorporated by reference in the
Prospectus are independent public accountants within the meaning of the
1933 Act and the 1933 Act Regulations.
(vi) FINANCIAL STATEMENTS. The financial statements and any supporting
schedules of the Company included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the financial
position of the Company as of the dates indicated and the results of its
operations and cash flows for the periods specified; and, except as stated
therein, said financial statements have been prepared in conformity with
generally accepted accounting principles in the United States applied on a
consistent basis; and any supporting schedules included in the Registration
Statement present fairly the information required to be stated therein.
(vii) AUTHORIZATION AND VALIDITY OF THIS AGREEMENT, THE INDENTURE AND
THE NOTES. This Agreement has been duly authorized and, upon execution and
delivery by the Agents, will be a valid and binding agreement of the
Company; the Indenture has been duly authorized and constitutes a valid and
binding obligation of the Company enforceable in accordance with its terms;
the Notes have been duly and validly authorized for issuance, offer and
sale pursuant to this Agreement and, when issued, authenticated and
delivered pursuant to the provisions of this Agreement and the Indenture
against payment of the consideration therefor specified in the Prospectus
or pursuant to any Terms Agreement, the Notes will
5
<PAGE>
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms; except as enforcement of the
Indenture and the Notes may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting the enforcement of creditors' rights generally
and general equitable principles; the Notes and the Indenture will be
substantially in the form heretofore delivered to the Agents and conform
in all material respects to all statements relating thereto contained in
the Prospectus; and the Notes will be entitled to the benefits provided
by the Indenture.
(viii) MATERIAL CHANGES OR MATERIAL TRANSACTIONS. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as may otherwise be stated therein or contemplated
thereby, there has been no material adverse change in the condition,
financial or otherwise, of the Company, whether or not arising in the
ordinary course of business.
(ix) NO CONFLICTS. The execution and delivery of this Agreement and
the Indenture and the consummation of the transactions contemplated herein,
therein and pursuant to any applicable Terms Agreement have been duly
authorized by all necessary corporate action and will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company is a party
or by which it may be bound or to which any of the property or assets of
the Company is subject, nor will such action result in any violation of the
Articles of Incorporation or By-laws, as restated or amended, of the
Company or any law, administrative regulation or administrative or court
order or decree.
(x) REGULATORY APPROVALS. The Company has made all necessary filings
and obtained all necessary consents, orders or approvals from the Federal
Energy Regulatory Commission ("FERC") and the Public Service Commission of
Wisconsin ("PSCW") in connection with the issuance and sale of the Notes,
and no consent, approval, authorization, order or decree of any other court
or governmental agency or body is required for the consummation by the
Company of the transactions contemplated by this Agreement, except such as
may be required under state securities ("Blue Sky") laws.
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<PAGE>
(b) ADDITIONAL CERTIFICATIONS. Any certificate signed by any director or
officer of the Company and delivered to the Agents or to counsel for the Agents
in connection with an offering of Notes or the sale of Notes to the Agents as
principal shall be deemed a representation and warranty by the Company to the
Agents as to the matters covered thereby on the date of such certificate and at
each Representation Date subsequent thereto.
SECTION 3. SOLICITATIONS AS AGENTS; PURCHASES AS PRINCIPAL.
(a) SOLICITATIONS AS AGENTS. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, each Agent agrees, as the agent of the Company, to use its reasonable
efforts to solicit offers to purchase the Notes upon the terms and conditions
set forth herein and in the Prospectus.
The Company reserves the right, in its sole discretion, to suspend
solicitation of purchases of Notes through any Agent, as agent, commencing at
any time for any period of time or permanently. Upon receipt of instructions
from the Company, such Agent will forthwith suspend solicitation of purchases
from the Company until such time as the Company has advised such Agent that such
solicitation may be resumed.
The Company agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Note sold by the Company as a result of a solicitation made by such Agent as set
forth in Schedule A hereto. The Agents may allow any portion of the commission
payable pursuant hereto to dealers or purchasers in connection with the offer
and sale of any Notes.
The purchase price, interest rate, maturity date and other terms of the
Notes shall be agreed upon by the Company and the Agents and set forth in a
pricing supplement to the Prospectus to be prepared following each acceptance by
the Company of an offer for the purchase of Notes. Except as may be otherwise
provided in such supplement to the Prospectus, the Notes will be issued in
denominations of $1,000 or any larger amount that is an integral multiple of
$1,000. All Notes sold through any Agent as agent will be sold at 100% of their
principal amount unless otherwise agreed to by the Company and such Agent.
(b) PURCHASES AS PRINCIPAL. Each sale of Notes to an Agent as
principal shall be made in accordance with the terms contained herein and
(unless the Company and such Agent shall otherwise agree) pursuant to a
separate agreement which will provide for the sale of such Notes to, and the
purchase and reoffering thereof by,
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<PAGE>
such Agent. Each such separate agreement (which may be an oral agreement)
between such Agent and the Company is herein referred to as a "Terms
Agreement". Unless the context otherwise requires, each reference contained
herein to "this Agreement" shall be deemed to include any applicable Terms
Agreement between the Company and such Agent. Each such Terms Agreement,
whether oral or in writing, shall be with respect to such information (as
applicable) as is specified in Exhibit A hereto. Such Agent's commitment to
purchase Notes as principal pursuant to any Terms Agreement or otherwise
shall be deemed to have been made on the basis of the representations and
warranties of the Company herein contained and shall be subject to the terms
and conditions herein set forth. Each Terms Agreement shall specify the
principal amount of Notes to be purchased by such Agent pursuant thereto, the
price to be paid to the Company for such Notes (which, if not so specified in
a Terms Agreement, shall be at a discount equivalent to the applicable
commission set forth in Schedule A hereto), the time and place of delivery of
and payment for such Notes, any provisions relating to rights of, and default
by purchasers acting together with such Agent in the reoffering of the Notes,
and such other provisions (including further terms of the Notes) as may be
mutually agreed upon. Such Agent may utilize a selling or dealer group in
connection with the resale of the Notes purchased. Such Terms Agreement
shall also specify the requirements for the officers' certificate, opinions
of counsel and comfort letter pursuant to Sections 8(b), 8(c) and 8(d) hereof.
(c) ADMINISTRATIVE PROCEDURES. Administrative procedures with respect to
the sale of Notes shall be agreed upon from time to time by the Agents and the
Company (the "Procedures"). The Agents and the Company agree to perform the
respective duties and obligations specifically provided to be performed by them
in the Procedures.
SECTION 4. COVENANTS OF THE COMPANY.
The Company covenants with the Agents as follows:
(a) RULE 424(B) FILING. Promptly following execution of this Agreement,
to cause the Prospectus, including as part thereof a prospectus supplement
relating to the Notes, to be filed with, or mailed for filing to, the SEC
pursuant to Rule 424(b) under the 1933 Act and the Company will promptly advise
the Agents when such filing or mailing has been made. Prior to such filing or
mailing, the Company will cooperate with the Agents in the preparation of such
supplement to the Prospectus to assure that the Agents have no reasonable
objection to the form or content thereof when filed or mailed.
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<PAGE>
(b) FERC OR PSCW ACTION. To advise the Agents promptly of any additional
action by the FERC or PSCW pertaining to the Notes.
(c) COPIES OF 1933 ACT DOCUMENTS. To furnish promptly to each Agent
and to counsel for the Agents one signed copy of the Registration Statement
as originally filed and each amendment thereto filed prior to the date hereof
and relating to the Notes, and a copy of the Prospectus filed with the SEC,
including all documents incorporated therein by reference and all consents
and exhibits filed therewith.
(d) CONFORMED COPIES. To deliver promptly to the Agents such reasonable
number of the following documents as the Agents may request: (i) conformed
copies of the Registration Statement (excluding exhibits other than the
computation of the ratio of earnings to fixed charges, the Indenture,
Administrative Procedures, Interest Calculation Agency Agreement and this
Agreement), (ii) the Prospectus and (iii) any documents incorporated by
reference in the Prospectus.
(e) REVISIONS OF PROSPECTUS -- MATERIAL CHANGES. Except as otherwise
provided in subsection (p) of this Section, if at any time during the term of
this Agreement any event shall occur or condition exist as a result of which it
is necessary, in the reasonable opinion of counsel for the Agents or counsel for
the Company, to further amend or supplement the Prospectus in order that the
Prospectus will not include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time the Prospectus
is delivered to a Note purchaser, or if it shall be necessary, in the reasonable
opinion of either such counsel, to amend or supplement the Registration
Statement or the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, immediate notice shall be given, and confirmed
in writing, to the Agents to cease the solicitation of offers to purchase the
Notes in each Agent's capacity as agent and to cease sales of any Notes any
Agent may then own as principal pursuant to a Terms Agreement, and the Company
will promptly prepare and file with the SEC such amendment or supplement,
whether by filing documents pursuant to the 1934 Act, the 1933 Act or otherwise,
as may be necessary to correct such untrue statement or omission or to make the
Registration Statement and Prospectus comply with such requirements.
(f) NOTICES TO AGENTS. To advise the Agents promptly during the term of
this Agreement, (i) when any post-effective amendment to the Registration
Statement becomes effective, (ii) of any request or proposed request by the SEC
for an amendment or
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<PAGE>
supplement to the Registration Statement, to the Prospectus, to any document
incorporated by reference in any of the foregoing or for any additional
information, (iii) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or any order directed to the
Prospectus or any document incorporated therein by reference or the
initiation or threat of any stop order proceeding or of any challenge by the
SEC to the accuracy or adequacy of any document incorporated by reference in
the Prospectus, (iv) of receipt by the Company of any notification with
respect to the suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threat of any proceeding for that purpose
and (v) of the happening of any event which makes untrue any statement of a
material fact made in the Registration Statement (insofar as the Registration
Statement relates to or covers the Notes) or the Prospectus or which requires
the making of a change in the Registration Statement or the Prospectus in
order to make any material statement therein not misleading.
(g) PREPARATION OF PRICING SUPPLEMENTS. The Company will prepare, with
respect to any Notes to be sold through or to any of the Agents pursuant to this
Agreement, a Pricing Supplement with respect to such Notes in a form previously
approved by the Agents and will file timely such Pricing Supplement pursuant to
Rule 424(b)(3) under the 1933 Act.
(h) PROSPECTUS REVISIONS -- PERIODIC FINANCIAL INFORMATION. Except as
otherwise provided in subsection (p) of this Section, on or prior to the date on
which there shall be released to the general public interim financial statement
information related to the Company with respect to each of the first three
quarters of any fiscal year or preliminary financial statement information with
respect to any fiscal year, the Company shall furnish such information to the
Agents, confirmed in writing, and shall cause the Prospectus to be amended or
supplemented to include or
incorporate by reference financial information with respect thereto and
corresponding information for the comparable period of the preceding fiscal
year, as well as such other information and explanations as shall be
necessary for an understanding thereof or as shall be required by the 1933
Act or the 1933 Act Regulations.
(i) PROSPECTUS REVISIONS -- AUDITED FINANCIAL INFORMATION. Except as
otherwise provided in subsection (p) of this Section, on or prior to the date on
which there shall be released to the general public financial information
included in or derived from the audited financial statements of the Company for
the preceding fiscal year, the Company shall cause the Registration Statement
and the Prospectus to be amended, whether by the filing of documents pursuant to
the 1934 Act, the 1933 Act or otherwise, to include or
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<PAGE>
incorporate by reference such audited financial statements and the report or
reports, and consent or consents to such inclusion or incorporation by
reference, of the independent accountants with respect thereto, as well as
such other information and explanations as shall be necessary for an
understanding of such financial statements or as shall be required by the
1933 Act or the 1933 Act Regulations.
(j) STOP ORDER. If, during the term of this Agreement, the SEC shall
issue a stop order suspending the effectiveness of the Registration Statement,
to make every reasonable effort to obtain the lifting of that order at the
earliest possible time.
(k) EARNINGS STATEMENT. As soon as practicable, to make generally
available to its security holders and to deliver to the Agents an earnings
statement, conforming with the requirements of Section 11(a) of the 1933 Act
and Rule 158 of the 1933 Act Regulations, covering a period of at least
twelve months beginning after the effective date of the Registration
Statement as defined in Rule 158(c) of the 1933 Act Regulations.
(l) SHAREHOLDER AND OTHER REPORTS. During the period of five years
hereafter, or such lesser period as any of the Notes shall be outstanding, to
furnish to the Agents, (i) as soon as available, a copy of each report of the
Company mailed to its shareholders or report filed by the Company with the SEC
and (ii) from time to time such other information concerning the Company as the
Agents may reasonably request.
(m) BLUE SKY QUALIFICATIONS. The Company will endeavor, in cooperation
with the Agents, to qualify the Notes for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States as
the Agents may designate, and will maintain such qualifications in effect for as
long as may be required for the distribution of the Notes; provided, however,
that the Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation in any jurisdiction in which
it is not so qualified. The Company will file such statements and reports as
may be required by the laws of each jurisdiction in which the Notes have been
qualified as above provided. The Company will promptly advise the Agents of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Notes for sale in any such state or jurisdiction or the
initiating or threatening of any proceeding for such purpose.
(n) 1934 ACT FILINGS. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act, will
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file promptly all documents required to be filed with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act.
(o) STAND-OFF AGREEMENT. If required pursuant to the terms of a Terms
Agreement, between the date of any Terms Agreement and the Settlement Date with
respect to such Terms Agreement, the Company will not, without the prior consent
of the Agents, offer or sell, or enter into any agreement to sell, any debt
securities of the Company (other than the Notes that are to be sold pursuant to
such Terms Agreement and commercial paper in the ordinary course of business).
(p) SUSPENSION OF CERTAIN OBLIGATIONS. The Company shall not be required
to comply with the provisions of subsections (e), (h) or (i) of this Section
during any period from the time (i) the Agents shall have suspended solicitation
of purchases of the Notes in their capacity as agents pursuant to a request from
the Company and (ii) the Agents shall not then hold any Notes as principal
purchased pursuant to a Terms Agreement, to the time the Company shall determine
that solicitation of purchases of the Notes should be resumed or shall
subsequently enter into a new Terms Agreement with an Agent.
(q) CONDITION TO AGENCY TRANSACTIONS. Any person who has agreed to
purchase Notes as the result of an offer to purchase solicited by an Agent shall
have the right to refuse to purchase and pay for such Notes if, on the related
settlement date fixed pursuant to the Procedures, (i) there has been, since the
date on which such person agreed to purchase the Notes (the "Trade Date"), or
since the respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition, financial or otherwise,
of the Company, whether or not arising in the ordinary course of business, or
(ii) there shall have occurred any outbreak or escalation of major hostilities
in which the United States is involved or any other substantial national or
international calamity or crisis the effect of which is such as to make it, in
the judgment of such person, impracticable or inadvisable to purchase the Notes,
or (iii) trading in any securities of the Company has been suspended by the SEC
or a national securities exchange or the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") National Market, or if trading
generally on the New York Stock Exchange shall have been suspended, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by said exchange or by order of the SEC or any
other governmental authority, or if a banking moratorium shall have been
declared by either Federal or New York authorities, or (iv) the rating assigned
by any "nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) of the 1933
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Act), to any debt securities of the Company as of the Trade Date shall have
been lowered since that date or if any such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any debt securities of the Company.
(r) COSTS. To pay all costs incident to the authorization, issuance, sale
and delivery of the Notes; the costs incident to the preparation, printing and
filing under the 1933 Act of the Registration Statement and the Prospectus and
any amendments, supplements and exhibits thereto; the costs incident to the
preparation, printing and filing of the documents and any amendments and
exhibits thereto required to be filed by the Company under the 1934 Act; the
costs of distributing the Registration Statement as originally filed and each
amendment and post-effective amendment thereof (including exhibits), any
preliminary prospectus, the Prospectus and any documents incorporated by
reference in any of the foregoing documents; the costs of printing this
Agreement, the Indenture, Administrative Procedures, Interest Calculation Agency
Agreement and any Terms Agreement; fees paid to rating agencies in connection
with the rating of the Notes; the fees and expenses of qualifying the Notes
under the securities laws of the several jurisdictions as provided in
subsection (m) of this Section and of preparing and printing a Blue Sky
Memorandum (including fees of counsel to the Agents not to exceed $_____ in the
aggregate); the reasonable fees and expenses of counsel for the Agents; and all
other costs and expenses incident to the performance of the Company's
obligations under this Agreement; PROVIDED that, except as provided in this
Section 4(r),the Agents shall pay their own costs and expenses, any transfer
taxes on the Notes purchased as principal which they may sell and the expenses
of advertising any offering of the Notes made by the Agents.
SECTION 5. CONDITIONS OF OBLIGATIONS.
The obligations of each Agent to solicit offers to purchase Notes as agent
of the Company, the obligations of any purchasers of Notes sold through such
Agent as agent, and any obligation of such Agent to purchase Notes pursuant to a
Terms Agreement or otherwise will be subject to the accuracy of the
representations and warranties on the part of the Company herein and to the
accuracy of the statements of the Company's officers made in any certificate
furnished pursuant to the provisions hereof, to the performance and observance
by the Company of all of its covenants and agreements herein contained and to
each of the following additional terms and conditions:
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(a) NO STOP ORDER. No stop order suspending the effectiveness of the
Registration Statement nor any order directed to any document incorporated by
reference in the Prospectus shall have been issued and prior to that time no
stop order proceeding shall have been initiated or threatened by the SEC and
no challenge shall have been made by the SEC to the accuracy or adequacy of
any document incorporated by reference in the Prospectus; any request of the
SEC for inclusion of additional information in the Registration Statement or
the Prospectus or otherwise shall have been complied with and there shall be
no material adverse change in the condition, financial or otherwise, of the
Company, whether or not arising in the ordinary course of business.
(b) LEGAL MATTERS. All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement, the
Indenture, any Terms Agreement, the Notes, the form of the Registration
Statement, the Prospectus and all other legal matters relating to this Agreement
and the transactions contemplated hereby shall be satisfactory in all respects
to _______________, counsel for the Agents, and the Company shall have
furnished to such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters, it being understood that such
counsel shall not be required to pass on any financial statements, financial
data, statistical data and supporting schedules included in the Prospectus.
(c) OPINION OF COMPANY COUNSEL. Stafford, Rosenbaum, Rieser & Hansen,
counsel to the Company, shall have furnished to the Agents a letter addressed to
the Agents and dated the date hereof stating their opinion to the effect that:
(i) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Wisconsin,
with corporate authority to own and operate its properties, and valid
franchises, licenses and permits adequate for the conduct of its business,
as described in the Prospectus;
(ii) this Agreement and each Terms Agreement, if any, has been duly
authorized, executed and delivered by the Company;
(iii) the Indenture is in due and proper form, has been duly and
validly authorized by the necessary corporate action, has been duly and
validly executed and delivered and is a valid instrument legally binding on
the Company, except as enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws relating to or affecting enforcement of
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creditors' rights generally or by general equitable principles;
(iv) the Notes are in due and proper form; the issue and sale of the
Notes by the Company in accordance with the terms of this Agreement have
been duly and validly authorized by the necessary corporate action; the
Notes, when duly executed (which execution may include facsimile signatures
of officers of the Company), authenticated and delivered to the purchasers
or to an Agent pursuant to any Terms Agreement, against payment of the
agreed consideration therefor, will constitute legal, valid and binding
obligations of the Company enforceable in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting enforcement of creditors' rights generally or by
general equitable principles; and each holder of Notes will be entitled to
the benefits of the Indenture;
(v) the Notes, the Indenture and any Terms Agreement conform as to
legal matters with the statements concerning them made in the Prospectus,
and such statements accurately set forth the matters respecting the Notes,
the Indenture and the Terms Agreement required to be set forth in the
Prospectus;
(vi) the Indenture is qualified under the 1939 Act;
(vii) the orders of the FERC and the PSCW referred to in Section
2(a)(x) hereof pertaining to the Notes have been duly entered and, to the
best of the knowledge of such counsel, are still in force and effect; and
no further approval, authorization, consent, certificate or order of any
state or federal commission or regulatory authority (other than in
connection or compliance with the provisions of the securities or Blue Sky
laws of any jurisdiction) is necessary with respect to the issue and sale
of the Notes as contemplated by this Agreement;
(viii) the Registration Statement has become effective under the 1933
Act and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending or
threatened under the 1933 Act;
(ix) the Registration Statement and the Prospectus and each amendment
or supplement thereto comply as to form in all
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material respects with the requirements of the 1933 Act and the 1933 Act
Regulations (except that such counsel need express no opinion as to the
financial statements, financial data, statistical data or supporting
schedules contained therein);
(x) such counsel does not know of any legal or governmental proceeding
required to be described in the Prospectus which is not described as
required, or of any contract or document of a character required to be
described or incorporated in the Registration Statement or the Prospectus
or to be filed as an exhibit to the Registration Statement which is not
described, incorporated or filed as required;
(xi) neither the execution and delivery of this Agreement and the
Indenture nor the issuance and sale of the Notes in accordance with the
terms of this Agreement or applicable Terms Agreement nor the consummation
of the transactions therein contemplated, nor compliance with the terms and
provisions thereof, will conflict with, violate or result in a breach of
any law, any administrative regulation or any court decree known to such
counsel to be applicable to the Company, conflict with or result in a
breach of any of the terms, conditions or provisions of the Articles of
Incorporation or the By-laws, as restated or amended, of the Company or of
any material agreement or instrument known to such counsel to which the
Company is a party or by which the Company is bound or constitute a default
thereunder, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the properties or assets
of the Company;
(xii) the documents referred to in Section 2(a)(iv) hereof, as of
their respective filing dates, complied as to form in all material respects
with the applicable requirements of the 1934 Act and the 1934 Act
Regulations (except that such counsel do not need to express any opinion as
to the financial statements, financial data, statistical data or supporting
schedules contained therein);
(xiii) any statements made in the Prospectus which are stated therein
to have been made on the authority of such counsel have been reviewed by
them and, as to matters of law and legal conclusion, are correct; and
(xiv) except as set forth in the Prospectus, to the best knowledge of
such counsel there are no pending or threatened legal or administrative
proceedings to which the Company is a
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party or in which any of its property is the subject wherein an
unfavorable decision, ruling or finding would adversely affect the
transactions contemplated by this Agreement or any Terms Agreement or
the validity or enforceability against the Company of this Agreement or
any Terms Agreement, the Indenture or the Notes;
and such letter shall additionally state that nothing has come to the attention
of such counsel that would lead them to believe that the Registration Statement
(other than the financial statements, financial data, statistical data and
supporting schedules included therein, as to which they do not need to express
any belief), at the time it became effective, and if an amendment to the
Registration Statement or an Annual Report on Form 10-K has been filed by the
Company with the SEC subsequent to the effectiveness of the Registration
Statement, then at the time such amendment became effective or at the time of
the most recent such filing, and at the date hereof, or (if such opinion is
being delivered in connection with a Terms Agreement pursuant to Section 3(b)
hereof) at the date of any Terms Agreement and at the Settlement Date with
respect thereto as the case may be, contained or contains an untrue statement of
a material fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus (other than the financial statements, financial data,
statistical data and supporting schedules included therein, as to which they do
not need to express any belief) as amended or supplemented at the date hereof,
or (if such opinion is being delivered in connection with a Terms Agreement
pursuant to Section 3(b) hereof) at the date of any Terms Agreement and at the
Settlement Date with respect thereto, as the case may be, contained or contains
any untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) OPINION OF COMPANY SPECIAL COUNSEL. Sidley & Austin, special counsel
to the Company, shall have furnished to the Agents a letter addressed to the
Agents and dated the date hereof stating in their opinion substantially to the
effect set forth in clauses (ii), (iii), (iv), (v), (vi), (vii), (viii) and (ix)
of paragraph (c) of this Section 5 and to the further effect that:
(i) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Wisconsin,
with corporate authority to own and operate its properties as described in
the Prospectus; and
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(ii) neither the execution and delivery of this Agreement and the
Indenture nor the issuance and sale of the Notes in accordance with the
terms of this Agreement or Terms Agreements nor the consummation of the
transactions therein contemplated, nor compliance with the terms and
provisions thereof, will conflict with, violate or result in a breach of
any of the terms, conditions or provisions of Articles of Incorporation or
By-laws, as restated or amended, of the Company, or of any material
agreement or instrument known to such counsel to which the Company is a
party or by which the Company is bound or constitute a default thereunder;
and such letter shall additionally state that nothing has come to the attention
of such counsel that would lead them to believe that the Registration Statement
(other than the financial statements, financial data, statistical data and
supporting schedules included therein, as to which they do not need to express
any belief), at the time it became effective, and if an amendment to the
Registration Statement or an Annual Report on Form 10-K has been filed by the
Company with the SEC subsequent to the effectiveness of the Registration
Statement, then at the time such amendment became effective or at the time of
the most recent such filing, and at the date hereof, or (if such opinion is
being delivered in connection with a Terms Agreement pursuant to Section 3(b)
hereof) at the date of any Terms Agreement and at the Settlement Date with
respect thereto as the case may be, contains or contained an untrue statement of
a material fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus (other than the financial statements, financial data,
statistical data and supporting schedules included therein, as to which they do
not need to express any belief) as amended or supplemented at the date hereof,
or (if such opinion is being delivered in connection with a Terms Agreement
pursuant to Section 3(b) hereof) at the date of any Terms Agreement and at the
Settlement Date with respect thereto, as the case may be, contains or contained
any untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
For the purpose of rendering the foregoing opinions, Sidley & Austin may
rely exclusively upon the opinion Stafford, Rosenbaum, Rieser & Hansen, counsel
for the Company, delivered to the Agents pursuant to paragraph (c) of this
Section 5 as to the organization of the Company and as to all other matters of
Wisconsin law and upon the factual representations made in this Agreement and
upon certificates of officers of the Company and public officials.
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(e) OFFICERS' CERTIFICATE. The Company shall have furnished to the Agents
on the date hereof a certificate, dated the date hereof, of its Chairman of the
Board, its President or a Vice President and its Treasurer or an Assistant
Treasurer stating that, to the best of their knowledge after reasonable
investigation, the representations and warranties of the Company in Section 2
hereof are true and correct as of the date hereof; the Company has complied with
all its agreements contained herein; and the conditions set forth in Sections
5(a), 5(h), 5(i)and 5(j) hereof have been fulfilled.
(f) COMFORT LETTER. On the date hereof, the Agents shall have received a
letter from PricewaterhouseCoopers LLP dated as of the date hereof and in form
and substance satisfactory to the Agents, to the effect that:
(i) They are independent public accountants with respect to the
Company within the meaning of the 1933 Act and the 1933 Act Regulations;
(ii) In their opinion, the financial statements and supporting
schedule(s) of the Company audited by them and included or incorporated by
reference in the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and
the 1933 Act Regulations with respect to registration statements on Form
S-3 and the 1934 Act and the 1934 Act Regulations;
(iii) They have performed specified procedures, not constituting an
audit, including a reading of the latest available interim financial
statements of the Company, a reading of the minute books of the Company
since the end of the most recent fiscal year with respect to which an audit
report has been issued, inquiries of and discussions with certain officials
of the Company responsible for financial and accounting matters with
respect to the unaudited consolidated financial statements of the Company
included in the Registration Statement and Prospectus and the latest
available interim unaudited financial statements of the Company, and such
other inquiries and procedures as may be specified in such letter, and on
the basis of such inquiries and procedures nothing came to their attention
that caused them to believe that: (A) the unaudited consolidated financial
statements of the Company included in the Registration Statement and
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the 1934 Act and the 1934 Act
Regulations or were not fairly presented in conformity with generally
accepted accounting principles in the United States applied on a basis
substantially consistent
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with that of the audited financial statements included therein, or (B)
at a specified date not more than five days prior to the date of such
letter, there was any change in the capital stock or any increase in
long-term debt of the Company or any decrease in the common
shareholders' equity of the Company other than for the declaration of
regular quarterly dividends, in each case as compared with the amounts
shown on the most recent balance sheet of the Company included in the
Registration Statement and Prospectus or, during the period from the
date of such balance sheet to a specified date not more than five days
prior to the date of such letter, there were any decreases, as compared
with the corresponding period in the preceding year, in operating
revenues or net income of the Company, except in each such case as set
forth in or contemplated by the Registration Statement and Prospectus or
except for such exceptions (e.g. inability to determine such decreases
because of insufficient accounting information available after the date
of such most recent balance sheet) enumerated in such letter as shall
have been agreed to by the Agents and the Company; and
(iv) In addition to the examination referred to in their report
included or incorporated by reference in the Registration Statement and the
Prospectus, and the limited procedures referred to in clause (iii) above,
they have carried out certain other specified procedures, not constituting
an audit, with respect to certain amounts, percentages and financial
information which are included or incorporated by reference in the
Registration Statement and Prospectus and which are specified by the
Agents, and have found such amounts, percentages and financial information
to be in agreement with the relevant accounting, financial and other
records of the Company identified in such letter.
(g) OPINION OF AGENTS' COUNSEL. Jones, Day, Reavis & Pogue, Chicago,
Illinois, as counsel for the Agents, shall have furnished to the Agents on the
date hereof such opinions with respect to the validity of the Notes and with
respect to the Registration Statement, the Prospectus, and other related matters
as the Agents may reasonably require.
(h) FERC AND PSCW ORDERS. The orders of the FERC and PSCW referred to in
Section 2(a)(x) hereof shall be in full force and effect and no proceedings to
suspend the effectiveness of either such order shall be pending or threatened.
(i) RATINGS. Subsequent to the execution of this Agreement, there shall
not have been any decrease in the ratings of any of the
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Company's debt securities by Standard & Poor's Rating Service or Moody's
Investors Service Inc.
(j) NO MATERIAL ADVERSE CHANGE. Subsequent to the date of the most recent
financial statements incorporated by reference in the Prospectus, there shall
have been no material adverse change in the condition (financial or otherwise),
of the Company, except as set forth in the Registration Statement and the
Prospectus, including the documents incorporated by reference therein, as of the
effective date of this Agreement.
(k) OTHER DOCUMENTS. On the date hereof and on each Settlement Date with
respect to any applicable Terms Agreement, counsel to the Agents shall have been
furnished with such documents and opinions as such counsel may reasonably
require for the purpose of enabling such counsel to pass upon the issuance and
sale of Notes as herein contemplated and related proceedings, or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained; and
all proceedings taken by the Company in connection with the issuance and sale of
Notes as herein contemplated shall be satisfactory in form and substance to the
Agents and to counsel to the Agents.
If any condition specified in this Section 5 shall not have been fulfilled
when and as required to be fulfilled, this Agreement (or, at the option of the
Agents, any applicable Terms Agreement) may be terminated by the Agents by
written notice to the Company at any time and any such termination shall be
without liability of any party to any other party, except that the covenant
regarding provision of an earnings statement set forth in Section 4(k) hereof,
the provisions concerning payment of expenses under Section 4(r) hereof, the
indemnity and contribution agreement set forth in Section 9 hereof, the
provisions concerning the representations, warranties and agreements to survive
delivery in Section 10 hereof and the provisions set forth under "Parties" of
Section 14 hereof shall remain in effect.
SECTION 6. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the Notes are subject to
the following conditions precedent:
(a) NO STOP ORDER. At or before the date hereof, no stop order
suspending the effectiveness of the Registration Statement nor any order
directed to any document incorporated by reference in the Prospectus shall
have been issued and prior to that time no stop order proceeding shall have
been initiated or threatened by the SEC and no challenge shall have
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been made by the SEC to the accuracy or adequacy of any document
incorporated by reference in the Prospectus; any request of the SEC for
inclusion of additional information in the Registration Statement or the
Prospectus or otherwise shall have been complied with.
(b) FERC AND PSCW ORDERS. The orders of the FERC and the PSCW
referred to in Section (2)(a)(x) hereof shall be in full force and effect
and no proceeding to suspend the effectiveness of either such order shall
be pending or threatened.
In case any of the conditions specified above in this Section 6 shall not have
been fulfilled on the date hereof, this Agreement may be terminated by the
Company by delivering written notice of termination to the Agents. Any such
termination shall be without liability of any party to any other party except to
the extent provided in Section 4(r), and Section 9 hereof.
SECTION 7. DELIVERY OF AND PAYMENT FOR NOTES SOLD THROUGH THE AGENTS.
Delivery of Notes sold through any Agent as agent shall be made by the
Company to such Agent for the account of any purchaser only against payment
therefor in immediately available funds. In the event that a purchaser shall
fail either to accept delivery of or to make payment for a Note on the date
fixed for settlement, such Agent shall promptly notify the Company and deliver
the Note to the Company, and, if such Agent has theretofore paid the Company for
such Note, the Company will promptly return such funds to such Agent. If such
failure occurred for any reason other than default by such Agent in the
performance of its obligations hereunder, the Company will reimburse such Agent
on an equitable basis for its loss of the use of the funds for the period such
funds were credited to the Company's account.
SECTION 8. ADDITIONAL COVENANTS OF THE COMPANY.
The Company covenants and agrees with each Agent that:
(a) REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each acceptance by
the Company of an offer for the purchase of Notes, and each delivery of Notes to
an Agent pursuant to a Terms Agreement, shall be deemed to be an affirmation by
the Company that the representations and warranties of the Company contained in
this Agreement and in any certificate theretofore delivered to such Agent
pursuant hereto are true and correct at the
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time of such acceptance or sale, as the case may be, and an undertaking that
such representations and warranties will be true and correct at the time of
delivery to the purchaser or the agent of such purchaser, or to such Agent,
of the Note or Notes relating to such acceptance or sale, as the case may be,
as though made at and as of each such time (and it is understood that such
representations and warranties shall relate to the Registration Statement and
Prospectus as amended and supplemented to each such time).
(b) SUBSEQUENT DELIVERY OF CERTIFICATES. Each time that the Registration
Statement or the Prospectus shall be amended or supplemented (other than by an
amendment or supplement providing solely for a change in the interest rates of
Notes or similar changes, and, unless the Agents shall otherwise specify, other
than by an amendment or supplement which relates exclusively to an offering of
securities other than the Notes) or there is filed with the SEC any document
incorporated by reference into the Prospectus (other than any Current Report on
Form 8-K relating exclusively to the issuance of securities other than Notes
under the Registration Statement, unless the Agents shall otherwise specify) or
(if required pursuant to the terms of a Terms Agreement) the Company sells Notes
to an Agent pursuant to a Terms Agreement, the Company shall furnish or cause to
be furnished to such Agent forthwith a certificate dated the date of filing with
the SEC of such supplement or document, the date of effectiveness of such
amendment, or the date of such sale, as the case may be, in form satisfactory to
such Agent to the effect that the statements contained in the certificate
referred to in Section 5(e) hereof which was last furnished to such Agent are
true and correct at the time of such amendment, supplement, filing or sale, as
the case may be, as though made at and as of such time (except that such
statements shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented to such time) or, in lieu of such
certificate, a certificate of the same tenor as the certificate referred to in
said Section 5(e), modified as necessary to relate to the Registration Statement
and the Prospectus as amended and supplemented to the time of delivery of such
certificate.
(c) SUBSEQUENT DELIVERY OF LEGAL OPINIONS. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing solely for a change in the interest
rates of Notes or similar changes or solely for the inclusion of additional
financial information, and, unless the Agents shall otherwise specify, other
than by an amendment or supplement which relates exclusively to an offering of
securities other than Notes) or there is filed with the SEC any document
incorporated by reference into the Prospectus (other than any Current Report on
Form 8-K or Quarterly Report on Form 10-Q, unless the Agents shall otherwise
specify), or (if required pursuant to the terms of a Terms Agreement) the
Company
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<PAGE>
sells Notes to an Agent pursuant to a Terms Agreement, the Company shall
furnish or cause to be furnished forthwith to such Agent and to counsel to
the Agents written opinion of Stafford, Rosenbaum, Rieser & Hansen, counsel
to the Company, or other counsel satisfactory to such Agent, dated the date
of filing with the SEC of such supplement or document, the date of
effectiveness of such amendment, or the date of such sale, as the case may
be, in form and substance satisfactory to such Agent, of the same tenor as
the opinion referred to in Section 5(c) hereof, but modified, as necessary,
to relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such opinion; or, in lieu of such
opinion, counsel last furnishing such opinion to the Agents shall furnish
such Agent with a letter to the effect that such Agent may rely on such last
opinion to the same extent as though it was dated the date of such letter
authorizing reliance (except that statements in such last opinion shall be
deemed to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such letter authorizing reliance).
(d) SUBSEQUENT DELIVERY OF COMFORT LETTERS. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented to
include additional financial information or there is filed with the SEC any
document incorporated by reference into the Prospectus which contains additional
financial information or, (if required pursuant to the terms of a Terms
Agreement) the Company sells Notes to an Agent pursuant to a Terms Agreement,
the Company shall cause PricewaterhouseCoopers LLP forthwith to furnish such
Agent a letter, dated the date of effectiveness of such amendment, supplement or
document with the SEC , or the date of such sale, as the case may be, in form
satisfactory to such Agent, of the same tenor as the portions of the letter
referred to in clauses (i) and (ii) of Section 5(f) hereof but modified to
relate to the Registration Statement and Prospectus, as amended and supplemented
to the date of such letter, and of the same general tenor as the portions of the
letter referred to in clauses (iii) and (iv) of said Section 5(f) with such
changes as may be necessary to reflect changes in the financial statements and
other information derived from the accounting records of the Company; PROVIDED,
HOWEVER, that if the Registration Statement or the Prospectus is amended or
supplemented solely to include financial information as of and for a fiscal
quarter, PricewaterhouseCoopers LLP may limit the scope of such letter to the
unaudited financial statements included in such amendment or supplement unless
any other information included therein of an accounting, financial or
statistical nature is of such a nature that, in the reasonable judgment of such
Agent, such letter should cover such other information.
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SECTION 9. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE AGENTS. The Company agrees to indemnify and
hold harmless each Agent and each person, if any, who controls such Agent within
the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus (or
any amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred, (including,
subject to Section 9(c) hereof, the fees and disbursements of counsel)
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by each
Agent expressly for use in the Registration Statement (or any amendment thereto)
or any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); and PROVIDED, FURTHER, that this indemnity agreement with respect to
any preliminary prospectus shall not
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inure to the benefit of the Agent from whom the person asserting any such
losses, liabilities, claims, damages or expenses purchased Notes, or any
person controlling such Agent, if a copy of the Prospectus provided to such
Agent by the Company (as then amended or supplemented if the Company shall
have furnished any such amendment or supplement thereto, but excluding
documents incorporated or deemed to be incorporated by reference therein) was
not sent or given by or on behalf of such Agent to such person, if such is
required by law, at or prior to the written confirmation of the sale of such
Notes to such person and if the Prospectus (as so amended or supplemented,
but excluding documents incorporated or deemed to be incorporated by
reference therein) would have corrected the defect giving rise to such loss,
liability, claim, damage or expense, it being understood that this proviso
shall have no application if such defect shall have been corrected in a
document which is incorporated or deemed to be incorporated by reference in
the Prospectus.
(b) INDEMNIFICATION OF THE COMPANY. Each Agent agrees to indemnify and
hold harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Agent
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) GENERAL. Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure so to notify an indemnifying
party shall not relieve such indemnifying party from any liability which it may
have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action. In no
event shall the indemnifying parties be liable for the fees and expenses of more
than one counsel (in addition to any local counsel) for all indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.
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The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i)
counsel for the indemnified party concludes that the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have been advised by counsel
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action or
(iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party.
(d) CONTRIBUTION. If the indemnification provided for in this Section is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to herein, then each indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and each Agent on the
other from the sale to or through each Agent of the Notes or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and of each Agent on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations; provided, however, that in no
case shall any Agent be responsible for any amount in excess of the total
underwriting discounts and commission received by such Agent in connection with
the sale of the Notes to or through such Agent.
27
<PAGE>
The relative benefits received by the Company on the one hand and each Agent
on the other in connection with the sale of the Notes shall be deemed to be
in the same proportion as the total commissions and underwriting discounts
received by such Agent to the date of such liability bear to the total sales
price from the sale of Notes to or through such Agent to the date of such
liability. The relative fault of the Company on the one hand and of each
Agent on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Agent and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Agents agree that it would not be just and equitable if
contribution pursuant to this Section were determined by pro rata allocation or
by any other method of allocation which does not take account of the
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section, no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
For purposes of this Section, each person, if any, who controls an Agent
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as such Agent, and each director of the Company and each officer of
the Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of 1933 Act, shall have
the same rights to contribution as the Company.
SECTION 10. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement
or in certificates of officers of the Company submitted pursuant hereto or
thereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of an Agent or any controlling person of such
Agent, or by or on behalf of the Company, and shall survive each delivery of and
payment for any of the Notes.
28
<PAGE>
SECTION 11. TERMINATION.
(a) TERMINATION OF THIS AGREEMENT. This Agreement (excluding any Terms
Agreement) may be terminated for any reason, at any time by either the Company
or the Agents upon the giving of 30 days' written notice of such termination to
the other party hereto.
(b) TERMINATION OF A TERMS AGREEMENT. An Agent may terminate any Terms
Agreement, immediately upon notice to the Company, at any time prior to the
Settlement Date relating thereto (i) if there has been, since the date of such
Terms Agreement or since the respective dates as of which information is given
in the Registration Statement, any material adverse change in the condition,
financial or otherwise, of the Company, whether or not arising in the ordinary
course of business, or (ii) if there shall have occurred any outbreak or
escalation of major hostilities in which the United States is involved or any
other substantial national or international calamity or crisis the effect of
which is such as to make it, in the judgment of such Agent, impracticable or
inadvisable to market Notes or enforce contracts for the sale of Notes, or (iii)
if trading in any securities of the Company has been suspended by the SEC or a
national securities exchange or in the NASDAQ National Market, or if trading
generally on the New York Stock Exchange shall have been suspended, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by said exchange or by order of the SEC or any
other governmental authority, or if a banking moratorium shall have been
declared by either Federal or New York authorities, or (iv) if the rating
assigned by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) of the 1933 Act) to any debt securities of
the Company as of the date of any applicable Terms Agreement shall have been
lowered since that date or if any such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any debt securities of the Company, or (v) if there
shall have come to such Agent's attention any facts that would cause such Agent
to believe that the Prospectus, at the time it was required to be delivered to a
purchaser of Notes, contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
light of the circumstances existing at the time of such delivery, not
misleading.
(c) GENERAL. In the event of any such termination, neither party will
have any liability to the other party hereto, except that (i) an Agent shall be
entitled to any commission earned in accordance with the third paragraph of
Section 3(a) hereof, (ii) if at the time of termination (a) an Agent shall own
any Notes purchased pursuant to a Terms Agreement with the intention of
29
<PAGE>
reselling them or (b) an offer to purchase any of the Notes has been accepted by
the Company but the time of delivery to the purchaser or his agent of the Note
or Notes relating thereto has not occurred, the covenants set forth in Sections
4 and 7 hereof shall remain in effect until such Notes are so resold or
delivered, as the case may be, and (iii) the covenant set forth in Section 4(r)
hereof, the indemnity and contribution agreements set forth in Section 9 hereof,
and the provisions of Sections 4(r), 10 and 14 hereof shall remain in effect.
SECTION 12. NOTICES.
Unless otherwise provided herein, all notices required under the terms and
provisions hereof shall be in writing, either delivered by hand, by mail or by
telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.
If to the Company:
Madison Gas and Electric Company
133 South Blair Street
Madison, Wisconsin 53703
Attention: Treasurer
Fax: 608-252-1540
If to the Agents:
or at such other address as such party or parties may designate from time to
time by notice duly given in accordance with the terms of this Section 12.
30
<PAGE>
SECTION 13. GOVERNING LAW.
This Agreement and all the rights and obligations of the parties shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed in the State of New York. Any
suit, action or proceeding brought by the Company against the Agents in
connection with or arising under this Agreement shall be brought solely in the
state or federal court of appropriate jurisdiction located in the Borough of
Manhattan, The City of New York.
SECTION 14. PARTIES.
This Agreement shall inure to the benefit of and be binding upon each Agent
and the Company and their respective successors. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the parties hereto and their respective successors and
the controlling persons and officers and directors referred to in Section 9 and
their heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
This Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of the parties hereto and respective successors
and said controlling persons and officers and directors and their heirs and
legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Notes shall be deemed to be a successor by reason
merely of such purchase.
SECTION 15. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
31
<PAGE>
If the foregoing is in accordance with each Agent's understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between each Agent and the Company in accordance with its terms.
Very truly yours,
MADISON GAS AND ELECTRIC COMPANY
By:
---------------------------
Name:
Title:
Accepted:
- ---------------------------
Agent
By:
--------------------------------
Name:
Title:
- ---------------------------
Agent
By:
-----------------------------------
Name:
Title:
- -------------------------------
Agent
- -------------------------------
32
<PAGE>
EXHIBIT A
The following terms, if applicable, shall be agreed to by the Agent and the
Company pursuant to each Terms Agreement:
Principal Amount: $__________
Interest Rate:
If Fixed Rate Note, Interest Rate:
Interest Payment Dates:
If Floating Rate Note:
Interest Rate Basis:
Initial Interest Rate:
Initial Interest Reset Date:
Spread, if any:
Spread Multiplier, if any:
Interest Rate Reset:
Interest Payment Dates:
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Rate Reset Period:
Interest Payment Period:
Interest Payment Date:
Calculation Agent:
If Redeemable:
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction:
Date of Maturity:
Purchase Price:_____%
Settlement Date and Time:
Stand-off Period (if any):
Additional Terms:
Also, agreement as to whether the following will be required:
Legal Opinion pursuant to Section 5(c)of the
Distribution Agreement.
Officer's Certificate pursuant to Section 5(e)
of the Distribution Agreement.
Comfort Letter pursuant to Section 5(f) of the
Distribution Agreement.
<PAGE>
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company shall
pay the Agents, on a discount basis, a commission for the sale of each Note
equal to the principal amount of such Note multiplied by the appropriate
percentage set forth below:
<TABLE>
<CAPTION>
<S> <C>
PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
- --------------- ----------------
From 9 months but less than 1 year............. .125%
From 1 year but less than 18 months............ .150%
From 18 months but less than 2 years........... .200%
From 2 years but less than 3 years............. .250%
From 3 years but less than 4 years............. .350%
From 4 years but less than 5 years............. .450%
From 5 years but less than 6 years............. .500%
From 6 years but less than 7 years............. .550%
From 7 years but less than 10 years............ .600%
From 10 years but less than 15 years........... .625%
From 15 years but less than 20 years........... .675%
From 20 years to 30 years...................... .750%
</TABLE>
<PAGE>
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company shall
pay the Agents, on a discount basis, a commission for the sale of each Note
equal to the principal amount of such Note multiplied by the appropriate
percentage set forth below:
<TABLE>
<CAPTION>
<S> <C>
PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
- --------------- ----------------
From 9 months but less than 1 year.............
From 1 year but less than 18 months............
From 18 months but less than 2 years...........
From 2 years but less than 3 years.............
From 3 years but less than 4 years.............
From 4 years but less than 5 years.............
From 5 years but less than 6 years.............
From 6 years but less than 7 years.............
From 7 years but less than 10 years............
From 10 years but less than 15 years...........
From 15 years but less than 20 years...........
From 20 years to 30 years......................
</TABLE>
<PAGE>
Exhibit 1.2
MADISON GAS AND ELECTRIC COMPANY
Notes
TERMS AGREEMENT
___________, 1998
Underwriters
Addresses
Dear Sirs:
Madison Gas and Electric Company, a Wisconsin corporation (the
"Company"), confirms its agreement with ____________________ (the
"Underwriters") with respect to the issue and sale by the Company of its Notes,
___% Series due ____ (the "Notes"). The Notes are to be issued pursuant to the
indenture (the "Indenture") dated as of ____________, 1998 between the Company
and Bank One, N.A., as trustee.
This Terms Agreement is entered into pursuant to, and hereby
incorporates by reference all of the terms of, the Distribution Agreement dated
______________, 1998, between the Company and the Underwriters, as Agents
thereunder ("Distribution Agreement"). Capitalized terms used in this Terms
Agreement have the definitions given to them in the Distribution Agreement.
SECTION 1. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants to the Underwriters as of the date hereof and as of the Settlement
Date for the purchase, sale and delivery of the Notes to the Underwriters, that
the representations and warranties of the Company in the Distribution Agreement
are true and correct as if made as of the date hereof and as of the Settlement
Date.
SECTION 2. PURCHASE AND OFFERING. Subject to the terms and
conditions hereof and in reliance upon the representations and warranties herein
set forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter agrees, severally and not jointly, to purchase
from the Company, at the purchase price and on the other terms set forth in
Schedule I hereto, the principal amount of the Notes set forth opposite its name
in Schedule I hereto, and the Notes shall have the terms set
<PAGE>
forth in Schedule I hereto, which is incorporated by reference in this Terms
Agreement.
SECTION 3. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
respective obligations of the Underwriters under this Terms Agreement with
respect to the Notes are subject to the accuracy, on the date hereof and on the
Settlement Date, of the representations and warranties of the Company contained
herein, to performance by the Company of its obligations contained in the
Distribution Agreement and this Terms Agreement, and to each of the following
additional terms and conditions:
(a) NO STOP ORDER. On the Settlement Date, no stop order suspending
the effectiveness of the Registration Statement nor any order directed to
any document incorporated by reference in the Prospectus shall be in effect
and no stop order proceeding shall be pending or shall have been initiated
or threatened by the SEC and no challenge shall have been made by the SEC
to the accuracy or adequacy of any document incorporated by reference in
the Prospectus; and any request of the SEC for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise
shall have been complied with.
(b) LEGAL MATTERS. All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Terms Agreement,
the Notes and the Registration Statement, the Prospectus and all other
legal matters relating to this Terms Agreement and the transactions
contemplated hereby shall be satisfactory in all respects to _____________,
counsel for the Underwriters, and the Company shall have furnished to such
counsel all documents and information that they may reasonably request to
enable them to pass upon such matters (it being understood that such
counsel shall not be required to pass on any financial statements and other
financial data included in the Prospectus).
(c) OTHER CERTIFICATES, OPINIONS AND LETTERS. The Company shall have
furnished to the Underwriters on the Settlement Date, (i) a certificate
dated the Settlement Date complying with Section 8(b) of the Distribution
Agreement; (ii) a written opinion of Stafford, Rosenbaum, Reiser & Hansen,
or other counsel satisfactory to the Underwriters, dated the Settlement
Date, complying with Section 8(c) of the Distribution Agreement; and (iii)
a letter of Pricewater- houseCoopers LLP, dated the Settlement Date
complying with Section 8(d) of the Distribution Agreement.
SECTION 4. GOVERNING LAW. This Terms Agreement and all the rights and
obligations of the parties shall be governed by and
2
<PAGE>
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in the State of New York. Any suit,
action or proceeding brought by the Company against the Underwriters in
connection with or arising under this Terms Agreement shall be brought solely
in the state or federal court of appropriate jurisdiction located in the
Borough of Manhattan, The City of New York.
SECTION 5. CERTAIN COSTS. Notwithstanding anything to the contrary in
Section 4(r) of the Distribution Agreement, the Underwriters shall pay the fees
and expenses of their counsel.
SECTION 6. PARTIES. This Terms Agreement shall inure to the benefit of
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Terms Agreement is intended
or shall be construed to give any person, firm or corporation, other than the
parties hereto and their respective successors and the controlling persons and
officers and directors referred to in Section 9 of the Distribution Agreement
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Terms Agreement or any provision herein
contained. This Terms Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the parties hereto and
respective successors and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Notes shall be deemed to be a
successor by reason merely of such purchase.
SECTION 7. EXECUTION IN COUNTERPARTS. This Terms Agreement may be
executed in counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
If the foregoing is in accordance with the Underwriters' understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument along with all counterparts will become a binding
agreement between the Underwriters and the Company in accordance with its terms.
Very truly yours,
MADISON GAS & ELECTRIC COMPANY
By: __________________________
Name:
Accepted: Title:
Names of Underwriters
by: ___________________
3
<PAGE>
by:_____________________
Name:
Title:
4
<PAGE>
SCHEDULE I
Terms Agreement dated ____________, 1998, to Distribution
Agreement dated _____________, 1988, between Madison Gas and Electric
Company and _______________________________
Underwriters' Address:
____________________
____________________
____________________
____________________
____________________
____________________
Registration No. 333-_____
Designation of Notes: ___% Series due ____
Maturity Date: _____________, ____
Interest Rate per annum: ___%
Interest Payment Dates: ______________ and ______________
First Interest Payment Date: __________________, 199_
Principal amount of Notes to be severally
purchased by each Underwriter:
Underwriter Amount
$ __________
__________
-------------
Total Principal Amount of Notes $
__________
-------------
-------------
Purchase Price as percent of
principal amount, plus
accrued interest from
________, 1998 ______%
I-1
<PAGE>
Initial Public Offering Price as
percent of principal amount,
plus accrued interest from
_____________, 1998 ______%
Dealer discount: not in
excess of %
Reallowance to dealers: not
in excess of %
Redemption Provisions:
Form of Notes: Book-Entry Notes
Settlement Date: ____________, 1998
Settlement Time: 10:00 a.m., New York time
Place: Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Payment:
[By transfer of same day Federal funds to
_______________________________________, ABA #_________,
Account #______ for credit to Madison Gas and Electric
Company]
Stand-Off Period: The Company will not, without the
prior written consent of the Underwriters, offer or sell, or
enter into any agreement to offer or sell, any debt
securities of the Company (other than the Notes and
commercial paper in the ordinary course of business) until
after the Settlement Date.
I-2
<PAGE>
EXHIBIT 1.3
MADISON GAS AND ELECTRIC COMPANY
____________ SHARES
COMMON STOCK
UNDERWRITING AGREEMENT
____________, 1998
Underwriters
Addresses
Dear Sirs:
Madison Gas and Electric Company, a Wisconsin corporation (the
"Company"), proposes to issue and sell to the several Underwriters named in
Schedule I hereto (the "Underwriters"), for whom you are acting as
representatives ("Representatives"), _____________ shares of the common stock,
$1 par value, of the Company (the "Firm Shares").
The Company also proposes to issue and sell to the several
Underwriters not more than an additional ______ shares of its common stock, $1
par value (the "Additional Shares"), if and to the extent that the
Representatives shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of common stock granted to the
Underwriters in Section 2. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares". The shares of the common
stock, $1 par value, of the Company to be outstanding after giving effect to the
sales contemplated hereby are hereinafter referred to as the "Common Stock".
The Company has filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form S-3 (No. 333-_____) for the registration
of certain securities, including the Shares, under the Securities Act of 1933
(the "1933 Act") and the offering thereof from time to time in accordance with
Rule 415 of the rules and regulations of the SEC under the 1933 Act (the "1933
Act Regulations"). Such registration statement has been declared effective by
the SEC. As used in this Agreement, (i) "Registration Statement" means such
registration statement, as
<PAGE>
amended or supplemented to the date hereof; (ii) "Preliminary Prospectus"
means each prospectus (including all documents incorporated therein by
reference) specifically relating to the Shares included in the Registration
Statement before it became effective under the 1933 Act, including any
prospectus filed with the SEC pursuant to Rule 424(a) of the 1933 Act
Regulations; (iii) "Basic Prospectus" means the prospectus (including all
documents incorporated therein by reference) specifically relating to the
Shares included in the Registration Statement; and (iv) "Prospectus" means
the Basic Prospectus together with any prospectus amendment or supplement
(including in each case all documents incorporated therein by reference)
specifically relating to the Shares, as filed with, or mailed for filing to,
the SEC pursuant to paragraph Rule 424(b) of the 1933 Act Regulations.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to each Underwriter as follows:
(i) DUE INCORPORATION AND QUALIFICATION. The Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the state of Wisconsin with corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus; and the Company is not required to be
qualified as a foreign corporation to transact business in any other
jurisdiction.
(ii) SUBSIDIARIES. The Company has no significant subsidiaries, as
"significant subsidiary" is defined in Rule 405 of the 1933 Act
Regulations.
(iii) REGISTRATION STATEMENT AND PROSPECTUS. At the time the
Registration Statement became effective, the Registration Statement
complied, and on the date hereof complies, in all material respects, with
the requirements of the 1933 Act and the 1933 Act Regulations. The
Registration Statement, at the time it became effective did not, on the
date hereof does not, and at all times during the period specified in
Section 3(k) hereof will not, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus,
as of the date hereof does not, and at all times during the period
specified in Section 3(K) will not, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; PROVIDED, HOWEVER, that
2
<PAGE>
the representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus
made in reliance upon and in conformity with information furnished to
the Company in writing by any Underwriter through the Representatives
expressly for use in the Registration Statement or Prospectus.
(iv) INCORPORATED DOCUMENTS. The documents incorporated by reference in
any Preliminary Prospectus or the Prospectus, at the time they were or
hereafter are filed with the SEC, complied or when so filed will comply, as
the case may be, in all material respects with the requirements of the
Securities Exchange Act of 1934 ("1934 Act") and the rules and regulations
promulgated thereunder ("1934 Act Regulations"), and, when read together
with the other information in the Prospectus, did not and will at all times
during the period specified in Section 3(k) hereof not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were or are made, not
misleading.
(v) ACCOUNTANTS. The accountants who issued their reports on the
financial statements included or incorporated by reference in the
Prospectus are independent public accountants within the meaning of the
1933 Act and the 1933 Act Regulations.
(vi) FINANCIAL STATEMENTS. The financial statements and any supporting
schedules of the Company included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the financial
position of the Company as of the dates indicated and the results of its
operations and cash flows for the periods specified; and, except as stated
therein, said financial statements have been prepared in conformity with
generally accepted accounting principles in the United States applied on a
consistent basis; and any supporting schedules included in the Registration
Statement present fairly the information required to be stated therein.
(vii) AUTHORIZATION AND VALIDITY OF THIS AGREEMENT. This Agreement has
been duly authorized and, upon execution and delivery by the
Representatives on behalf of the Underwriters, will be a valid and binding
agreement of the Company.
(viii) The authorized capital stock of the Company conforms to the
description thereof contained in the Prospectus.
3
<PAGE>
(ix) The shares of Common Stock outstanding prior to the issuance of
the Shares have been duly authorized and are validly issued, fully paid and
non-assessable, except to the extent that they are assessable as provided
in Section 180.0622 of the Wisconsin Business Corporation Law.
(x) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, except to the extent that they are
assessable as provided in Section 180.0622 of the Wisconsin Business
Corporation Law, and the issuance of the Shares will not be subject to any
preemptive rights.
(xi) MATERIAL CHANGES OR MATERIAL TRANSACTIONS. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as may otherwise be stated therein or contemplated
thereby, there has been no material adverse change in the condition,
financial or otherwise, of the Company, whether or not arising in the
ordinary course of business.
(xii) NO CONFLICTS. The execution and delivery of this Agreement and
the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate action and will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company is a party
or by which it may be bound or to which any of the property or assets of
the Company is subject, nor will such action result in any violation of the
Articles of Incorporation or By-laws, as restated or amended, of the
Company or any law, administrative regulation or administrative or court
order or decree.
(xiii) REGULATORY APPROVALS. The Company has made all necessary
filings and obtained all necessary consents, orders or approvals from the
Federal Energy Regulatory Commission ("FERC") and the Public Service
Commission of Wisconsin ("PSCW") in connection with the issuance and sale
of the Shares, and no consent, approval, authorization, order or decree of
any other court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated by this
Agreement, except such as may be required under state securities ("Blue
Sky") laws.
4
<PAGE>
(b) ADDITIONAL CERTIFICATIONS. Any certificate signed by any director or
officer of the Company and delivered to the Representatives shall be deemed a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby on the date of such certificate.
SECTION 2. PURCHASE AND SALE OF SHARES.
(a) FIRM SHARES. On the basis of the representations and warranties
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby agrees to sell to the several Underwriters, and each Underwriter
agrees, severally and not jointly, to purchase from the Company, for $_____ per
Share ("Purchase Price"), the number of Firm Shares set forth in Schedule I
hereto opposite the name of such Underwriter.
(b) ADDITIONAL SHARES. On the basis of the representations and warranties
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to sell to the Underwriters the Additional Shares, and the
Underwriters shall have a one-time right to purchase, severally and not jointly,
up to ________ Additional Shares for the Purchase Price per Share. Additional
Shares may be purchased solely for the purpose of covering over-allotments made
in connection with the offering of Firm Shares. If any Additional Shares are to
be purchased, each Underwriter agrees, severally and not jointly, to purchase
the number of Additional Shares (subject to such adjustment to eliminate
fractional shares as the Representatives may determine) that bears the same
proportion to the total number of Additional Shares to be purchased as the
number of Firm Shares set forth in Schedule I hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
(c) The Company is advised by the Representative that the Underwriters
propose to make a public offering of their respective portions of the Shares as
soon after this Agreement has become effective as in the judgment of the
Representatives is advisable. The Company is further advised by the
Representatives that the Shares are to be offered to the public initially at
$______ per Share (the "Public Offering Price," which term includes such price
as it may be changed from time to time by the Representatives) and to certain
dealers selected by the Representatives at a price that represents a concession
not in excess of $__ per Share under the Public Offering Price, and that any
Underwriter may allow, and such dealers may allow, a concession, not in excess
of $_____ per Share, to any Underwriter or to certain other dealers.
(d) PAYMENT FOR FIRM SHARES. Payment for the Firm Shares shall be made by
certified or official bank check or checks payable
5
<PAGE>
to the order of the Company in New York Clearing House funds at the offices
of Sidley & Austin, One First National Plaza, Chicago, Illinois, at 10:00
A.M., local time, on _________, __, or at such other time on the same or such
other date, not later than __________, __, as shall be designated in writing
by the Representatives and the Company. The time and date of each such
payment are hereinafter referred to as the "Closing Date".
(e) PAYMENT FOR ADDITIONAL SHARES. Payment for any Additional Shares
shall be made by certified or official bank check or checks payable to the order
of the Company in New York Clearing House funds at the offices of Sidley &
Austin, One First National Plaza, Chicago, Illinois, at 10:00 A.M., local time,
on such date (which may be the same as the Closing Date but shall in no event be
earlier than the Closing Date nor later than ten business days after the giving
of the notice hereinafter referred to), not later than _____, as shall be
designated in a written notice from the Representatives to the Company of their
determination, on behalf of the Underwriters, to purchase a number, specified in
said notice, of Additional Shares, as shall be designated in writing by the
Representatives and the Company. The time and date of such payment are
hereinafter referred to as the "Option Closing Date". The notice of the
determination to exercise the option to purchase Additional Shares and of the
Option Closing Date may be given at any time within 30 days after the date of
this Agreement.
(f) CERTIFICATES. Certificates for the Firm Shares and Additional Shares
shall be in definitive form and registered in such names and in such
denominations as the Representatives shall request in writing not later than two
full business days prior to the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and Additional Shares
shall be delivered to the Representatives on the Closing Date or the Option
Closing Date, as the case may be, for the respective accounts of the several
Underwriters.
SECTION 3. COVENANTS OF THE COMPANY.
The Company covenants with the Underwriters as follows:
(a) RULE 424(B) FILING. Promptly following execution of this Agreement,
to cause the Prospectus, including as part thereof a prospectus supplement
relating to the Shares, to be filed with, or mailed for filing to, the SEC
pursuant to Rule 424(b)(2) and (3) under the 1933 Act and the Company will
promptly advise the Underwriters when such filing or mailing has been made.
Prior to such filing or mailing, the Company will cooperate with the
Underwriters in the preparation of such supplement to the
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Prospectus to assure that the Underwriters have no reasonable objection to
the form or content thereof when filed or mailed.
(b) FERC OR PSCW ACTION. To advise the Representatives promptly of any
additional action by the FERC or PSCW pertaining to the Shares.
(c) COPIES OF 1933 ACT DOCUMENTS. To furnish promptly to each
Representative and to counsel for the Underwriters one signed copy of the
Registration Statement as originally filed and each amendment thereto filed
prior to the date hereof and relating to the Shares, and a copy of the
Prospectus filed with the SEC, including all documents incorporated therein by
reference and all consents and exhibits filed therewith.
(d) CONFORMED COPIES. To deliver promptly to the Representatives such
reasonable number of the following documents as the Representatives may
request: (i) conformed copies of the Registration Statement (excluding
exhibits other than this Agreement), (ii) the Prospectus and (iii) any
documents incorporated by reference in the Prospectus.
(e) REVISIONS OF PROSPECTUS -- MATERIAL CHANGES. If at any time during
the period specified in Section 3(k) any event shall occur or condition exist as
a result of which it is necessary, in the reasonable opinion of counsel for the
Underwriters or counsel for the Company, to further amend or supplement the
Prospectus in order that the Prospectus will not include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time the Prospectus is delivered to a Share purchaser, or if it shall be
necessary, in the reasonable opinion of either such counsel, to amend or
supplement the Registration Statement or the Prospectus in order to comply with
the requirements of the 1933 Act or the 1933 Act Regulations, the Company will
promptly prepare and file with the SEC such amendment or supplement, whether by
filing documents pursuant to the 1934 Act, the 1933 Act or otherwise, as may be
necessary to correct such untrue statement or omission or to make the
Registration Statement and Prospectus comply with such requirements.
(f) NOTICES TO REPRESENTATIVES. To advise the Representatives promptly
during the period specified in Section 3(k), (i) when any post-effective
amendment to the Registration Statement becomes effective, (ii) of any request
or proposed request by the SEC for an amendment or supplement to the
Registration Statement, to the Prospectus, to any document incorporated by
reference in any of the foregoing or for any
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additional information, (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or any order
directed to the Prospectus or any document incorporated therein by reference
or the initiation or threat of any stop order proceeding or of any challenge
by the SEC to the accuracy or adequacy of any document incorporated by
reference in the Prospectus, (iv) of receipt by the Company of any
notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threat of any
proceeding for that purpose and (v) of the happening of any event which makes
untrue any statement of a material fact made in the Registration Statement
(insofar as the Registration Statement relates to or covers the Shares) or
the Prospectus, which causes the Registration Statement or the Prospectus to
omit to state therein a material fact necessary to make the statements
therein not misleading or which requires the making of a change in the
Registration Statement or the Prospectus in order to make any material
statement therein not misleading.
(g) STOP ORDER. If, during the period specified in Section 3(k), the SEC
shall issue a stop order suspending the effectiveness of the Registration
Statement, to make every reasonable effort to obtain the lifting of that order
at the earliest possible time.
(h) EARNINGS STATEMENT. As soon as practicable, to make generally
available to its security holders and to deliver to the Representatives an
earnings statement, conforming with the requirements of Section 11(a) of the
1933 Act and Rule 158 of the 1933 Act Regulations, covering a period of at least
twelve months beginning after the effective date of the Registration Statement
as defined in Rule 158(c) of the 1933 Act Regulations.
(i) SHAREHOLDER AND OTHER REPORTS. During the period of five years
hereafter, to furnish to the Representatives, (i) as soon as available, a copy
of each report of the Company mailed to its shareholders or report filed by the
Company with the SEC and (ii) from time to time such other information
concerning the Company as the Representatives may reasonably request.
(j) BLUE SKY QUALIFICATIONS. The Company will endeavor, in cooperation
with the Representatives, to qualify the Shares for offering and sale under
the applicable securities laws of such states and other jurisdictions of the
United States as the Representatives may designate, and will maintain such
qualifications in effect for the period specified in Section 3(k); provided,
however, that the Company shall not be obligated to file any general consent
to service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. The Company will file such
statements and reports as
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may be required by the laws of each jurisdiction in which the Shares have
been qualified as above provided. The Company will promptly advise the
Representatives of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Shares for sale in any such state
or jurisdiction or the initiating or threatening of any proceeding for such
purpose.
(k) 1934 ACT FILINGS. The Company, during the period when the Prospectus
is required to be delivered under the 1933 Act, will file promptly all documents
required to be filed with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d)
of the 1934 Act.
(l) STAND-OFF AGREEMENT. The Company will not, without the prior written
consent of the Representatives, offer or sell, or enter into any agreement to
sell, any shares of common stock of the Company or any securities convertible
into or exercisable or exchangeable for such common stock, for a period of 30
days after the date of the initial public offering of the Shares, other than (i)
the Shares to be sold hereunder and (ii) any actions taken under its Investors
Plus Plan.
(m) COSTS. To pay all costs incident to the authorization, issuance, sale
and delivery of the Shares; the costs incident to the preparation, printing and
filing under the 1933 Act of the Registration Statement and the Prospectus and
any amendments, supplements and exhibits thereto; the costs incident to the
preparation, printing and filing of the documents and any amendments and
exhibits thereto required to be filed by the Company under the 1934 Act; the
costs of distributing the Registration Statement as originally filed and each
amendment and post-effective amendment thereof (including exhibits), any
Preliminary Prospectus, the Prospectus and any documents incorporated by
reference in any of the foregoing documents; the costs of printing this
Agreement; the listing of the Shares on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") National Market; the fees and
expenses of qualifying the Shares under the securities laws of the several
jurisdictions as provided in subsection (j) of this Section and of preparing and
printing a Blue Sky Memorandum, (including fees of counsel to the Underwriters
not to exceed $_____ in the aggregate); and all other costs and expenses
incident to the performance of the Company's obligations under this Agreement;
PROVIDED that, except as provided in this Section 3(m),the Underwriters shall
pay their own costs and expenses, including the fees and expenses of their
counsel, any transfer taxes on the Shares which they may sell and the expenses
of advertising any offering of the Shares made by the Underwriters.
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(n) To use reasonable efforts to maintain the inclusion of the Common
Stock in the NASDAQ National Market (or on a national securities exchange) for a
period of five years after the date hereof.
SECTION 4. CONDITIONS OF OBLIGATIONS.
The several obligations of the Underwriters under this Agreement with
respect to the Shares are subject to the accuracy, on the date hereof, on the
Closing Date and on the Option Closing Date, of the representations and
warranties on the part of the Company herein and to the accuracy of the
statements of the Company's officers made in any certificate furnished pursuant
to the provisions hereof, to the performance and observance by the Company of
all of its covenants and agreements herein contained and to each of the
following additional terms and conditions applicable to the Shares:
(a) NO STOP ORDER. No stop order suspending the effectiveness of the
Registration Statement nor any order directed to any document incorporated by
reference in the Prospectus shall have been issued and prior to that time no
stop order proceeding shall have been initiated or threatened by the SEC and no
challenge shall have been made by the SEC to the accuracy or adequacy of any
document incorporated by reference in the Prospectus; any request of the SEC for
inclusion of additional information in the Registration Statement or the
Prospectus or otherwise shall have been complied with and there shall be no
material adverse change in the condition, financial or otherwise, of the
Company, whether or not arising in the ordinary course of business.
(b) LEGAL MATTERS. All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement, the Shares,
the form of the Registration Statement, the Prospectus and all other legal
matters relating to this Agreement and the transactions contemplated hereby
shall be satisfactory in all respects to _________________, counsel for the
Underwriters, and the Company shall have furnished to such counsel all documents
and information that they may reasonably request to enable them to pass upon
such matters (it being understood that such counsel shall not be required to
pass on any financial statements, financial data, statistical data and
supporting schedules included in the Prospectus).
(c) OPINION OF COMPANY COUNSEL. Stafford, Rosenbaum, Rieser & Hansen,
counsel to the Company, shall have furnished to the Representatives a letter
addressed to the Underwriters and dated the Closing Date stating their opinion
to the effect that:
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(i) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Wisconsin,
with corporate authority to own and operate its properties, and valid
franchises, licenses and permits adequate for the conduct of its business,
as described in the Prospectus;
(ii) this Agreement has been duly authorized, executed and delivered
by the Company;
(iii) the certificates for the Shares are in due and proper form; the
issue and sale of the Shares by the Company in accordance with the terms of
this Agreement have been duly and validly authorized by the necessary
corporate action;
(iv) the Shares conform as to legal matters with the statements
concerning them made in the Prospectus, and such statements accurately set
forth the matters respecting the Shares required to be set forth in the
Prospectus;
(v) the Shares have been duly authorized and, when issued and
delivered to the Underwriters pursuant to this Agreement against payment
of the Purchase Price per Share therefore, will be validly issued, fully
paid and non-assessable, except to the extent that they are assessable as
provided in Section 180.0622 of the Wisconsin Business Corporation Law, and
the issuance of the Shares will not be subject to any preemptive rights.
(vi) the order of the PSCW referred to in Section 1(a)(x) hereof
pertaining to the Shares have been duly entered and, to the best of the
knowledge of such counsel, are still in force and effect; and no further
approval, authorization, consent, certificate or order of any state or
federal commission or regulatory authority (other than in connection or
compliance with the provisions of the securities or Blue Sky laws of any
jurisdiction) is necessary with respect to the issue and sale of the Shares
as contemplated by this Agreement;
(vii) the Registration Statement has become effective under the 1933
Act and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending or
threatened under the 1933 Act;
(viii) the Registration Statement and the Prospectus and each
amendment or supplement thereto comply as to form in all material respects
with the requirements of the 1933 Act
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and the 1933 Act Regulations (except that such counsel need express no
opinion as to the financial statements, financial data, statistical data
or supporting schedules contained therein);
(ix) such counsel does not know of any legal or governmental
proceeding required to be described in the Prospectus which is not
described as required, or of any contract or document of a character
required to be described or incorporated in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement
which is not described, incorporated or filed as required;
(x) neither the execution and delivery of this Agreement nor the
issuance and sale of the Shares in accordance with the terms of this
Agreement nor the consummation of the transactions herein contemplated, nor
compliance with the terms and provisions hereof, will conflict with,
violate or result in a breach of any law, any administrative regulation or
any court decree known to such counsel to be applicable to the Company,
conflict with or result in a breach of any of the terms, conditions or
provisions of the Articles of Incorporation or the By-laws, as restated or
amended, of the Company or of any material agreement or instrument known to
such counsel to which the Company is a party or by which the Company is
bound or constitute a default thereunder;
(xi) the documents referred to in Section 1(a)(v) hereof, as of their
respective filing dates, complied as to form in all material respects with
the applicable requirements of the 1934 Act and the 1934 Act Regulations
(except that such counsel do not need to express any opinion as to the
financial statements, financial data, statistical data or supporting
schedules contained therein);
(xii) the statements made in the Prospectus which are stated therein
to have been made on the authority of such counsel have been reviewed by
them and, as to matters of law and legal conclusion, are correct; and
(xiii) except as set forth in the Prospectus, to the best knowledge of
such counsel there are no pending or threatened legal or administrative
proceedings to which the Company is a party or in which any of its property
is the subject wherein an unfavorable decision, ruling or finding would
adversely affect the transactions contemplated by this Agreement or the
validity or enforceability against the Company of this Agreement;
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and such letter shall additionally state that nothing has come to the attention
of such counsel that would lead them to believe that the Registration Statement
(other than the financial statements, financial data, statistical data and
supporting schedules included therein, as to which they do not need to express
any belief), at the time it became effective or at the Closing Date, contained
or contains an untrue statement of a material fact or omitted or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus (other than the
financial statements, financial data, statistical data and supporting schedules
included therein, as to which they do not need to express any belief), at the
time it was first filed with the SEC pursuant to Rule 424(b) under the 1933 Act
or at the Closing Date contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(d) OPINION OF COMPANY SPECIAL COUNSEL. Sidley & Austin, special counsel
to the Company, shall have furnished to the Representatives a letter addressed
to the Underwriters and dated the Closing Date stating in their opinion
substantially to the effect set forth in clauses (ii), (iii), (iv), (v), (vi),
(vii) and (viii) of paragraph (c) of this Section 4 and to the further effect
that:
(i) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Wisconsin,
with corporate authority to own and operate its properties as described in
the Prospectus; and
(ii) neither the execution and delivery of this Agreement nor the
issuance and sale of the Shares in accordance with the terms of this
Agreement nor the consummation of the transactions herein contemplated, nor
compliance with the terms and provisions hereof, will conflict with,
violate or result in a breach of any of the terms, conditions or provisions
of Articles of Incorporation or By-laws, as restated or amended, of the
Company, or of any material agreement or instrument known to such counsel
to which the Company is a party or by which the Company is bound or
constitute a default thereunder;
and such letter shall additionally state that nothing has come to the attention
of such counsel that would lead them to believe that the Registration Statement
(other than the financial statements, financial data, statistical data and
supporting schedules included therein, as to which they do not need to express
any belief), at
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the time it became effective or at the Closing Date contained or contains an
untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus (other than the financial
statements, financial data, statistical data and supporting schedules
included therein, as to which they do not need to express any belief) as at
the time it was first filed with the SEC pursuant to Rule 424(b) under the
1933 Act or at the Closing Date contained or contains any untrue statement of
a material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
For the purpose of rendering the foregoing opinions, Sidley & Austin may
rely exclusively upon the opinion Stafford, Rosenbaum, Rieser & Hansen, counsel
for the Company, delivered to you pursuant to paragraph (c) of this Section 4 as
to the organization of the Company and as to all other matters of Wisconsin law
and upon the factual representations made in this Agreement and upon
certificates of officers of the Company and public officials.
(e) OFFICERS' CERTIFICATE. The Company shall have furnished to the
Representatives a certificate, dated the Closing Date, of its Chairman of the
Board, its President or a Vice President and its Treasurer or an Assistant
Treasurer stating that, to the best of their knowledge after reasonable
investigation, the representations and warranties of the Company in Section 1
hereof are true and correct as of the date hereof; the Company has complied with
all its agreements contained herein; and the conditions set forth in Sections
4(a), 4(h), 4(i)and 4(j) hereof have been fulfilled.
(f) COMFORT LETTER. The Representatives shall have received a letter from
PricewaterhouseCoopers LLP dated as of the Closing Date and in form and
substance satisfactory to the Representatives, to the effect that:
(i) They are independent public accountants with respect to the
Company within the meaning of the 1933 Act and the 1933 Act Regulations;
(ii) In their opinion, the financial statements and supporting
schedule(s) of the Company audited by them and included or incorporated by
reference in the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and
the 1933 Act Regulations with respect to registration statements on Form
S-3 and the 1934 Act and the 1934 Act Regulations;
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(iii) They have performed specified procedures, not constituting an
audit, including a reading of the latest available interim financial
statements of the Company, a reading of the minute books of the Company
since the end of the most recent fiscal year with respect to which an audit
report has been issued, inquiries of and discussions with certain officials
of the Company responsible for financial and accounting matters with
respect to the unaudited consolidated financial statements of the Company
included in the Registration Statement and Prospectus and the latest
available interim unaudited financial statements of the Company, and such
other inquiries and procedures as may be specified in such letter, and on
the basis of such inquiries and procedures nothing came to their attention
that caused them to believe that: (A) the unaudited consolidated financial
statements of the Company included in the Registration Statement and
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the 1934 Act and the 1934 Act
Regulations or were not fairly presented in conformity with generally
accepted accounting principles in the United States applied on a basis
substantially consistent with that of the audited financial statements
included therein, or (B) at a specified date not more than five days prior
to the date of such letter, there was any change in the capital stock or
any increase in long-term debt of the Company or any decrease in the common
shareholders' equity of the Company other than for the declaration of
regular quarterly dividends, in each case as compared with the amounts
shown on the most recent balance sheet of the Company included in the
Registration Statement and Prospectus or, during the period from the date
of such balance sheet to a specified date not more than five days prior to
the date of such letter, there were any decreases, as compared with the
corresponding period in the preceding year, in operating revenues or net
income of the Company, except in each such case as set forth in or
contemplated by the Registration Statement and Prospectus or except for
such exceptions (e.g. inability to determine such decreases because of
insufficient accounting information available after the date of such most
recent balance sheet) enumerated in such letter as shall have been agreed
to by the Representatives and the Company; and
(iv) In addition to the examination referred to in their report
included or incorporated by reference in the Registration Statement and the
Prospectus, and the limited procedures referred to in clause (iii) above,
they have carried out certain other specified procedures, not constituting
an audit, with respect to certain amounts, percentages and financial
information which are included or
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incorporated by reference in the Registration Statement and Prospectus
and which are specified by the Representatives, and have found such
amounts, percentages and financial information to be in agreement with
the relevant accounting, financial and other records of the Company
identified in such letter.
(g) OPINION OF UNDERWRITERS' COUNSEL. Jones, Day, Reavis & Pogue,
Chicago, Illinois, as counsel for the Underwriters, shall have furnished to the
Representatives on the Closing Date such opinions with respect to the validity
of the Shares and with respect to the Registration Statement, the Prospectus,
and other related matters as the Representatives may reasonably require.
(h) FERC AND PSCW ORDERS. The order of the PSCW referred to in Section
1(a)(x) hereof shall be in full force and effect and no proceedings to suspend
the effectiveness of either such order shall be pending or threatened.
(i) NO MATERIAL ADVERSE CHANGE. Subsequent to the date of the most recent
financial statements incorporated by reference in the Prospectus, there shall
have been no material adverse change in the condition (financial or otherwise),
of the Company, whether or not arising in the ordinary course of business,
except as set forth in the Registration Statement and the Prospectus, including
the documents incorporated by reference therein, as of the effective date of
this Agreement.
(j) OTHER DOCUMENTS. Counsel to the Underwriters shall have been
furnished with such documents and opinions as such counsel may reasonably
require for the purpose of enabling such counsel to pass upon the issuance and
sale of Shares as herein contemplated and related proceedings, or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained; and
all proceedings taken by the Company in connection with the issuance and sale of
Shares as herein contemplated shall be satisfactory in form and substance to the
Representatives and to counsel to the Underwriters.
If any condition specified in this Section 4 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Representatives by written notice to the Company and any such termination shall
be without liability of any party to any other party, except that the covenant
regarding provision of an earnings statement set forth in Section 3(h) hereof,
the provisions concerning payment of expenses
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under Section 3(m) hereof, the indemnity and contribution agreement set forth
in Section 6 hereof, the provisions concerning the payment of expenses in
Section 8 hereof and the provisions set forth under "Parties" of Section 12
hereof shall remain in effect.
SECTION 5. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the Shares are subject
to the following conditions precedent:
(a) NO STOP ORDER. At or before the date hereof, no stop order
suspending the effectiveness of the Registration Statement nor any order
directed to any document incorporated by reference in the Prospectus shall
have been issued and prior to that time no stop order proceeding shall have
been initiated or threatened by the SEC and no challenge shall have been
made by the SEC to the accuracy or adequacy of any document incorporated by
reference in the Prospectus; any request of the SEC for inclusion of
additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
(b) PSCW ORDERS. The order of the PSCW referred to in Section
(1)(a)(x) hereof shall be in full force and effect and no proceeding to
suspend the effectiveness of either such order shall be pending or
threatened.
In case any of the conditions specified above in this Section 5 shall not have
been fulfilled on the date hereof, this Agreement may be terminated by the
Company by delivering written notice of termination to the Representatives. Any
such termination shall be without liability of any party to any other party
except to the extent provided in Section 3(m), and Section 6 hereof.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE UNDERWRITERS. The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus (or
any amendment or supplement thereto) or the omission or alleged omission
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therefrom of a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred, (including,
subject to Section 6(c) hereof, the fees and disbursements of counsel)
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and PROVIDED, FURTHER, that
this indemnity agreement with respect to any preliminary prospectus shall not
inure to the benefit of the Underwriter from whom the person asserting any such
losses, liabilities, claims, damages or expenses purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any such amendment or
supplement thereto, but excluding documents incorporated or deemed to be
incorporated by reference therein) is provided to the Underwriter but was not
sent or given by or on behalf of such Underwriter to such person, if such is
required by law, at or prior to the written confirmation of the sale of such
Shares to such person and if the Prospectus (as so amended or supplemented, but
excluding documents incorporated or deemed to be incorporated by reference
therein) would have corrected the defect giving rise to such loss, liability,
claim, damage or expense, it being understood that this proviso shall have no
application if such defect shall have been corrected in a
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document which is incorporated or deemed to be incorporated by reference in
the Prospectus.
(b) INDEMNIFICATION OF THE COMPANY. Each Underwriter agrees to indemnify
and hold harmless the Company, its directors, each of its officers who signed
the Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) GENERAL. Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure so to notify an indemnifying
party shall not relieve such indemnifying party from any liability which it may
have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action. In no
event shall the indemnifying parties be liable for the fees and expenses of more
than one counsel (in addition to any local counsel) for all indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.
The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i)
counsel for the indemnified party concludes that the use of counsel chosen by
the indemnifying party to represent the
19
<PAGE>
indemnified party would present such counsel with a conflict of interest,
(ii) the actual or potential defendants in, or targets of, any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have been advised by counsel that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party.
(d) CONTRIBUTION. If the indemnification provided for in this Section is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to herein, then each indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and each Agent on the
other from the sale to or through each Agent of the Notes or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and of each Agent on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations; provided, however, that in no
case shall any Agent be responsible for any amount in excess of the total
underwriting discounts and commission received by such Agent in connection with
the sale of the Notes to or through such Agent. The relative benefits received
by the Company on the one hand and each Agent on the other in connection with
the sale of the Notes shall be deemed to be in the same proportion as the total
commissions and underwriting discounts received by such Agent to the date of
such liability bear to the total sales price from the sale of Notes to or
through such Agent to the date of such liability. The relative fault of the
Company on the one hand and of each Agent on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by such Agent and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
20
<PAGE>
The Company and the Agents agree that it would not be just and equitable if
contribution pursuant to this Section were determined by pro rata allocation or
by any other method of allocation which does not take account of the
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section, no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as such Underwriter, and each director of the Company and
each officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of
1933 Act, shall have the same rights to contribution as the Company.
SECTION 7. TERMINATION.
The Representatives may terminate this Agreement, immediately upon notice
to the Company, at any time prior to the Closing Date (i) if there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse change
in the condition, financial or otherwise, of the Company, whether or not arising
in the ordinary course of business, or (ii) if there shall have occurred any
outbreak or escalation of major hostilities in which the United States is
involved or any other substantial national or international calamity or crisis
the effect of which is such as to make it, in the judgment of the
Representatives, impracticable or inadvisable to market the Shares, or (iii) if
trading in any securities of the Company has been suspended by the SEC or a
national securities exchange or in the NASDAQ National Market, or if trading
generally on the New York Stock Exchange shall have been suspended, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by said exchange or by order of the SEC or any
other governmental authority, or if a banking moratorium shall have been
declared by either Federal or New York authorities, or (iv) if there shall have
come to the attention of the Representatives any facts that would cause the
Representatives to believe that the
21
<PAGE>
Prospectus, at the Closing Date, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the Closing
Date, not misleading.
SECTION 8. PAYMENT OF EXPENSES IN CERTAIN CIRCUMSTANCES.
If the purchase of the Shares by the Underwriters is not consummated for
any reason other than a default by one or more of the Underwriters, the Company
shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 3(m) hereof, the respective obligations of the Company and
the Underwriters pursuant to Section 6 hereof shall remain in effect, and the
Company will reimburse the Representatives for the reasonable out-of-pocket
expenses of the Underwriters, not exceeding $10,000, and for the fee and
disbursements of Jones, Day, Reavis & Pogue, Chicago, Illinois, the Underwriters
agreeing to pay such expenses, fee and disbursements in any other event. In no
event will the Company be liable to any of the Underwriters for damages on
account of loss of anticipated profits.
SECTION 9. DEFAULT BY UNDERWRITERS.
If one or more of the Underwriters shall fail at the Closing Date to
purchase the Shares which it or they are obligated to purchase under this
Agreement (Defaulted Shares"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Shares in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, the Representatives shall not have completed such
arrangements within such 24-hour period, then:
(a) if the amount of Defaulted Shares does not exceed 10% of the
amount of the Shares, each of the non-defaulting Underwriters shall be
obligated, severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the amount of Defaulted Shares exceeds 10% of the amount of
the Shares, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section 9 shall relieve any
defaulting Underwriter from liability in respect of its default.
22
<PAGE>
In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company shall
have the right to postpone the Closing Date for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements.
SECTION 10. NOTICES.
Unless otherwise provided herein, all notices required under the terms and
provisions hereof shall be in writing, either delivered by hand, by mail or by
telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.
If to the Company:
Madison Gas and Electric Company
133 South Blair Street
Madison, Wisconsin 53703
Attention: Treasurer
Fax: 608-252-1540
If to the Representatives:
or at such other address as such party or parties may designate from time to
time by notice duly given in accordance with the terms of this Section 10.
SECTION 11. GOVERNING LAW.
This Agreement and all the rights and obligations of the parties shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed in the State of New York. Any
suit, action or
23
<PAGE>
proceeding brought by the Company against the Underwriters in connection with
or arising under this Agreement shall be brought solely in the state or
federal court of appropriate jurisdiction located in the Borough of
Manhattan, The City of New York.
SECTION 12. PARTIES.
This Agreement shall inure to the benefit of and be binding upon each
Underwriter and the Company and their respective successors. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the parties hereto and their respective
successors and the controlling persons and officers and directors referred to in
Section 6 and their heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the parties hereto and
respective successors and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Shares shall be deemed to be a
successor by reason merely of such purchase.
SECTION 13. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
24
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
the several Underwriters and the Company in accordance with its terms.
Very truly yours,
MADISON GAS AND ELECTRIC COMPANY
By:
---------------------------
Name:
Title:
Accepted:
Names of Representatives
By:
---------------------------------
Name:
Title:
On behalf of each of the Underwriters
25
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
<S> <C> <C>
NAME ADDRESS NUMBER OF SHARES
- ---- ------- ----------------
</TABLE>
<PAGE>
Exhibit 4.4
- -------------------------------------------------------------------------------
MADISON GAS AND ELECTRIC COMPANY
AND
BANK ONE, N.A., AS TRUSTEE
-------------------------
INDENTURE
DATED AS OF ________ _, 1998
-------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS . . . . . . . . . . . .1
Section 1.01. General . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.02. TIA . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.03. Other Definitions . . . . . . . . . . . . . . . . . . . .2
Accrued Interest. . . . . . . . . . . . . . . . . . . . . . . . . .2
Accrued Interest Factor . . . . . . . . . . . . . . . . . . . . . .2
Amortized Face Amount . . . . . . . . . . . . . . . . . . . . . . .2
Amortizing Note . . . . . . . . . . . . . . . . . . . . . . . . . .3
Authenticating Agent. . . . . . . . . . . . . . . . . . . . . . . .3
Authorized Agent. . . . . . . . . . . . . . . . . . . . . . . . . .3
Authorized Newspaper. . . . . . . . . . . . . . . . . . . . . . . .3
Basis Point . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . .4
Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . .4
Bond Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . .4
Business Day. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Calculation Agent . . . . . . . . . . . . . . . . . . . . . . . . .4
Calculation Date. . . . . . . . . . . . . . . . . . . . . . . . . .4
Commercial Paper Rate . . . . . . . . . . . . . . . . . . . . . . .4
Commercial Paper Rate Interest Determination Date . . . . . . . . .5
Commercial Paper Rate Notes . . . . . . . . . . . . . . . . . . . .5
Common Shareholders Equity. . . . . . . . . . . . . . . . . . . . .5
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Composite Quotations. . . . . . . . . . . . . . . . . . . . . . . .8
Corporate Trust Office of the Trustee . . . . . . . . . . . . . . .8
CUSIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Depositary. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Designated LIBOR Page . . . . . . . . . . . . . . . . . . . . . . .8
Discharged. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . .9
Extension Notice. . . . . . . . . . . . . . . . . . . . . . . . . .9
Extension Period. . . . . . . . . . . . . . . . . . . . . . . . . .9
Final Maturity Date . . . . . . . . . . . . . . . . . . . . . . . 10
First Mortgage Bonds. . . . . . . . . . . . . . . . . . . . . . . 10
Fixed Rate Amortizing Note. . . . . . . . . . . . . . . . . . . . 10
Fixed Rate Note . . . . . . . . . . . . . . . . . . . . . . . . . 10
Floating Rate Note. . . . . . . . . . . . . . . . . . . . . . . . 10
Global Note . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
H.15(519):. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Index Maturity. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Initial Interest Rate . . . . . . . . . . . . . . . . . . . . . . 11
Initial Redemption Date . . . . . . . . . . . . . . . . . . . . . 11
Interest Accrual Period . . . . . . . . . . . . . . . . . . . . . 11
Interest Determination Date . . . . . . . . . . . . . . . . . . . 12
<PAGE>
Interest Factor . . . . . . . . . . . . . . . . . . . . . . . . . 12
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . 12
Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Interest Rate Basis; Base Rate. . . . . . . . . . . . . . . . . . 13
Interest Reset Date . . . . . . . . . . . . . . . . . . . . . . . 13
Interest Reset Period . . . . . . . . . . . . . . . . . . . . . . 14
Issue Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
LIBOR Interest Determination Date . . . . . . . . . . . . . . . . 16
LIBOR Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
London Business Day . . . . . . . . . . . . . . . . . . . . . . . 16
Maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . 17
Minimum Interest Rate . . . . . . . . . . . . . . . . . . . . . . 17
Money Market Yield. . . . . . . . . . . . . . . . . . . . . . . . 17
Note or Notes; Outstanding. . . . . . . . . . . . . . . . . . . . 17
Noteholder; Holder. . . . . . . . . . . . . . . . . . . . . . . . 18
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . 18
Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . . . 18
Optional Interest Reset Date: . . . . . . . . . . . . . . . . . . 19
Original Issue Date . . . . . . . . . . . . . . . . . . . . . . . 19
Original Issue Discount Note. . . . . . . . . . . . . . . . . . . 19
Permitted Encumbrances. . . . . . . . . . . . . . . . . . . . . . 19
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Pre-Exercise Stated Maturity Date . . . . . . . . . . . . . . . . 22
Prime Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Prime Rate Interest Determination Date. . . . . . . . . . . . . . 23
Prime Rate Notes. . . . . . . . . . . . . . . . . . . . . . . . . 23
Principal Amount. . . . . . . . . . . . . . . . . . . . . . . . . 23
Principal Executive Offices of the Company. . . . . . . . . . . . 23
Principal Facility. . . . . . . . . . . . . . . . . . . . . . . . 24
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . 24
Reset Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Reset Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . 25
Reuters Screen USPRIME1 . . . . . . . . . . . . . . . . . . . . . 25
Spread. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Spread Multiplier . . . . . . . . . . . . . . . . . . . . . . . . 26
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . 26
Subsequent Interest Period. . . . . . . . . . . . . . . . . . . . 26
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Treasury. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Treasury Bills. . . . . . . . . . . . . . . . . . . . . . . . . . 26
Treasury Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Treasury Rate Interest Determination Date . . . . . . . . . . . . 27
Treasury Rate Notes . . . . . . . . . . . . . . . . . . . . . . . 28
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . 28
Wholly-Owned Subsidiary . . . . . . . . . . . . . . . . . . . . . 28
ii
<PAGE>
Yield to Maturity . . . . . . . . . . . . . . . . . . . . . . . . 28
Zero Coupon Note. . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE TWO
FORM, ISSUE, EXECUTION, REGISTRATION AND
EXCHANGE OF NOTES . . . . . . . . . . . 29
Section 2.01. Form Generally. . . . . . . . . . . . . . . . . . . . . 29
Section 2.02. Form of Trustee's Certificate of
Authentication. . . . . . . . . . . . . . . . . . . . . 29
Section 2.03. Amount Unlimited. . . . . . . . . . . . . . . . . . . . 30
Section 2.04. Denominations, Dates, Interest Payment
and Record Dates. . . . . . . . . . . . . . . . . . . . 30
Section 2.05. Execution, Authentication, Delivery
and Dating. . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.06. Exchange and Registration of Transfer
of Notes. . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.07. Mutilated, Destroyed, Lost or Stolen
Notes . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.08. Temporary Notes . . . . . . . . . . . . . . . . . . . . 37
Section 2.09. Cancellation of Notes Paid, etc . . . . . . . . . . . . 37
Section 2.10. Interest Rights Preserved . . . . . . . . . . . . . . . 37
Section 2.11. Payment of Notes. . . . . . . . . . . . . . . . . . . . 37
Section 2.12. Notes Issuable in the Form of a Global
Note. . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 2.13. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE THREE
REDEMPTION OF NOTES; REPAYMENT PRIOR TO
STATED MATURITY. . . . . . . . . . . . 41
Section 3.01. Applicability of Redemption Provisions. . . . . . . . . 41
Section 3.02. Notice of Redemption; Selection of Notes. . . . . . . . 42
Section 3.03. Payment of Notes on Redemption; Deposit
of Redemption Price . . . . . . . . . . . . . . . . . . 43
Section 3.04. Repayment at the Option of the Holder . . . . . . . . . 44
Section 3.05. Extension . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.06. Reset Notes . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE FOUR
FIRST MORTGAGE BONDS. . . . . . . . . . . 47
Section 4.01. Issuance Restrictions . . . . . . . . . . . . . . . . . 47
Section 4.02. First Mortgage Bonds held by the Trustee. . . . . . . . 48
Section 4.03. Trustee to Exercise Rights of First
Mortgage Bondholder . . . . . . . . . . . . . . . . . . 48
Section 4.04. No Transfer of First Mortgage Bonds;
Exception . . . . . . . . . . . . . . . . . . . . . . . 48
iii
<PAGE>
Section 4.05. Release of First Mortgage Bonds . . . . . . . . . . . . 48
Section 4.06. Voting of First Mortgage Bonds. . . . . . . . . . . . . 49
Section 4.07. Discharge of Bond Indenture . . . . . . . . . . . . . . 49
ARTICLE FIVE
SATISFACTION AND DISCHARGE; UNCLAIMED MONEYS. . . . . 50
Section 5.01. Satisfaction and Discharge. . . . . . . . . . . . . . . 50
Section 5.02. Deposited Moneys to Be Held in Trust by
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.03. Return of Unclaimed Moneys. . . . . . . . . . . . . . . 52
Section 5.04. Reinstatement . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE SIX
PARTICULAR COVENANTS OF THE COMPANY. . . . . . . 52
Section 6.01. Payment of Principal, Premium and
Interest. . . . . . . . . . . . . . . . . . . . . . . . 52
Section 6.02. Office for Notices and Payments, etc. . . . . . . . . . 53
Section 6.03. Appointments to Fill Vacancies in
Trustee's Office. . . . . . . . . . . . . . . . . . . . 53
Section 6.04. Annual Statement and Notice . . . . . . . . . . . . . . 53
Section 6.05. Corporate Existence . . . . . . . . . . . . . . . . . . 53
Section 6.06. Limitation Upon Mortgages and Liens . . . . . . . . . . 54
Section 6.07. Waiver of Certain Covenants . . . . . . . . . . . . . . 54
ARTICLE SEVEN
NOTEHOLDER LISTS AND REPORTS BY THE COMPANY
AND THE TRUSTEE . . . . . . . . . . . 54
Section 7.01. Noteholder Lists. . . . . . . . . . . . . . . . . . . . 54
Section 7.02. Securities and Exchange Commission
Reports . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 7.03. Reports by the Trustee. . . . . . . . . . . . . . . . . 55
ARTICLE EIGHT
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON EVENT OF DEFAULT. . . . . . . . . . . 55
Section 8.01. Events of Default . . . . . . . . . . . . . . . . . . . 55
Section 8.02. Acceleration of Maturity; Rescission and
Annulment . . . . . . . . . . . . . . . . . . . . . . . 57
Section 8.03. Collection and Suits for Enforcement by
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 8.04. Trustee May File Proofs of Claim. . . . . . . . . . . . 59
Section 8.05. Trustee May Enforce Claims Without
Possession of Notes . . . . . . . . . . . . . . . . . . 60
Section 8.06. Application of Moneys Collected by
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 60
iv
<PAGE>
Section 8.07. Proceedings by Noteholders. . . . . . . . . . . . . . . 61
Section 8.08. Proceedings by Trustee. . . . . . . . . . . . . . . . . 62
Section 8.09. Remedies Cumulative and Continuing. . . . . . . . . . . 62
Section 8.10. Restoration of Rights and Remedies. . . . . . . . . . . 62
Section 8.11. Direction of Proceedings and Waiver of
Defaults by Majority Noteholders. . . . . . . . . . . . 63
Section 8.12. Notice of Default . . . . . . . . . . . . . . . . . . . 63
Section 8.13. Undertaking to Pay Costs. . . . . . . . . . . . . . . . 64
ARTICLE NINE
CONCERNING THE TRUSTEE. . . . . . . . . . 64
Section 9.01. Certain Duties and Responsibilities . . . . . . . . . . 64
Section 9.02. Notice of Defaults. . . . . . . . . . . . . . . . . . . 65
Section 9.03. Certain Rights of Trustee . . . . . . . . . . . . . . . 66
Section 9.04. Not Responsible for Recitals or Issuance
of Notes. . . . . . . . . . . . . . . . . . . . . . . . 67
Section 9.05. May Hold Notes. . . . . . . . . . . . . . . . . . . . . 67
Section 9.06. Money Held in Trust . . . . . . . . . . . . . . . . . . 67
Section 9.07. Compensation and Reimbursement. . . . . . . . . . . . . 68
Section 9.08. Disqualification; Conflicting Interests . . . . . . . . 68
Section 9.09. Corporate Trustee Required; Eligibility . . . . . . . . 74
Section 9.10. Resignation and Removal; Appointment of
Successor . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.11. Acceptance of Appointment by Successor. . . . . . . . . 76
Section 9.12. Merger, Conversion, Consolidation or
Succession to Business. . . . . . . . . . . . . . . . . 76
Section 9.13. Preferential Collection of Claims
Against Company . . . . . . . . . . . . . . . . . . . . 77
Section 9.14. Appointment of Authenticating Agent . . . . . . . . . . 81
ARTICLE TEN
CONCERNING THE NOTEHOLDERS . . . . . . . . 83
Section 10.01. Action by Noteholders . . . . . . . . . . . . . . . . . 83
Section 10.02. Proof of Execution by Noteholders . . . . . . . . . . . 83
Section 10.03. Who Deemed Absolute Owners. . . . . . . . . . . . . . . 84
Section 10.04. Company-Owned Notes Disregarded . . . . . . . . . . . . 84
Section 10.05. Revocation of Consents; Future Holders
Bound . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.06. Record Date for Noteholder Acts . . . . . . . . . . . . 85
ARTICLE ELEVEN. . . . . . . . . . . . 85
NOTEHOLDERS' MEETING . . . . . . . . . . 85
Section 11.01. Purposes of Meetings. . . . . . . . . . . . . . . . . . 85
Section 11.02. Call of Meetings by Trustee . . . . . . . . . . . . . . 86
Section 11.03. Call of Meetings by Company or
Noteholders . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.04. Qualifications for Voting . . . . . . . . . . . . . . . 86
v
<PAGE>
Section 11.05. Regulations . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.06. Voting. . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 11.07. Right of Trustee or Noteholders not
Delayed . . . . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE TWELVE. . . . . . . . . . . . 88
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE . . . . . . . . . . . 88
Section 12.01. Company May Consolidate, etc., only
on Certain Terms. . . . . . . . . . . . . . . . . . . . 88
Section 12.02. Successor Corporation Substituted . . . . . . . . . . . 89
ARTICLE THIRTEEN
SUPPLEMENTAL INDENTURES. . . . . . . . . . 90
Section 13.01. Supplemental Indentures without Consent
of Noteholders. . . . . . . . . . . . . . . . . . . . . 90
Section 13.02. Supplemental Indentures with Consent of
Noteholders . . . . . . . . . . . . . . . . . . . . . . 91
Section 13.03. Compliance with Trust Indenture Act;
Effect of Supplemental Indentures . . . . . . . . . . . 92
Section 13.04. Notation on Notes . . . . . . . . . . . . . . . . . . . 93
Section 13.05. Evidence of Compliance of Supplemental
Indenture to Be Furnished Trustee . . . . . . . . . . . 93
ARTICLE FOURTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS. . . . . . . . . . 93
Section 14.01. Indenture and Notes Solely Corporate
Obligations . . . . . . . . . . . . . . . . . . . . . . 93
ARTICLE FIFTEEN
MISCELLANEOUS PROVISIONS. . . . . . . . . . 94
Section 15.01. Provisions Binding on Company's
Successors. . . . . . . . . . . . . . . . . . . . . . . 94
Section 15.02. Official Acts by Successor Corporation. . . . . . . . . 94
Section 15.03. Addresses for Notices, etc. . . . . . . . . . . . . . . 94
Section 15.04. Governing Law . . . . . . . . . . . . . . . . . . . . . 94
Section 15.05. Evidence of Compliance with Conditions
Precedent . . . . . . . . . . . . . . . . . . . . . . . 94
Section 15.06. Business Days . . . . . . . . . . . . . . . . . . . . . 96
Section 15.07. Trust Indenture Act to Control. . . . . . . . . . . . . 96
Section 15.08. Table of Contents, Headings, etc. . . . . . . . . . . . 96
Section 15.09. Execution in Counterparts . . . . . . . . . . . . . . . 96
Section 15.10. Manner of Mailing Notice to Noteholders . . . . . . . . 96
vi
<PAGE>
EXHIBIT A - Global Fixed Rate Note. . . . . . . . . . . . . . . .A-1
EXHIBIT B - Fixed Rate Note . . . . . . . . . . . . . . . . . . .B-1
EXHIBIT C - Global Floating Rate Note . . . . . . . . . . . . . .C-1
EXHIBIT D - Floating Rate Note. . . . . . . . . . . . . . . . . .D-1
vii
<PAGE>
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as of
________ _, 1998, between Madison Gas and Electric Company and Bank One, N.A.,
as trustee.
SECTION OF ACT SECTION OF INDENTURE
-------------- --------------------
310(a)(1) and (2) ................... 9.09
310(a)(3) and (4) ................... Not applicable
310(a)(5) ........................... 9.08
310(b) .............................. 9.08 and 9.10
310(c) .............................. Not applicable
311(a) and (b) ...................... 9.13
311(c) .............................. Not applicable
312(a) .............................. 7.01
312(b) and (c) ...................... 7.01
313(a) .............................. 7.03
313(b)(1) ........................... Not applicable
313(b)(2) ........................... 7.03
313(c) .............................. 7.03
313(d) .............................. 7.03
314(a) .............................. 6.04, 7.02
314(b) .............................. Not applicable
314(c)(1) and (2) ................... 15.05
314(c)(3) ........................... Not applicable
314(d) .............................. Not applicable
314(e) .............................. 15.05
314(f) .............................. Not applicable
315(a), (c) and (d) ................. 9.01
315(b) .............................. 8.12; 9.02
315(e) .............................. 8.13
316(a)(1) ........................... 8.01 and 8.11
316(a)(2) ........................... Omitted
316(a) last sentence ................ 10.04
316(b) .............................. 8.07
316(c) .............................. 10.06
317(a)(1)............................ 8.03
317(a)(2)............................ 8.04
317(b) .............................. Omitted
318(a) .............................. 15.07
_________________________
This tie-sheet does not constitute a part of the Indenture.
<PAGE>
THIS INDENTURE, dated as of ________ _, 1998, between Madison Gas and
Electric Company, a corporation duly organized and existing under the laws of
the State of Wisconsin (hereinafter sometimes called the "Company"), and Bank
One, N.A., a national banking association organized and existing under the laws
of the United States of America, as trustee (hereinafter called the "Trustee").
W I T N E S S E T H:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of its Medium-Term Notes (hereinafter sometimes
called "Notes"), to be issued as in this Indenture provided;
AND WHEREAS, all acts and things necessary to make this Indenture a
valid agreement according to its terms have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized;
NOW THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes
are, and are to be authenticated, issued and delivered, and in consideration of
the premises, of the purchase and acceptance of the Notes by the Holders thereof
and of the sum of one dollar duly paid to it by the Trustee at the execution of
these presents, the receipt whereof is hereby acknowledged, the Company
covenants and agrees with the Trustee for the equal and proportionate benefit of
the respective Holders from time to time of the Notes, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. GENERAL. The terms defined in this Article One (except
as herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Article One.
SECTION 1.02. TIA. (a) Whenever this Indenture refers to a
provision of the Trust Indenture Act of 1939, as amended ("TIA"), such provision
is incorporated by reference in and made a part of this Indenture. The
following TIA terms incorporated in this Indenture have the following meanings:
<PAGE>
"indenture securities" means the Notes.
"indenture note holder" means a Noteholder or a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company.
(b) All terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by a rule of the
Securities and Exchange Commission have the meanings assigned to them in the TIA
or such statute or rule as in force on the date of execution of this Indenture.
SECTION 1.03. OTHER DEFINITIONS. For purposes of this Indenture, the
following terms have the following meanings:
ACCRUED INTEREST:
The term "Accrued Interest" at any Interest Payment Date (a) for a
Floating Rate Note shall mean the amount obtained by multiplying the principal
amount of such Floating Rate Note by its Accrued Interest Factor, and (b) for a
Fixed Rate Note, shall mean the amount obtained by multiplying the principal
amount of such Fixed Rate Note by its Interest Rate, and multiplying the product
thus obtained by a fraction, the numerator of which is the number of days in the
Interest Reset Period for such Note ending on such Interest Payment Date based
on a 360-day year of twelve 30-day months, and the denominator of which is 360.
ACCRUED INTEREST FACTOR:
The term "Accrued Interest Factor" at any Interest Payment Date for a
Floating Rate Note shall mean the sum of the Interest Factors for such Floating
Rate Note calculated for each day in the Interest Reset Period for such Note
ending on such Interest Payment Date or the prior Record Date, as the case may
be.
AMORTIZED FACE AMOUNT:
The term "Amortized Face Amount" of an Original Issue Discount Note as
of the date that (i) the principal amount of such Note is to be repaid prior to
its Stated Maturity, whether upon declaration of acceleration, call for
redemption, repayment at the option of the Holder or otherwise, or (ii) any
consent, notice, request, direction, waiver or suit by the Noteholders shall be
deemed to be given, made or commenced under this Indenture, shall
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<PAGE>
mean the principal amount of such Note multiplied by its Issue Price plus the
portion of the difference between the dollar amount thus obtained and the
principal amount of such Note that has accreted at the Yield to Maturity of
such Note (computed in accordance with generally accepted United States bond
yield computation principles) to such date, but in no event shall the
Amortized Face Amount of an Original Issue Discount Note exceed its principal
amount stated in the applicable Company Order.
AMORTIZING NOTE:
The term "Amortizing Note" shall mean a Note for which payments of
principal of and interest on such Note are made in installments over the life of
such Note, and unless otherwise specified in the applicable Company Order,
payments with respect to an Amortizing Note shall be applied first to interest
due and payable thereon and then to the reduction of the unpaid principal amount
thereof.
AUTHENTICATING AGENT:
The term "Authenticating Agent" shall mean the agent of the Trustee
which shall be appointed and acting pursuant to Section 9.14.
AUTHORIZED AGENT:
The term "Authorized Agent" shall mean an agent of the Company
designated by an Officers' Certificate to give to the Trustee the information
specified in clause (a) of "Company Order" for the issuance of a Note.
AUTHORIZED NEWSPAPER:
The term "Authorized Newspaper" shall mean a newspaper of general
circulation in the relevant area, printed in the English language and
customarily published on each Business Day; whenever successive publications in
an Authorized Newspaper are required by this Indenture, such publications may be
made on the same or different days and in the same or in different Authorized
Newspapers.
BASIS POINT:
The term "Basis Point" shall mean one-one hundredth of a percentage
point.
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<PAGE>
BOARD OF DIRECTORS:
The term "Board of Directors" shall mean the Board of Directors of the
Company or the Executive Committee of such Board or any other duly authorized
Committee of such Board.
BOARD RESOLUTION:
The term "Board Resolution" shall mean a copy of a resolution
certified by the Secretary or an Assistant Secretary of the Company to have been
duly adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
BOND INDENTURE:
The term "Bond Indenture" shall mean the Indenture of Mortgage and
Deed of Trust dated as of January 1, 1946, from the Company to First Wisconsin
Trust Company (now known as Firstar Trust Company), trustee.
BUSINESS DAY:
The term "Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday that in The City of New York, is not a day on which banking
institutions are authorized or obligated by law, regulation or executive order
to close and, with respect to LIBOR Notes, is also a London Business Day, unless
otherwise specified in the applicable Company Order.
CALCULATION AGENT:
The term "Calculation Agent" for a particular Floating Rate Note shall
mean the Trustee, unless otherwise specified in the applicable Company Order.
CALCULATION DATE:
The term "Calculation Date" shall mean with regard to any particular
Interest Determination Date, the earlier of (i) the tenth calendar day after
such Interest Determination Date, or, if any such day is not a Business Day, the
next day that is a Business Day, or (ii) the Business Day immediately preceding
the applicable Interest Payment Date or Maturity, as the case may be.
COMMERCIAL PAPER RATE:
The term "Commercial Paper Rate" for a particular Floating Rate Note,
unless otherwise indicated in the applicable Company Order, shall mean, with
respect to any Commercial Paper
-4-
<PAGE>
Rate Interest Determination Date, the Money Market Yield on such date of the
rate for commercial paper having the Index Maturity specified in such Company
Order, as such rate shall be published in H.15(519) under the heading
"Commercial Paper". In the event that such rate is not published prior to
9:00 A.M., New York City time, on the Calculation Date pertaining to such
Commercial Paper Rate Interest Determination Date, then the Commercial Paper
Rate shall be the Money Market Yield on such Commercial Paper Rate Interest
Determination Date of the rate for commercial paper of the specified Index
Maturity as published in Composite Quotations under the heading "Commercial
Paper". If by 3:00 P.M., New York City time, on such Calculation Date such
rate is not published in either H.15(519) or Composite Quotations, then the
Commercial Paper Rate for such Commercial Paper Rate Interest Determination
Date shall be calculated by the Calculation Agent and shall be the Money
Market Yield of the arithmetic mean of the offered rates (quoted on a bank
discount basis) as of 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 selected by the Calculation Agent for
commercial paper of the specified Index Maturity placed for an industrial
issuer whose bond rating is "AA", or the equivalent, from a nationally
recognized rating agency; PROVIDED, HOWEVER, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as set forth above, the
Commercial Paper Rate will be the Commercial Paper Rate immediately prior to
such Commercial Paper Rate Interest Determination Date.
COMMERCIAL PAPER RATE INTEREST DETERMINATION DATE:
The term "Commercial Paper Rate Interest Determination Date"
pertaining to an Interest Reset Date for a Commercial Paper Rate Note shall mean
the second Business Day immediately preceding such Interest Reset Date, unless
otherwise specified in the applicable Company Order.
COMMERCIAL PAPER RATE NOTES:
The term "Commercial Paper Rate Notes" shall mean Floating Rate Notes
which are specified in the applicable Company Order as bearing interest at an
interest rate calculated with reference to the Commercial Paper Rate.
COMMON SHAREHOLDERS EQUITY:
The term "Common Shareholders Equity" shall mean, at any time, the
total shareholders' equity of the Company and its consolidated subsidiaries,
determined on a consolidated basis in accordance with generally accepted
accounting principles, as of the end of the most recently completed fiscal
quarter of the Company for which financial information is then available.
-5-
<PAGE>
COMPANY:
The term "Company" shall mean the corporation named as the "Company"
in the first paragraph of this Indenture, and its successors and assigns.
COMPANY ORDER:
The term "Company Order" shall mean:
(a) a written order signed in the name of the Company by the
Chairman of the Board, the President or any Vice President and by the Secretary
or an Assistant Secretary of the Company, and delivered to the Trustee, to
authenticate a Note and to make it available for delivery, and specifying for
such Note the following information:
(1) the name of the Person in which a Note to be issued and
authenticated shall be registered;
(2) the address of such Person;
(3) the taxpayer identification number of such Person;
(4) the principal amount of such Note and, if multiple Notes are to
be issued to such Person, the denominations of such Notes;
(5) the Issue Price of such Note;
(6) the Original Issue Date of such Note;
(7) the date upon which such Note is scheduled to mature, any
Extension Period or Extension Periods, the Final Maturity Date and any
procedures pursuant to which the Holder of such Note may renew such Note;
(8) if the Note is to be redeemable at the option of the Company, the
Initial Redemption Date and the date or dates on which, and the price or
prices at which, such Note is redeemable at the option of the Company;
(9) if the Note is to be repayable prior to Stated Maturity at the
option of the Holder, the date or dates on which, and the price or prices
at which, such Note is repayable at the option of the Holder;
(10) if the Note is a Fixed Rate Note, the rate of interest on such
Note and the Interest Payment Dates, if other
-6-
<PAGE>
than January 15 and July 15, and the Record Dates, if other than
January 1 and July 1;
(11) if the Note is an Original Issue Discount Note, its Yield to
Maturity;
(12) if such Note is an Amortizing Note, a table setting forth the
schedule of dates and amounts of payments of principal of and interest on
such Note or the formula for the amortization of principal and/or interest;
(13) if the Note is a Reset Note, the Optional Interest Reset Date and
the formula, if any, for resetting the interest rate of a Fixed Rate Note
or the Spread and/or Spread Multiplier of a Floating Rate Note;
(14) if the Note is a Floating Rate Note, its:
(A) Initial Interest Rate (F) Interest Reset Dates
(B) Interest Rate Basis or (G) Spread
Base Rate (including any (H) Spread Multiplier
Designated LIBOR Page) (I) Maximum Interest Rate
(C) Index Maturity (J) Minimum Interest Rate
(D) Interest Determination (K) Interest Payment Dates
Dates (L) Record Dates
(E) Interest Reset Period
(15) whether or not such Note is to be issued in the form of a Global
Note to the Depositary;
(16) the name and address of the Calculation Agent, if other than the
Trustee;
(17) if other than denominations of $1,000 and integral multiples
thereof, the authorized denominations in which Notes shall be issued; and
(18) all other information necessary for the issuance of such Note not
inconsistent with the provisions of this Indenture; or
(b) confirmation given to the Trustee by an officer of the Company
designated by an Officers' Certificate, by telephone, confirmed by telex or
facsimile or similar writing, of the information given to the Trustee by an
Authorized Agent for the issuance of a Note, and the written order of the
Company to authenticate such Note and to make it available for delivery.
-7-
<PAGE>
COMPOSITE QUOTATIONS:
The term "Composite Quotations" shall mean the daily statistical
release "Composite 3:30 P.M. Quotations for U.S. Government Securities" or any
successor publication published by the Federal Reserve Bank of New York.
CORPORATE TRUST OFFICE OF THE TRUSTEE:
The term "Corporate Trust Office of the Trustee" (or other similar
term) shall mean the principal office of the Trustee at which at any particular
time its corporate business shall be administered, which office at the date of
original execution of this Indenture is located at 100 East Broad Street, 8th
Floor, Columbus, Ohio 43215, Attention: Corporate Trust Administration, except
that, with respect to presentation of the Notes for payment or registration of
transfers or exchanges and the location of the register, such term means the
office or agency of the Trustee at which at any particular time its corporate
agency business shall be conducted, which at the date of original execution of
this Indenture is located at c/o First Chicago Trust Company of New York, 14
Wall Street, 8th Floor, Suite 4607, New York, New York 10005.
CUSIP:
The term "CUSIP" shall mean the registered trademark "Committee on
Uniform Securities Identification Procedures" or "CUSIP" and a unique system of
identification of each public issue of a security owned by the American Bankers
Association and administered by Standard and Poor's Corporation, as agent of the
American Bankers Association.
DEPOSITARY:
The term "Depositary" shall mean, unless otherwise specified by the
Company pursuant to Section 2.05 hereof, The Depository Trust Company, New York,
New York, or any successor thereto registered as a Clearing Agency under the
Securities and Exchange Act of 1934, as amended, or any successor statute or
regulation.
DESIGNATED LIBOR PAGE:
The term "Designated LIBOR Page" shall mean either (a) the display on the
Reuters Monitor Money Rates Service for the purpose of displaying the London
interbank rates of major banks for United States Dollars (if "LIBOR Reuters" is
specified in the applicable Company Order), or (b) the display on the Dow Jones
Telerate Service for the purpose of displaying the London interbank rates of
major banks for United States dollars (if "LIBOR Telerate" is
-8-
<PAGE>
specified in the applicable Company Order). If neither LIBOR Reuters nor
LIBOR Telerate is specified in the applicable Company Order, LIBOR for United
States dollars will be determined as if LIBOR Telerate (and page 3750) had
been chosen.
DISCHARGED:
The term "Discharged" means, with respect to all Notes at the time
outstanding, that the Company shall be deemed to have paid and discharged the
entire indebtedness represented by, and obligations under, all Notes and to have
satisfied all the obligations under the Indenture relating to such Notes except
(i) the rights of Holders of such Notes to receive, from the trust fund provided
for under Sections 5.01 and 5.02, payment of the principal of (and premium, if
any) and interest on such Notes when such payments are due, (ii) the Company's
obligations with respect to such Notes under Sections 2.06, 2.07 and 6.02 and
(iii) the rights, powers, trusts, duties and immunities of the Trustee under the
Indenture.
EVENT OF DEFAULT:
The term "Event of Default" shall mean any event specified in Section
8.01, continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.
EXTENSION NOTICE:
The term "Extension Notice" shall mean a notice sent by the Trustee by
telegram, telex, facsimile transmission, hand delivery or letter (first class,
postage prepaid) to the Holder of a Note with respect to which the Company has
exercised its option to extend the Stated Maturity, indicating (i) that the
Company has elected to extend the Stated Maturity of such Note, (ii) the new
Stated Maturity, (iii) in the case of a Fixed Rate Note, the interest rate
applicable to the Extension Period or, in the case of a Floating Rate Note, the
Spread and/or Spread Multiplier applicable to the Extension Period, and (iv) any
provisions for redemption of such Note during the Extension Period, including
the date or dates on which or the period or periods during which and the price
or prices at which such redemption may occur during the Extension Period.
EXTENSION PERIOD:
The term "Extension Period" shall mean a period of from one to five
whole years for which the Company may, at its option, extend the Stated Maturity
of a particular Note.
-9-
<PAGE>
FINAL MATURITY DATE:
The term "Final Maturity Date" shall mean the date beyond which the
Stated Maturity of a particular Note may not be extended at the option of the
Company.
FIRST MORTGAGE BONDS:
The term "First Mortgage Bonds" shall mean the first mortgage bonds
issued under the Bond Indenture.
FIXED RATE AMORTIZING NOTE:
The term "Fixed Rate Amortizing Note" shall mean a Fixed Rate Note
which is an Amortizing Note.
FIXED RATE NOTE:
The term "Fixed Rate Note" shall mean a Note which bears interest at a
fixed rate (which may be zero in the case of a Zero Coupon Note) specified in
the applicable Company Order.
FLOATING RATE NOTE:
The term "Floating Rate Note" shall mean a Note which bears interest
at a variable rate determined by reference to interest rate formula, and
includes a Commercial Paper Rate Note, a LIBOR Note, a Prime Rate Note or a
Treasury Rate Note.
GLOBAL NOTE:
The term "Global Note" shall mean a single Note that pursuant to
Section 2.05 is issued to evidence Notes having identical terms and provisions,
which is delivered to the Depositary or pursuant to instructions of the
Depositary and which shall be registered in the name of the Depositary or its
nominee.
H.15(519):
The term "H.15(519)" shall mean the publication "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication published by
the Board of Governors of the Federal Reserve System.
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<PAGE>
INDEBTEDNESS:
The term "Indebtedness" shall mean with respect to any Person (i) any
liability of such Person (a) for borrowed money, or (b) evidenced by a bond,
note, debenture or similar instrument (including purchase money obligations but
excluding trade payables), or (c) for the payment of money relating to a lease
that is required to be classified as a capitalized lease obligation in
accordance with generally accepted accounting principles; (ii) any liability of
others described in the preceding clause (i) that such Person has guaranteed,
that is recourse to such Person or that is otherwise its legal liability; and
(iii) any amendment, supplement, modification, deferral, renewal, extension or
refunding of any liability of the types referred to in clauses (i) and (ii)
above.
INDENTURE:
The term "Indenture" shall mean this instrument as originally executed
or, if amended or supplemented as herein provided, as so amended or
supplemented.
INDEX MATURITY:
The term "Index Maturity" of a particular Floating Rate Note shall
mean the period to Stated Maturity of the instrument or obligation from which
the Base Rate of such Floating Rate Note is calculated, as specified in the
applicable Company Order.
INITIAL INTEREST RATE:
The term "Initial Interest Rate" for a particular Floating Rate Note
shall mean the interest rate specified in the applicable Company Order as in
effect from the Original Issue Date of such Floating Rate Note to its first
Interest Reset Date.
INITIAL REDEMPTION DATE:
The term "Initial Redemption Date" shall mean the earliest date, if
any, on which a particular Note shall be redeemable at the option of the Company
prior to the Stated Maturity of such Note, as specified in the applicable
Company Order.
INTEREST ACCRUAL PERIOD:
The term "Interest Accrual Period" for a particular Floating Rate Note
shall mean the period from the date of issue of such Floating Rate Note, or from
an Interest Reset Date, if any, to its next subsequent Interest Reset Date.
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<PAGE>
INTEREST DETERMINATION DATE:
The term "Interest Determination Date" shall mean each Commercial
Paper Rate Interest Determination Date, LIBOR Interest Determination Date, Prime
Rate Interest Determination Date and Treasury Rate Interest Determination Date.
INTEREST FACTOR:
The term "Interest Factor" for a Floating Rate Note for each day in an
Interest Accrual Period for such Floating Rate Note shall be computed by
dividing the Interest Rate applicable to such day by 360, in the case of
Commercial Paper Rate Notes, LIBOR Notes and Prime Rate Notes, or by the actual
number of days in the year, in the case of Treasury Rate Notes.
INTEREST PAYMENT DATE:
(a) The term "Interest Payment Date" shall mean with respect to a
Floating Rate Note, including a Floating Rate Amortizing Note, which has an
Interest Reset Date which is (1) daily, weekly or monthly: the third Wednesday
of each month or the third Wednesday of March, June, September and December of
each year, as specified in the applicable Company Order, (2) quarterly: the
third Wednesday of March, June, September and December of each year, as
specified in the applicable Company Order, (3) semiannually: the third Wednesday
of the two months of each year, as specified in the applicable Company Order;
(4) annually: the third Wednesday of one month of each year, as specified in the
applicable Company Order, and, in each case, the date of Maturity of such
Floating Rate Note and, with respect to defaulted interest on such Floating Rate
Note, the date established by the Company for the payment of such defaulted
interest. If any Interest Payment Date (other than at Maturity) for any
Floating Rate Note would fall on a day that is not a Business Day with respect
to such Floating Rate Note, such Interest Payment Date will be the following day
that is a Business Day with respect to such Floating Rate Note, except that, in
the case of a LIBOR Note, if such Business Day with respect to such Floating
Rate Note is in the next succeeding calendar month, such Interest Payment Date
shall be the immediately preceding London Business Day.
(b) the term "Interest Payment Date" shall mean with respect to a
Fixed Rate Note, including a Fixed Rate Amortizing Note, each January 15 and
July 15, or such other dates which are specified in the applicable Company Order
during the period such Fixed Rate Note is outstanding, the date of Maturity of
such Fixed Rate Note, and with respect to defaulted interest on such Fixed Rate
Note, the date established by the Company for the payment of such defaulted
interest.
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(C) Notwithstanding the foregoing, the first Interest Payment Date for
any Note originally issued between a Record Date and the next Interest Payment
Date shall be the Interest Payment Date following the next succeeding Record
Date.
INTEREST RATE:
(a) The term "Interest Rate" for a particular Floating Rate Note shall
mean (1) from the date of issue of such Floating Rate Note to the first Interest
Reset Date for such Floating Rate Note, the Initial Interest Rate, and (2) each
Interest Accrual Period commencing on or after such First Interest Reset Date,
the Base Rate with reference to the Index Maturity for such Floating Rate Note
as specified in the applicable Company Order plus or minus the Spread, if any,
multiplied by the Spread Multiplier, if any; PROVIDED that in the event no
Spread or Spread Multiplier is provided in such Company Order, the Spread and
Spread Multiplier shall be zero and one, respectively; PROVIDED, FURTHER, in no
event shall the Interest Rate be greater than the Maximum Interest Rate, if any,
or less than the Minimum Interest Rate, if any; PROVIDED, FURTHER, the Interest
Rate in effect for the ten days immediately prior to Maturity will be the
Interest Rate in effect on the tenth day preceding such Maturity; and PROVIDED,
FURTHER, the Interest Rate will in no event be higher than the maximum rate
permitted by New York or other applicable law, as the same may be modified by
United States federal laws of general application.
(b) The term "Interest Rate" for a particular fixed Rate Note shall
mean the interest rate specified in the applicable Company Order.
INTEREST RATE BASIS; BASE RATE:
The term "Interest Rate Basis" or "Base Rate" shall mean with respect
to (a) Commercial Paper Rate Notes, the Commercial Paper Rate, (b) LIBOR Notes,
LIBOR, (c) Prime Rate Notes, the Prime Rate, (d) Treasury Rate Notes, the
Treasury Rate, and (e) any other Floating Rate Note, the interest rate formula
which determines the variable rate at which such Note bears interest.
INTEREST RESET DATE:
The term "Interest Reset Date" shall mean, in the case of a Floating
Rate Note specified in the applicable Company Order as being reset (a) daily:
each Business Day; (b) weekly: the Wednesday of each week (with the exception
of weekly reset Treasury Rate Notes which reset the Tuesday of each week, except
as specified below); (c) monthly: the third Wednesday of each month; (d)
quarterly: the third Wednesday of March, June, September and
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December; (e) semiannually: the third Wednesday of the two months specified
in the applicable Company Order; and (f) annually: the third Wednesday of the
month specified in the applicable Company Order. If any Interest Reset Date
for a Floating Rate Note would otherwise be a day which is not a Business
Day, such Interest Reset Date shall be postponed to the next succeeding day
that is a Business Day, except that in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Reset
Date shall be the immediately preceding Business Day. If, in the case of a
Treasury Rate Note, an Interest Reset Date shall fall on a day on which the
Treasury auctions Treasury Bills, then such Interest Reset Date shall instead
be the first Business Day immediately following such auction.
INTEREST RESET PERIOD:
The term "Interest Reset Period" shall mean for:
(a) each Floating Rate Note on which interest is reset monthly,
quarterly, semiannually or annually, and each Fixed Rate Note, the period:
(1) beginning on and including the Original Issue Date of such
Note or the most recent Interest Payment Date on which interest was
paid on such Note, and
(2) ending on but not including the next Interest Payment Date
or, for the last Interest Reset Period, the Maturity, of such Note;
(b) each Floating Rate Note on which interest is reset daily or
weekly, the period:
(1) beginning on and including the Original Issue Date of such
Floating Rate Note, or beginning on but excluding the most recent
Record Date through which interest was paid on such Note, and
(2) ending on and including the next Record Date or, for the
last Interest Reset Period, ending on but excluding Maturity, of such
Note;
PROVIDED, HOWEVER, that the first Interest Reset Period for any Note which has
its Original Issue date after a Record Date and prior to its next Interest
Payment Date, shall begin on and include such Original Issue Date and (i) end on
and include the next Record Date for Floating Rate Notes on which interest is
reset daily or weekly, and (ii) end on but not include the second Interest
Payment Date after the Original Issue Date for all other Notes.
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ISSUE PRICE:
The term "Issue Price" shall mean the price expressed as a percentage
of the aggregate principal amount of a Note at which such Note is issued.
LIBOR:
The term "LIBOR" for a particular Floating Rate Note, unless otherwise
indicated in the applicable Company Order, shall mean, with respect to any LIBOR
Interest Determination Date, the rate determined:
(i) with respect to any LIBOR Interest Determination Date, LIBOR shall
be either: (a) if "LIBOR Reuters" is specified in the applicable Company Order,
the arithmetic mean of the offered rates (unless the specified Designated LIBOR
Page by its terms provides only for a single rate, in which case such single
rate will be used) for deposits in United States dollars having the Index
Maturity specified in the applicable Company Order, commencing on the second
London Business Day immediately following such LIBOR Interest Determination
Date, which appear on the Designated LIBOR Page specified in the applicable
Company Order as of 11:00 A.M., London time, on that LIBOR Interest
Determination Date, if at least two such offered rates appear (unless, as
aforesaid, only a single rate is required) on such Designated LIBOR Page, or (b)
if "LIBOR Telerate" is specified in the applicable Company Order, the rate for
deposits in United States dollars having the Index Maturity specified in the
applicable Company Order, commencing on the second London Business Day
immediately following such LIBOR Interest Determination Date, which appears on
the Designated LIBOR Page specified in the applicable Company Order as of 11:00
A.M., London time, on that LIBOR Interest Determination Date. Notwithstanding
the foregoing, if fewer than two offered rates appear on the Designated LIBOR
Page with respect to LIBOR Reuters (unless the specified Designated LIBOR Page
by its terms provides only for a single rate, in which case such single rate
will be used), or if no rate appears on the Designated LIBOR Page with respect
to LIBOR Telerate, whichever may be applicable, LIBOR with respect to such LIBOR
Interest Determination Date shall be determined as provided in clause (ii)
below.
(ii) With respect to any LIBOR Interest Determination Date on which
fewer than two offered rates appear on the Designated LIBOR Page with respect to
LIBOR Reuters (unless the specified Designated LIBOR Page by its terms provides
only for a single rate, in which case such single rate will be used), or if no
rate appears on the Designated LIBOR Page with respect to LIBOR Telerate, as the
case may be, the Calculation Agent shall request the principal London office of
each of four major banks in the London interbank
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market selected by the Calculation Agent to provide the Calculation Agent
with its offered rate quotation for deposits in United States dollars for the
period of the applicable Index Maturity specified in the applicable Company
Order, commencing on the second London Business Day immediately following
such LIBOR Interest Determination Date, to prime banks in the London
interbank market as of 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 United States dollars in such market at such time. If
at least two such quotations are provided, LIBOR with respect to such LIBOR
Interest Determination Date shall be calculated by the Calculation Agent and
shall be the arithmetic mean of such quotations. If fewer than two quotations
are provided, LIBOR with respect to such LIBOR Interest Determination Date
shall be the arithmetic mean of the rates quoted as of 11:00 A.M., New York
City Time, on such LIBOR Interest Determination Date by three major banks in
The City of New York selected by the Calculation Agent for loans in United
States Dollars to leading European banks, commencing on the second London
Business Day immediately following such LIBOR Interest Determination Date
having the Index Maturity specified in the applicable Company Order in a
principal amount that is representative for a single transaction in such
United States 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 with respect to such LIBOR Interest Determination
Date shall be LIBOR in effect immediately prior to such LIBOR Interest
Determination Date.
LIBOR INTEREST DETERMINATION DATE:
The term "LIBOR Interest Determination Date" pertaining to an Interest
Reset Date for a LIBOR Note shall mean the second London Business Day
immediately preceding such Interest Reset Date, unless otherwise specified in
the applicable Company Order.
LIBOR NOTES:
The term "LIBOR Notes" shall mean Floating Rate Notes which are
specified in the applicable Company Order as bearing interest at an interest
rate calculated with reference to LIBOR.
LONDON BUSINESS DAY:
The term "London Business Day" shall mean any day on which dealings in
deposits in United States dollars are transacted in the London interbank market.
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MATURITY:
The term "Maturity", when used with respect to any Note, shall mean
the date on which the principal of such Note or an installment of principal
becomes due and payable in accordance with its terms and the terms of this
Indenture as therein or herein provided, whether at Stated Maturity, upon
declaration of acceleration, call for redemption, repayment at the option of the
Holder or otherwise.
MAXIMUM INTEREST RATE:
The term "Maximum Interest Rate" shall mean the maximum rate of
interest, if any, which may be applicable to any Floating Rate Note during any
Interest Accrual Period as specified in the applicable Company Order.
MINIMUM INTEREST RATE:
The term "Minimum Interest Rate" shall mean the minimum rate of
interest, if any, which may be applicable to any Floating Rate Note during any
Interest Accrual Period as specified in the applicable Company Order.
MONEY MARKET YIELD:
The term "Money Market Yield" shall be the yield (expressed as a
percentage) calculated in accordance with the following formula:
D x 360
Money Market Yield = --------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the Interest Accrual Period for which interest is being
calculated.
NOTE OR NOTES; OUTSTANDING:
The terms "Note or "Notes" shall mean any Fixed Rate or Floating Rate
Note or Notes, as the case may be, authenticated and delivered under this
Indenture, including any Global Note.
The term "outstanding," when used with reference to Notes, shall,
subject to Section 10.04, mean, as of any particular time, all Notes
authenticated and delivered by the Trustee under this Indenture, except
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(a) Notes theretofore cancelled by the Company or delivered to
the Company for cancellation;
(b) Notes, or portions thereof, for the payment or redemption of
which moneys in the necessary amount shall have been deposited in
trust with the Trustee or with any paying agent (other than the
Company) or shall have been set aside and segregated in trust by the
Company (if the Company shall act as its own paying agent);PROVIDED
that if such Notes are to be redeemed prior to the Maturity thereof,
notice of such redemption shall have been given as provided in Article
Three, or provisions satisfactory to the Trustee shall have been made
for giving such notice;
(c) Notes which shall have been Discharged; and
(d) Notes in lieu of or in substitution for which other Notes
shall have been authenticated and delivered, or which have been paid,
pursuant to Section 2.07;
NOTEHOLDER; HOLDER:
The terms "Noteholder" or "Holder" shall mean any Person in whose name
at the time a particular Note is registered in the register of the Company kept
for that purpose in accordance with the terms hereof.
OFFICERS' CERTIFICATE:
The term "Officers' Certificate" when used with respect to the
Company, shall mean a certificate signed by the Chairman of the Board, the
President or any Vice President and by the Secretary or an Assistant Secretary
of the Company. Each such certificate shall include the statements provided for
in Section 15.05 if and to the extent required by such Section.
OPINION OF COUNSEL:
The term "Opinion of Counsel" shall mean an opinion in writing signed
by legal counsel, who may be an employee of the Company, or such other counsel
who is satisfactory to the Trustee. Each such opinion shall include the
statements provided for in Section 15.05 if and to the extent required by such
Section. In the event that the Indenture requires the delivery of an Opinion of
Counsel to the Trustee, the text and substance of which has been previously
delivered to the Trustee, the Company may satisfy such requirement by the
delivery by the legal counsel that delivered such previous Opinion of Counsel of
a letter to the Trustee to the effect that the Trustee may rely on such previous
Opinion of
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Counsel as if such Opinion of Counsel was dated and delivered the date
delivery of such Opinion of Counsel is required.
OPTIONAL INTEREST RESET DATE:
The term "Optional Interest Reset Date" shall mean each date on which
the interest rate on a Fixed Rate Reset Note or the Spread and/or Spread
Multiplier of a Floating Rate Reset Note may be reset at the option of the
Company.
ORIGINAL ISSUE DATE:
The term "Original Issue Date" shall mean for a particular Note, or
portions thereof, the date upon which it, or such portion, was issued by the
Company pursuant to this Indenture and authenticated by the Trustee (other than
in connection with a transfer, exchange or substitution).
ORIGINAL ISSUE DISCOUNT NOTE:
The term "Original Issue Discount Note" shall mean (i) a Note that has
a "stated redemption price at maturity" that exceeds its "issue price", each as
defined for United States federal income tax purposes, by at least 0.25% of its
stated redemption price at maturity multiplied by the number of complete years
from the Original Issue Date to the Stated Maturity for such Note (or in the
case of a Note that provides for payment of any amount other than the "qualified
stated interest", as defined for United States federal income tax purposes,
prior to maturity, the weighted average maturity of the Note) and (ii) any other
Note designated by the Company in the applicable Company Order as issued with
original issue discount for United States federal income tax purposes.
Permitted Encumbrances:
The term "Permitted Encumbrances" shall mean:
(a) (i) any mortgage, pledge or other lien or encumbrance on any
property hereafter acquired or constructed by the Company or a Subsidiary,
or on which property so constructed is located, and created prior to,
contemporaneously with or within 360 days after, such acquisition or
construction or the commencement of commercial operation of such property
to secure or provide for the payment of any part of the purchase or
construction price of such property, or (ii) any mortgage, pledge, or other
lien or encumbrance upon such property existing at the time of acquisition
thereof by the Company or any Subsidiary, whether or not assumed by the
Company or such Subsidiary, or (iii) any
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mortgage, pledge, or other lien or encumbrance existing on the property,
shares of stock or indebtedness of a corporation at the time such
corporation shall become a Subsidiary or any pledge of the shares of
stock of such corporation prior to, contemporaneously with or within 360
days after such corporation shall become a Subsidiary to secure or
provide for the payment of any part of the purchase price of such stock,
or (iv) any conditional sales agreement or other title retention
agreement with respect to any property hereafter acquired or
constructed; PROVIDED that, in the case of clauses (i) through (iv), the
lien of any such mortgage, pledge or other lien does not spread to
property owned prior to such acquisition or construction or to other
property thereafter acquired or constructed other than additions to such
acquired or constructed property and other than property on which
property so constructed is located; and PROVIDED, FURTHER, that if a
firm commitment from a bank, insurance company or other lender or
investor (not including the Company, a Subsidiary or an Affiliate of the
Company) for the financing of the acquisition or construction of
property is made prior to, contemporaneously with or within the 360-day
period hereinabove referred to, the applicable mortgage, pledge, lien or
encumbrance shall be deemed to be permitted by this subsection (a)
whether or not created or assumed within such period;
(b) any mortgage, pledge or other lien or encumbrance created for the
sole purpose of extending, renewing or refunding any mortgage, pledge, lien
or encumbrance permitted by subsection (a) of this definition; PROVIDED,
HOWEVER, that the principal amount of indebtedness secured thereby shall
not exceed the principal amount of indebtedness so secured at the time of
such extension, renewal or refunding and that such extension, renewal or
refunding mortgage, pledge, lien or encumbrance shall be limited to all or
any part of the same property that secured the mortgage, pledge or other
lien or encumbrance extended, renewed or refunded;
(c) liens for taxes or assessments or governmental charges or levies
not then due and delinquent or the validity of which is being contested in
good faith, and against which an adequate reserve has been established;
liens on any property created in connection with pledges or deposits to
secure public or statutory obligations or to secure performance in
connection with bids or contracts; materialmen's, mechanics', carrier's,
workmen's, repairmen's or other like liens; or liens on any property
created in connection with deposits to obtain the release of such liens;
liens on any property created in connection with deposits to secure surety,
stay, appeal or customs bonds; liens created by
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or resulting from any litigation or legal proceeding which is currently
being contested in good faith by appropriate proceedings; leases and
liens, rights of reverter and other possessory rights of the lessor
thereunder; zoning restrictions, easements, rights-of-way or other
restrictions on the use of real property or minor irregularities in the
title thereto; and any other liens and encumbrances similar to those
described in this subsection (c), the existence of which does not, in
the opinion of the Company, materially impair the use by the Company or
a Subsidiary of the affected property in the operation of the business
of the Company or a Subsidiary, or the value of such property for the
purposes of such business;
(d) any mortgage, pledge or other lien or encumbrance created after
the date of this Indenture on any property leased to or purchased by the
Company or a Subsidiary after that date and securing, directly or
indirectly, obligations issued by a State, a territory or a possession of
the United States, or any political subdivision of any of the foregoing, or
the District of Columbia, to finance the cost of acquisition or cost of
construction of such property; PROVIDED that the interest paid on such
obligations is entitled to be excluded from gross income of the recipient
pursuant to Section 103(a)(1) of the Internal Revenue Code of 1986, as
amended (or any successor to such provision), as in effect at the time of
the issuance of such obligations;
(e) any mortgage, pledge or other lien or encumbrance on any property
now owned or hereafter acquired or constructed by the Company or a
Subsidiary, or on which property so owned, acquired or constructed is
located, to secure or provide for the payment of any part of the
construction price or cost of improvements of such property, and created
prior to, contemporaneously with or within 360 days after, such
construction or improvement; PROVIDED that if a firm commitment from a
bank, insurance company or other lender or investor (not including the
Company, a Subsidiary or an Affiliate of the Company) for the financing of
the acquisition or construction of property is made prior to,
contemporaneously with or within the 360-day period hereinabove referred
to, the applicable mortgage, pledge, lien or encumbrance shall be deemed to
be permitted by this subsection (e) whether or not created or assumed
within such period; and
(f) any mortgage, pledge or other lien or encumbrance not otherwise
permitted under this Section; PROVIDED that the aggregate amount of
indebtedness secured by all such
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mortgages, pledges, liens or encumbrances does not exceed the greater of
$20,000,000 or 10% of Common Shareholders Equity.
PERSON:
The term "Person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
PRE-EXERCISE STATED MATURITY DATE:
The term "Pre-Exercise Stated Maturity Date" shall mean the Stated
Maturity of a Note (including, if such Stated Maturity has previously been
extended, the Stated Maturity as previously extended) in effect immediately
prior to the Company's exercise of an option to extend such Stated Maturity for
an Extension Period or the Holder's exercise of an option to renew such Note
pursuant to provisions included in the applicable Company Order.
PRIME RATE:
The term "Prime Rate" for a particular Floating Rate Note, unless otherwise
indicated in the applicable Company Order, shall mean, with respect to any Prime
Rate Interest Determination Date, the rate on such date as published in
H.15(519) under the heading "Bank Prime Loan." In the event that such rate is
not published prior to 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Prime Rate Interest Determination Date, then the Prime Rate
with respect to such Prime Rate Interest Determination Date shall be calculated
by the Calculation Agent and shall be the arithmetic mean of the rates of
interest publicly announced by each bank that appears on the Reuters Screen
USPRIME1 as such bank's prime rate or base lending rate as in effect with
respect to such Prime Rate Interest Determination Date. If fewer than four such
rates appear on the Reuters Screen USPRIME1 with respect to such Prime Rate
Interest Determination Date, the Prime Rate with respect to such Prime Rate
Interest Determination Date shall be calculated by the Calculation Agent and
shall be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by 360 as of the close of business on
such Prime Rate Interest Determination Date by at least two of the three major
money center banks in The City of New York selected by the Calculation Agent.
If fewer than two quotations are provided, the Prime Rate with respect to such
Prime Rate Interest Determination Date shall be determined on the basis of the
rates furnished in The City of New York by the appropriate number of substitute
banks or trust companies organized and doing business under the laws of the
United States, or any state thereof, having total equity capital of at least
$500,000,000 and being subject to supervision or
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examination by federal or state authority, selected by the Calculation Agent
to provide such rate or rates; PROVIDED, HOWEVER, that if the appropriate
number of substitute banks or trust companies selected as aforesaid are not
quoting as mentioned in this sentence, the Prime Rate with respect to such
Prime Rate Interest Determination Date shall be the Prime Rate in effect
immediately prior to such Prime Rate Interest Determination Date.
PRIME RATE INTEREST DETERMINATION DATE:
The term "Prime Rate Interest Determination Date" pertaining to an Interest
Reset Date for a particular Prime Rate Note shall mean the second Business Day
immediately preceding such Interest Reset Date, unless otherwise specified in
the applicable Company Order.
PRIME RATE NOTES:
The term "Prime Rate Notes" shall mean Floating Rate Notes which are
specified in the applicable Company Order as bearing interest at an interest
rate calculated with reference to the Prime Rate.
PRINCIPAL AMOUNT:
The term "principal amount" with respect to any Note shall mean the
principal amount thereof set forth in the applicable Company Order; PROVIDED
that in the case of any Original Issue Discount Note, its principal amount as of
(i) any date that the principal amount of such Note is to be repaid prior to its
Stated Maturity, whether upon declaration of acceleration, call for redemption,
repayment at the option of the Holder or otherwise, or (ii) any date that any
consent, notice, request, direction, waiver or suit by the Noteholders shall be
deemed to be given, made or commenced under this Indenture, such term shall mean
the Amortized Face Amount of such Note as of such date.
PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY:
The term "principal executive offices of the Company" shall mean the
place where the main corporate offices of the Company are located, currently 133
South Blair Street, Madison, Wisconsin 53701, or such other place where the
main corporate offices of the Company are located as designated in an Officers'
Certificate delivered to the Trustee.
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PRINCIPAL FACILITY:
The term "Principal Facility" shall mean the real property, fixtures,
machinery and equipment relating to any facility owned by the Company or any
Subsidiary (which may include a network of electric or gas distribution
facilities or a network of electric or gas transmission facilities), except
any facility that, in the opinion of the Board of Directors, is not of
material importance to the business conducted by the Company and its
Subsidiaries, taken as a whole.
RECORD DATE:
The term "Record Date" shall mean for the Interest Payment Date for the
payment of interest for an Interest Reset Period for a particular Note,
unless otherwise specified in the applicable Company Order, (a) the day which
is fifteen calendar days prior to such Interest Payment Date, whether or not
such day is a Business Day, (b) the date of Maturity of such Note, unless
such date of Maturity for a Fixed Rate Note is a January 1 or a July 1, in
which event the Record Date will be as provided in clause (a), and (c) a date
which is not less than five Business Days preceding the Interest Payment Date
of defaulted interest on such Note established by notice given by first-class
mail by or on behalf of the Company to the Holder of such Note not less than
fifteen days prior to such Interest Payment Date.
REDEMPTION DATE:
The term "Redemption Date" for a Note shall mean the date fixed for the
redemption of such Note in accordance with the provisions of this Indenture.
REGULATED SUBSIDIARY:
The term "Regulated Subsidiary" shall mean any Subsidiary which owns or
operates facilities used for the generation, transmission or distribution of
electric energy and is subject to the jurisdiction of any governmental
authority of the United States or any state or political subdivision thereof,
as to any of its: rates; services; accounts; issuances of securities;
affiliate transactions; or construction, acquisition or sale of any such
facilities, except that any "exempt wholesale generator", as defined in 15
USC 79z-5a(a)(1), "qualifying facility", as defined in 18 CFR 29z,101(b)(1),
"foreign utility company", as defined in 15 USC 79z-5b(a)(3) and "power
marketer", as defined in NORTHWEST POWER MARKETING COMPANY, L.L.C., 75 FERC
PARA61,281, shall not be a Regulated Subsidiary.
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RESET NOTE:
The term "Reset Note" shall mean a Fixed Rate Note, with respect to which
the Company has the option to reset the interest rate, and a Floating Rate
Note, with respect to which the Company has the option to reset the Spread
and/or Spread Multiplier.
RESET NOTICE:
The term "Reset Notice" shall mean a notice sent by the Trustee by
telegram, telex, facsimile transmission, hand delivery or letter (first
class, postage prepaid) to the Holder of a Reset Note with respect to which
the Company has exercised its option to reset the interest rate or the Spread
and/or the Spread Multiplier, indicating (i) that the Company has elected to
exercise such option, (ii) such new interest rate or Spread and/or Spread
Multiplier and (iii) any provisions for redemption of such Note during the
Subsequent Interest Period commencing on the applicable Optional Interest
Reset Date.
RESPONSIBLE OFFICER:
The term "responsible officer" or "responsible officers" when used with
respect to the Trustee shall mean one or more of the following: the chairman
of the board of directors, the vice chairman of the board of directors, the
chairman of the executive committee, the vice chairman of the executive
committee, the chairman of the trust committee, the president, any vice
president, the cashier, the secretary, the treasurer, any trust officer, any
second or assistant vice president, any assistant cashier, any assistant
secretary, any assistant treasurer, any assistant trust officer or any other
officer or assistant officer of the Trustee customarily performing functions
similar to those performed by the persons who at the time shall be such
officers, respectively, or to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with the particular
subject.
REUTERS SCREEN USPRIME1:
The term "Reuters Screen USPRIME1" shall mean the display designated as
page "USPRIME1" on the Reuters Monitor Money Rate Service (or such other page
which may replace the USPRIME1 page on such service for the purpose of
displaying the prime rate or base lending rate of major banks).
SPREAD:
The term "Spread" applicable to a particular Floating Rate Note shall
mean the number of Basis Points above or below the Base Rate for such
Floating Rate Note as specified in the
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applicable Company Order, used in the calculation of the Interest Rate for
such Floating Rate Note.
SPREAD MULTIPLIER:
The term "Spread Multiplier" applicable to a particular Floating Rate
Note shall mean the percentage of the Base Rate (plus or minus any applicable
Spread) for such Floating Rate Note as specified in the applicable Company
Order, used in the calculation of the Interest Rate for such Floating Rate
Note.
STATED MATURITY:
The term "Stated Maturity", when used with respect to any Note shall mean
the date specified in such Note as the date on which the principal of such
Note is due and payable, or the date specified as the Stated Maturity (i) in
an Extension Notice or (ii) in accordance with procedures included in the
applicable Company Order pursuant to which the Holder may renew such Note.
SUBSEQUENT INTEREST PERIOD:
The term "Subsequent Interest Period" shall mean a period from an
Optional Interest Reset Date of a Note to the next Optional Interest Reset
Date of such Note or, if there is no such next Optional Interest Reset Date,
to the Stated Maturity of such Note.
SUBSIDIARY:
The term "Subsidiary" shall mean any corporation of which at least a
majority of the outstanding stock having by the terms thereof ordinary voting
power to elect a majority of the directors of such corporation, irrespective
of whether or not at the time stock of any class or classes of such
corporation shall have or might have voting power by reason of the happening
of any contingency, is at the time, directly or indirectly, owned or
controlled by the Company or by one or more Subsidiaries thereof, or by the
Company and one or more Subsidiaries.
TREASURY:
The term "Treasury" shall mean the United States Department of Treasury.
TREASURY BILLS:
The term "Treasury Bills" shall mean direct obligations of the United
States.
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TREASURY RATE:
The term "Treasury Rate" for a particular Floating Rate Note, unless
otherwise indicated in the applicable Company Order, shall mean, with respect
to any Treasury Rate Interest Determination Date, the rate resulting from the
most recent auction of Treasury Bills having the Index Maturity specified in
the applicable Company Order, as such rate is published in H.15(519) under
the heading "Treasury bills-auction average (investment)" or, if not so
published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Treasury Rate Interest Determination Date, the average
auction rate on such Treasury Rate Determination Date (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the Treasury. In the
event that the results of the auction of Treasury Bills having the specified
Index Maturity are not reported as provided above by 3:00 P.M., New York City
time, on such Calculation Date pertaining to such Treasury Rate Determination
Date, or if no such auction is held in a particular week, then the Treasury
Rate with respect to such Treasury Rate Interest Determination Date shall be
calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City
time, on such Treasury Rate Interest Determination Date, of three leading
primary United States government securities dealers selected by the
Calculation Agent, for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity specified in the applicable Company Order;
PROVIDED, HOWEVER, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as set forth above, the Treasury Rate with
respect to such Treasury Rate Interest Determination Date shall be the
Treasury Rate in effect immediately prior to such Treasury Rate Interest
Determination Date.
TREASURY RATE INTEREST DETERMINATION DATE:
The term "Treasury Rate Interest Determination Date" pertaining to an
Interest Reset Date for a Treasury Rate Note shall mean the day of the week
in which its Interest Reset Date falls on which Treasury Bills normally would
be auctioned; PROVIDED, HOWEVER, that if as a result of a legal holiday an
auction is held on the Friday of the week preceding such Interest Reset Date,
the related Treasury Rate Interest Determination Date shall be such Friday,
unless otherwise specified in the applicable Company Order.
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TREASURY RATE NOTES:
The term "Treasury Rate Notes" shall mean Floating Rate Notes which
are specified in the applicable Company Order as bearing interest at an interest
rate calculated with reference to the Treasury Rate.
TRUSTEE:
The term "Trustee" shall mean Bank One, N.A. and, subject to Article
Nine, shall also include any successor Trustee.
U.S. GOVERNMENT OBLIGATIONS:
The term "U.S. Government Obligations" shall mean securities that are (i)
direct obligations of the United States for the payment of which its full
faith and credit is pledged, or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States, which, in either case under clauses (i) or
(ii), are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligation or a specific
payment of interest on or principal of any such U.S. Government Obligation
held by such custodian for the account of the holder of a depository receipt;
PROVIDED that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of interest on or principal of
the U.S. Government Obligation evidenced by such depository receipt.
WHOLLY-OWNED SUBSIDIARY:
The term "Wholly-Owned Subsidiary" shall mean a Subsidiary of which all
of the outstanding voting stock (other than directors' qualifying shares) is
at the time, directly or indirectly, owned by the Company, or by one or more
Wholly-Owned Subsidiaries of the Company or by the Company and one or more
Wholly-Owned Subsidiaries.
YIELD TO MATURITY:
The term "Yield to Maturity" shall mean for a particular Note the yield
to maturity of such Note, computed in accordance with generally accepted
United States bond yield computation principles and expressed as a
percentage, specified in the applicable Company Order.
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ZERO COUPON NOTE:
The term "Zero Coupon Note" means a Note issued at a price representing a
discount from the principal amount payable at Maturity and bearing a zero
fixed rate of interest.
ARTICLE TWO
FORM, ISSUE, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
SECTION 2.01. FORM GENERALLY.
(a) The Notes shall be titled "Medium-Term Notes", and, if such Notes
shall be in the form of (a) a Fixed Rate Note which is a Global Note, shall
be in substantially the form set forth in EXHIBIT A, (b) a Fixed Rate Note
which is not a Global Note, shall be in substantially the form set forth in
EXHIBIT B, (c) a Floating Rate Note which is a Global Note, shall be in
substantially the form set forth in EXHIBIT C, and (d) a Floating Rate Note
which is not a Global Note, shall be in substantially the form set forth in
EXHIBIT D, to this Indenture, or in any such case such other form as shall be
established by a Board Resolution, or an Officers' Certificate pursuant to a
Board Resolution, or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of
any securities exchange or with applicable law or as may, consistently
herewith, be determined by the officers executing such Notes, as evidenced by
their execution of such Notes. If the form of Notes is established by a
Board Resolution, or an Officers' Certificate pursuant to a Board Resolution,
a copy of such Board Resolution or Officers' Certificate shall be delivered
to the Trustee at or prior to the delivery to the Trustee of the Company
Order contemplated by Section 2.05 for the authentication and delivery of
such Notes.
(b) The definitive Notes shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Notes, as evidenced by their
execution of such Notes.
SECTION 2.02. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The
Trustee's certificate of authentication on all Notes shall be in
substantially the following form:
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Trustee's Certificate of Authentication
This is one of the Notes referred to in the within-mentioned
Indenture.
BANK ONE, N.A., as Trustee
By ________________________
Authorized Signatory
SECTION 2.03. AMOUNT UNLIMITED. The aggregate principal amount of Notes
which may be authenticated and delivered under this Indenture is unlimited.
SECTION 2.04. DENOMINATIONS, DATES, INTEREST PAYMENT AND RECORD DATES.
(a) The Notes shall be issuable in registered form without coupons in
denominations of $1,000 and integral multiples thereof, unless otherwise
specified in the applicable Company Order.
(b) Each Note shall be dated and issued as of the date of its
authentication by the Trustee, and shall bear an Original Issue Date or, as
provided in Section 2.12(e), two or more Original Issue Dates; each Note
issued upon transfer, exchange or substitution of a Note shall bear the
Original Issue Date or Dates of such transferred, exchanged or substituted
Note, subject to Section 2.12(e).
(c) Each Note shall bear interest, if any, at its Interest Rate during
each Interest Reset Period for such Note, from the later of (1) its Original
Issue Date (or, if pursuant to Section 2.12, a Global Note has two or more
Original Issue Dates, interest shall, beginning on each such Original Issue
Date, begin to accrue for that part of the principal amount of such Global
Note to which that Original Issue Date is applicable), or (2) the most recent
date to which any interest has been paid or duly provided for until the
principal of such Note is paid or funds are made available for such payment,
and Accrued Interest on each Note shall be payable for each Interest Reset
Period on the Interest Payment Date immediately subsequent to the Record Date
for the payment of interest for such Interest Reset Period.
(d) All percentages resulting from any calculation of the Interest Rate
for a Floating Rate Note shall be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point, with five one-millionths of a
percentage point rounded
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upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or
.0987655)), and all dollar amounts used in or resulting from such calculation
shall be rounded to the nearest cent (with one-half cent being rounded
upward).
(e) Each Note shall mature on a date specified in such Note not less
than nine months nor more than 30 years after its Original Issue Date, and
the principal amount of each outstanding Note shall be payable on the
Maturity date specified therein.
(f) The Person in whose name any Note is registered at the close of
business on any Record Date with respect to an Interest Payment Date for such
Note shall be entitled to receive the Accrued Interest payable on such Note
on such Interest Payment Date notwithstanding the cancellation of such Note
upon any registration of transfer, exchange or substitution of such Note
subsequent to such Record Date and prior to such Interest Payment Date.
(g) The Company shall cause the Calculation Agent to calculate each
Interest Rate applicable to each Floating Rate Note in accordance with this
Indenture, and the Company shall, or shall cause the Calculation Agent to,
notify the Trustee of each determination of such Interest Rate promptly after
such determination. The Calculation Agent's determination of any Interest
Rate shall be final and binding in the absence of manifest error.
(h) On the fifth Business Day immediately preceding each Interest
Payment Date, the Trustee shall furnish to the Company a notice setting forth
the total amount of the Accrued Interest payments to be made on such Interest
Payment Date, and to the Depositary a notice setting forth the total amount
of Accrued Interest payments to be made on Global Notes on such Interest
Payment Date. The Trustee will provide monthly to the Company a list of the
principal of and any premium and Accrued Interest to be paid on Notes in the
next succeeding month and to the Depositary a list of the principal of and
any premium and Accrued Interest to be paid on Global Notes in the such
succeeding month. Promptly after the first Business Day of each month, the
Trustee shall furnish to the Company a written notice setting forth the
aggregate principal amount of the Global Notes. The Company will provide to
the Trustee not later than the payment date sufficient moneys to pay in full
all principal of and any premium and Accrued Interest payments due on such
payment date. The Trustee shall be responsible for withholding taxes on
interest paid as required by law.
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(i) Upon the request of any Noteholder of a Floating Rate Note, the
Trustee shall provide to such Noteholder the Interest Rate then in effect
and, if then determined, the Interest Rate that will become effective on the
next Interest Reset Date, with respect to such Floating Rate Note.
SECTION 2.05. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
(a) The Notes shall be executed on behalf of the Company by the Chairman
of the Board, the President or any Vice President and by the Secretary or an
Assistant Secretary. The signature of any of such officers on any Notes may
be manual or facsimile.
(b) Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not
hold such offices at the date of such Notes.
(c) At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Notes executed by the Company to
the Trustee for authentication, together with one or more Company Orders for
the authentication and delivery of such Notes, and the Trustee in accordance
with any such Company Order shall authenticate such Notes and make them
available for delivery. Prior to authenticating such Notes, and in accepting
the additional responsibilities under this Indenture in relation to such
Notes, the Trustee shall be entitled to receive the following only at or
before the first issuance of Notes, and (subject to Section 9.01) shall be
fully protected in relying upon:
(1) a Board Resolution authorizing this Indenture and the Notes,
and if applicable, an appropriate record of any action taken pursuant
to such Board Resolution, certified by the Secretary or an Assistant
Secretary of the Company;
(2) an Officers' Certificate designating one or more officers of
the Company who are authorized to give Company Orders for the issuance
of, and specifying terms of, Notes and, if appropriate, setting forth
the form of Notes in accordance with Section 2.01;
(3) an Opinion of Counsel stating,
(A) if the form of Notes has been established by or
pursuant to a Board Resolution, an Officers' Certificate
pursuant to a Board
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Resolution, or a supplemental indenture as permitted by Section
2.01, that such form has been established in conformity with this
Indenture;
(B) that the Indenture has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally
binding agreement of the Company, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting the
enforcement of creditors' rights and to general equity principles;
(C) that the Indenture and the Bond Indenture are qualified
under the TIA;
(D) that any supplemental indenture referred to in (A) above
has been duly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding agreement of the Company,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting the enforcement of creditors' rights and
to general equity principles;
(E) that the Notes, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel consistent with the
terms of this Indenture, will constitute legal, valid and legally
binding obligations of the Company, enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to
or affecting the enforcement of creditors' rights and to general
equity principles;
(F) that all laws and requirements in respect of the
execution, delivery and sale by the Company of the Notes have been
complied with;
(G) that the Company is not in default in any of its
obligations under this Indenture
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or the Bond Indenture, and that the issuance of the Notes
will not result in any such default; and
(H) such other matters as the Trustee may reasonably request.
(d) The Trustee shall have the right to decline to authenticate and
deliver any Note:
(1) if the issuance of such Note pursuant to this Indenture will
affect the Trustee's own rights, duties or immunities under the Notes
and this Indenture or otherwise in a manner which is not reasonably
acceptable to the Trustee;
(2) if the Trustee, being advised by counsel, determines that
such action may not lawfully be taken; or
(3) if the Trustee in good faith by its Board of Directors,
executive committee or a trust committee of directors and/or
responsible officers in good faith determines that such action would
expose the Trustee to personal liability to Holders of any outstanding
Notes.
(e) No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Note shall be conclusive evidence, and the only evidence, that such Note has
been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture; PROVIDED, HOWEVER, that if any Note shall have
been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Note to the Trustee for
cancellation as provided in Section 2.09, for all purposes of this Indenture
such Note shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 2.06. EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES.
(a) Subject to Section 2.12, Notes may be exchanged for one or more new
Notes of any authorized denominations and of a like aggregate principal
amount and Stated Maturity and having the same terms and Original Issue Date
or Dates. Notes to be exchanged shall be surrendered at any of the offices
or agencies to be maintained by the Company for such purpose as provided in
Section 6.02, and the Company shall execute and register and the Trustee
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shall authenticate and deliver in exchange therefor the Note or Notes which
the Noteholder making the exchange shall be entitled to receive.
(b) The Trustee on behalf of the Company shall keep, at one of said
offices or agencies, a register in which, subject to such reasonable
regulations as it or the Company may prescribe, the Trustee shall register or
cause to be registered Notes and shall register or cause to be registered the
transfer of Notes as in this Article Two provided. Such register shall be in
written form or in any other form capable of being converted into written
form within a reasonable time. At all reasonable times such register shall
be open for inspection by the Trustee. Upon due presentment for registration
of transfer of any Note at any such office or agency, the Company shall
execute and register or cause to be registered and the Trustee shall
authenticate and make available for delivery, in the name of the transferee
or transferees, one or more new Notes of any authorized denominations and of
a like aggregate principal amount and Stated Maturity and having the same
terms and Original Issue Date or Dates.
(c) All Notes presented for registration of transfer or for exchange,
redemption or payment shall (if so required by the Company) be duly endorsed
by, or be accompanied by a written instrument or instruments of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder
or the attorney of such Holder duly authorized in writing.
(d) No service charge shall be made for any exchange or registration of
transfer of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.
(e) The Company shall not be required to exchange or register a transfer
of any Notes selected, called or being called for redemption except, in the
case of any Note to be redeemed in part, the portion thereof not to be so
redeemed.
(f) If the principal amount and any applicable premium of part but not
all of a Global Note is paid, then upon surrender to the Trustee of such
Global Note, the Company shall execute, and the Trustee shall authenticate,
and make available for delivery, a Global Note in an authorized denomination
in aggregate principal amount equal to, and having the same terms and
Original Issue Date or Dates as, the unpaid portion of such Global Note.
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SECTION 2.07. MUTILATED, DESTROYED, LOST OR STOLEN NOTES.
(a) In case any temporary or definitive Note shall become mutilated or
be destroyed, lost or stolen, the Company in its discretion may execute, and
upon its request the Trustee shall authenticate and deliver, a new Note of
like form and principal amount and having the same terms and Original Issue
Date or Dates and bearing a number not contemporaneously outstanding, in
exchange and substitution for the mutilated Note, or in lieu of and in
substitution for the Note so destroyed, lost or stolen. In every case the
applicant for a substituted Note shall furnish to the Company, the Trustee,
any Authenticating Agent or Note registrar such security or indemnity as may
be required by them to save each of them harmless, and, in every case of
destruction, loss or theft of a Note, the applicant shall also furnish to the
Company and to the Trustee evidence to their satisfaction of the destruction,
loss or theft of such Note and of the ownership thereof.
(b) The Trustee may authenticate any such substituted Note and deliver
the same upon the written request or authorization of any officer of the
Company. Upon the issuance of any substituted Note, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses connected
therewith. In case any Note which has matured or is about to mature shall
become mutilated or be destroyed, lost or stolen, the Company may, instead of
issuing a substituted Note, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated Note) if the applicant
for such payment shall furnish to the Company, the Trustee, any
Authenticating Agent or Note registrar such security or indemnity as may be
required by them to save each of them harmless and, in case of destruction,
loss or theft, evidence satisfactory to the Company and the Trustee of the
destruction, loss or theft of such Note and of the ownership thereof.
(c) Every substituted Note issued pursuant to this Section 2.07 by
virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or
not such destroyed, lost or stolen Note shall be found at any time, and shall
be entitled to all the benefits of this Indenture equally and proportionately
with any and all other Notes duly issued hereunder. All Notes shall be held
and owned upon the express condition that, to the extent permitted by law,
the foregoing provisions are exclusive with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes and shall preclude any
and all other rights or remedies notwithstanding any law or statute existing
or hereafter enacted to
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the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
SECTION 2.08. TEMPORARY NOTES. Pending the preparation of definitive
Notes, the Company may execute and the Trustee shall authenticate and make
available for delivery, temporary Notes (printed, lithographed or otherwise
reproduced). Temporary Notes shall be issuable in any authorized
denomination and substantially in the form of the definitive Notes but with
such omissions, insertions and variations as may be appropriate for temporary
Notes, all as may be determined by the Company. Every such temporary Note
shall be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with the same effect, as the definitive
Notes. Without unreasonable delay the Company will execute and register and
will deliver to the Trustee definitive Notes and thereupon any or all
temporary Notes may be surrendered in exchange therefor, at the Corporate
Trust Office of the Trustee, and the Trustee shall authenticate and deliver
in exchange for such temporary Notes an equal aggregate principal amount of
definitive Notes. Such exchange shall be made by the Company at its own
expense and without any charge therefor to the Noteholders. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes authenticated and made
available for delivery hereunder.
SECTION 2.09. CANCELLATION OF NOTES PAID, ETC. All Notes surrendered
for the purpose of payment, redemption, exchange or registration of transfer
shall be surrendered to the Trustee for cancellation and promptly cancelled
by it and no Notes shall be issued in lieu thereof except as expressly
permitted by this Indenture. All Notes so cancelled shall be retained by the
Trustee. If the Company shall acquire any of the Notes, however, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Notes unless and until the same are
cancelled by the Trustee.
SECTION 2.10. INTEREST RIGHTS PRESERVED. Each Note delivered under
this Indenture upon transfer of or in exchange for or in lieu of any other
Note shall carry all the rights to unpaid Accrued Interest, and interest to
accrue, which were carried by such other Note, and each such Note shall be so
dated that neither gain nor loss of interest shall result from such transfer,
exchange or substitution.
SECTION 2.11. PAYMENT OF NOTES. Unless otherwise specified in the
applicable Company Order, the principal of and any premium and Accrued
Interest on all Notes shall be payable in such coin or currency of the United
States of America as at the time of
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payment is legal tender for payment of public and private debts as follows:
(a) On or before 10:00 a.m., New York City time, of the day on which any
payment of principal, Accrued Interest or premium is due on any Global Note
pursuant to the terms thereof, the Company shall deliver to the Trustee
immediately available funds sufficient to make such payment. On or before
10:30 a.m., New York City time or such other time as shall be agreed upon
between the Trustee and the Depositary, of the day on which such payment is
due, the Trustee shall deposit with the Depositary such funds by wire
transfer into the account specified by the Depositary. As a condition to the
payment at the Maturity of any part of the principal and any applicable
premium of any Global Note, the Depositary shall surrender, or cause to be
surrendered, such Global Note to the Trustee, whereupon a new Global Note
shall be issued to the Depositary pursuant to Section 3.03(d).
(b) With respect to any Note that is not a Global Note, principal, any
premium and Accrued Interest due at the Maturity of such Note shall be
payable in immediately available funds when due upon presentation and
surrender of such Note at the Corporate Trust Office of the Trustee; PROVIDED
that this Note is presented to the Trustee in time for the Trustee to make
such payment in such funds in accordance with its normal procedures. Accrued
Interest on (and, in the case of Amortizing Notes, installments of principal
of) any Note that is not a Global Note (other than Accrued Interest or such
installments payable at Maturity) shall be paid by a clearinghouse funds
check mailed on the Interest Payment Date; PROVIDED, HOWEVER, that if any
Holder of Notes, the aggregate principal amount of which equals or exceeds
$10,000,000, provides a written request to the Trustee on or before the
applicable Record Date for such Interest Payment Date, Accrued Interest (and
such installments of principal) shall be paid by wire transfer of immediately
available funds to a bank within the continental United States or by direct
deposit into the account of such Holder if such account is maintained with
the Trustee.
SECTION 2.12. NOTES ISSUABLE IN THE FORM OF A GLOBAL NOTE.
(a) If the Company shall establish pursuant to Section 2.05 that
particular Notes are to be issued in whole or in part in the form of one or
more Global Notes, then the Company shall execute and the Trustee shall, in
accordance with Section 2.05 and the Company Order delivered to the Trustee
thereunder, authenticate and make available for delivery, such Global Note or
Notes, which (1) shall represent, shall be denominated in an amount equal to
the aggregate principal amount of, and shall have the same terms as, the
outstanding Notes to be represented by such Global Note or
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Notes, (2) shall be registered in the name of the Depositary or its nominee,
(3) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction and (4) shall bear a legend substantially to the
following effect: "This Note is a Global Note registered in the name of the
Depositary or a nominee thereof and, unless and until it is exchanged in
whole or in part for the individual Notes represented hereby, this Global
Note may not be transferred except as a whole by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to
a successor Depositary or a nominee of such successor Depositary."
(b) Notwithstanding any other provision of Section 2.06 or of this
Section 2.12, unless the terms of a Global Note expressly permit such Global
Note to be exchanged in whole or in part for individual Notes, a Global Note
may be transferred, in whole but not in part, only to a nominee of the
Depositary, or by a nominee of the Depositary to the Depositary, or to a
successor Depositary for such Global Note selected or approved by the Company
or to a nominee of such successor Depositary.
(c) (1) If at any time the Depositary for a Global Note notifies the
Company that such Depositary is unwilling or unable to continue as Depositary
for such Global Note or if at any time the Depositary for a Global Note shall
no longer be registered as a clearing agency under the Securities Exchange
Act of 1934, as amended, or any successor statute or regulation, the Company
may appoint a successor Depositary with respect to such Global Note. If (A)
a successor Depositary for such Global Note is not appointed by the Company
within 90 days after the Company receives such notice or becomes aware of
such ineligibility, or (B) any Notes are represented by a Global Note at a
time when an Event of Default with respect to the Notes shall have occurred
and be continuing, then in each case the Company's election pursuant to the
applicable Company Order shall no longer be effective with respect to such
Global Note and the Company shall execute, and the Trustee, upon receipt of a
Company Order for the authentication and delivery of individual Notes of like
tenor and terms in exchange for such Global Note, shall authenticate and make
available for delivery, individual Notes of like tenor and terms in
definitive form in an aggregate principal amount equal to the principal
amount of such Global Note in exchange for such Global Note. The Trustee
shall not be charged with knowledge of notice of the ineligibility of a
Depositary unless a responsible officer assigned to and working in its
corporate trust administration department shall have actual knowledge thereof.
(2) The Company may at any time and in its sole discretion determine
that one or more Notes issued or issuable in
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the form of one or more Global Notes shall no longer be represented by such
Global Note or Notes. In such event the Company shall execute, and the
Trustee, upon receipt of a Company Order for the authentication and delivery
of individual Notes of like tenor and terms in exchange for such Global Note
or Notes, shall authenticate and make available for delivery, individual
Notes of like tenor and terms in definitive form in an aggregate principal
amount equal to the principal amount of such Global Note or Notes in exchange
for such Global Note or Notes.
(3) If agreed upon by the Company and the Depositary with respect to
Notes issued in the form of a Global Note, the Depositary for such Global
Note shall surrender such Global Note in exchange in whole or in part for
individual Notes of like tenor and terms in definitive form on such terms as
are acceptable to the Company and such Depositary. Thereupon the Company
shall execute, and the Trustee shall authenticate and make available for
delivery, without a service charge, (A) to each Person specified by the
Depositary, a new Note or Notes of like tenor and terms, and of any
authorized denominations as requested by such Person in aggregate principal
amount equal to and in exchange for the beneficial interest of such Person in
such Global Note; and (B) to such Depositary a new Global Note of like tenor
and terms and in a denomination equal to the difference, if any, between the
principal amount of the surrendered Global Note and the aggregate principal
amount of Notes delivered to Holders thereof.
(4) In any exchange provided for in Section 2.12(c)(1),(2) or (3), the
Company will execute and the Trustee will authenticate and make available for
delivery, individual Notes in definitive registered form in authorized
denominations. Upon the exchange of a Global Note for individual Notes, such
Global Note shall be cancelled by the Trustee. Notes issued in exchange for
a Global Note pursuant to this Section 2.12 shall be registered in such names
and in such authorized denominations as the Depositary for such Global Note,
pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall deliver such Notes
to the Depositary for delivery to the Persons in whose names such Notes are
so registered, or if the Depositary shall refuse or be unable to deliver such
Notes, the Trustee shall deliver such Notes to the Persons in whose names
such Notes are registered, unless otherwise agreed upon by the Trustee and
the Company.
(d) Neither the Company, the Trustee or any Authenticating Agent will
have any responsibility or liability for any aspect of the records relating
to, or payments made on account of, beneficial ownership interests in a
Global Note or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
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(e) Pursuant to the provisions of this subsection, at the option of the
Trustee and upon thirty days' written notice to the Depositary, the
Depositary shall be required to surrender any two or more Global Notes which
have identical terms, including, without limitation, identical maturities,
interest rates and redemption provisions (but which may have differing
Original Issue Dates) to the Trustee, and the Company shall execute and the
Trustee shall authenticate and deliver to, or at the direction of, the
Depositary a Global Note in principal amount equal to the aggregate principal
amount of, and with all terms identical to, the Global Notes so surrendered
to the Trustee, and such new Global Note shall indicate each applicable
Original Issue Date and the principal amount applicable to each such Original
Issue Date. The exchange contemplated in this subsection shall be
consummated at least 30 days prior to any Interest Payment Date applicable to
any of the Global Notes so surrendered to the Trustee. Upon any exchange of
any Global Note with two or more Original Issue Dates, whether pursuant to
this Section or pursuant to Section 2.06 or Section 3.03, the aggregate
principal amount of the Notes with a particular Original Issue Date shall be
the same before and after such exchange, giving effect to any retirement of
Notes and the Original Issue Dates applicable to such Notes occurring in
connection with such exchange.
SECTION 2.13. CUSIP NUMBERS. The Company in issuing Notes may use CUSIP
numbers (if then generally in use), and, if so, the Trustee shall use CUSIP
numbers in notices of redemption as a convenience to Noteholders; PROVIDED
that any such notice may state that no representation is made as to the
correctness of such CUSIP numbers either as printed on the Notes or as
contained in any notice of redemption and that reliance may be placed only on
the other identification numbers printed on the Notes, and any such
redemption shall not be affected by any defect in or omission of such numbers.
ARTICLE THREE
REDEMPTION OF NOTES; REPAYMENT PRIOR TO STATED MATURITY
SECTION 3.01. APPLICABILITY OF REDEMPTION PROVISIONS. Unless otherwise
specified in the applicable Company Order, the Notes will not be subject to
any sinking fund. If a Company Order specifies an Initial Redemption Date
for a Note, the Company shall have an option to redeem such Note prior to its
Stated Maturity on the date or dates and at the prices specified in such
Company Order, all as provided for in Sections 3.02 and 3.03.
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SECTION 3.02. NOTICE OF REDEMPTION; SELECTION OF NOTES.
(a) The election of the Company to redeem any Notes shall be evidenced
by a Board Resolution which shall be given with notice of such redemption to
the Trustee at least ten Business Days prior to the giving of the notice of
redemption to Holders of such Notes. The selection of Notes or portions
thereof to be redeemed prior to their Stated Maturity shall be in the sole
discretion of the Company; PROVIDED that the Company shall give notice
thereof to the Trustee in accordance with Section 3.02(b). Each Note which
by its terms is redeemable prior to its Stated Maturity may be redeemed by
the Company in whole or in part without also redeeming any other Note which
is redeemable prior to its Stated Maturity.
(b) Notice of redemption to each Holder of Notes to be redeemed as a
whole or in part shall be given by the Company (or, at the Company's request,
by the Trustee in the name and at the expense of the Company) in the manner
provided in Section 15.10 at least 30 but not more than 60 calendar days
prior to the Redemption Date. Any notice which is given in the manner herein
provided shall be conclusively presumed to have been duly given, whether or
not the Noteholder receives the notice. In any case, failure duly to give
such notice, or any defect in such notice, to the Holder of any Note
designated for redemption as a whole or in part shall not affect the validity
of the proceedings for the redemption of any other Note.
(c) Each such notice shall specify the Redemption Date, the places of
redemption and the redemption price at which such Notes are to be redeemed,
and shall state that payment of the redemption price of such Notes or portion
thereof to be redeemed will be made on surrender of such Notes at such places
of redemption, that Accrued Interest to the Redemption Date will be paid as
specified in such notice and that from and after such date interest thereon
will cease to accrue. If less than all the Notes having the same terms are
to be redeemed, the notice shall specify the particular Notes or portions
thereof to be redeemed. In case any Note is to be redeemed in part only, the
notice which relates to such Note shall state the portion of the principal
amount thereof to be redeemed, and shall state that, upon surrender of such
Note, a new Note or Notes having the same terms in aggregate principal amount
equal to the unredeemed portion thereof will be issued.
(d) If at the time of the mailing of any notice of redemption the
Company shall not have irrevocably directed the Trustee to apply funds
deposited with the Trustee or held by it and available to be used for the
redemption of Notes to redeem all the Notes called for redemption, such
notice may state that it is subject to the receipt of the redemption moneys
by the Trustee
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before the Redemption Date and that such notice shall be of no effect unless
such moneys are so received before such date.
SECTION 3.03. PAYMENT OF NOTES ON REDEMPTION; DEPOSIT OF REDEMPTION
PRICE.
(a) If notice of redemption shall have been given as provided in Section
3.02, such Notes or portions of Notes called for redemption shall become due
and payable on the date and at the places stated in such notice at the
applicable redemption price, together with Accrued Interest to the Redemption
Date of such Notes, and on and after the Redemption Date; PROVIDED that the
Company shall have deposited with the Trustee on or prior to the Redemption
Date funds in an amount sufficient to pay the redemption price together with
Accrued Interest to the Redemption Date of such Notes. Interest on the Notes
or portions thereof so called for redemption shall cease to accrue and such
Notes or portions thereof shall be deemed not to be entitled to any benefit
under this Indenture except to receive payment of the redemption price
together with Accrued Interest to the Redemption Date of such Notes;
PROVIDED, HOWEVER, that any payments due with respect to such Note prior to
the Redemption Date shall be payable to the Holders of record of such Notes
at the close of business on the relevant Record Date specified in the
applicable Company Order. On presentation and surrender of such Notes at
such a place of payment in such notice specified, such Notes or the specified
portions thereof shall be paid and redeemed at the applicable Redemption
Price.
(b) The Company shall not mail any notice of redemption of Notes during
the continuance of any Event of Default, except that (1) where notice of
redemption of any Notes has theretofore been mailed, the Company shall redeem
such Notes; PROVIDED that funds have theretofore been deposited for such
purpose, and (2) notices of redemption of all outstanding Notes may be given
during the continuance of an Event of Default.
(c) If any Note called for redemption shall not be so paid upon
surrender thereof for redemption, the principal of and any premium on such
Note, shall until paid bear interest from the date fixed for redemption at
the rate borne by such Note.
(d) Upon surrender of any Note redeemed in part only, the Company shall
execute and register, and the Trustee shall authenticate and make available
for delivery, a new Note or Notes of authorized denominations in aggregate
principal amount equal to, and having the same terms and Original Issue Date
or Dates as, the unredeemed portion of the Note so surrendered.
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SECTION 3.04. REPAYMENT AT THE OPTION OF THE HOLDER.
(a) Unless otherwise specified in the applicable Company Order, Notes
shall not be repayable prior to Stated Maturity at the option of the Holder.
If so specified, a Note shall be repayable at the option of the Holder, in
whole or in part, on a date or dates prior to Stated Maturity and at a price
or prices specified in the applicable Company Order, plus accrued and unpaid
interest to but excluding the date of repayment.
(b) In order for a Note that is repayable at the option of the Holder to
be repaid prior to Stated Maturity, such Holder shall deliver or cause to be
delivered to the Trustee at least 30 but not more than 45 calendar days prior
to the repayment date: (i) the Note with the form entitled "Option to Elect
Repayment" on the reverse of the Note duly completed, or (ii) a telegram,
telex, facsimile transmission, hand delivery or letter (first class, postage
prepaid) from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
in the United States setting forth the name of the Holder of the Note, the
principal amount of the Note, the principal amount of the Note to be repaid,
the certificate number or a description of the tenor and terms of the Note, a
statement that the option to elect repayment is being exercised thereby and a
guarantee that the Note to be repaid with the form entitled "Option to Elect
Repayment" on the reverse of the Note duly completed shall be received by the
Trustee not later than five Business Days after the date of such telegram,
telex, facsimile transmission, hand delivery or letter, if such Note and form
duly completed are received by the Trustee by such fifth Business Day.
(c) Exercise of the repayment option by the Holder of a Note shall be
irrevocable, except that a Holder who has tendered a Note for repayment may
revoke such tender for repayment by written notice to the Trustee received
prior to 5:00 P.M., New York City time, on the tenth calendar day prior to
the repayment date.
(d) Unless otherwise specified in the applicable Company Order, the
repayment option may be exercised by the Holder of a Note for less than the
entire principal amount of the Note; PROVIDED that the principal amount of
the Note remaining outstanding after such repayment is an authorized
denomination. Upon such partial repayment such Note will be cancelled and a
new Note or Notes for the remaining principal amount thereof shall be issued
in the name of the Holder thereof.
(e) While any Note is represented by one or more Global Notes, any such
option for repayment may be exercised by the applicable participant in the
Depositary that has an account for
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Notes with the Depositary, on behalf of the beneficial owners of the Note
represented by such Global Note or Notes, by delivering a written notice
substantially similar to the above-mentioned form duly completed to the
Trustee at its Corporate Trust Office (or such other address of which the
Company shall from time to time notify the Holders), at least 30 but not more
than 60 calendar days prior to the date of repayment. Notices of election
from such participants on behalf of beneficial owners of the Global Note or
Notes representing such Notes to exercise their option to have such Notes
repaid shall be received by the Trustee by 5:00 P.M., New York City time, on
the last day for giving such notice. All notices shall be executed by a duly
authorized officer of such participant (with signatures guaranteed) and shall
be irrevocable. In addition, beneficial owners of the Global Note or Notes
representing Notes shall effect delivery to the Depositary at the time such
notices of election are given by causing the applicable participant to
transfer such beneficial owner's interest in the Global Note or Notes
representing such Notes, on the Depositary's records, to the Trustee.
SECTION 3.05. EXTENSION.
(a) If a Company Order specifies an Extension Period or Periods for a
Note, the Company shall have an option to extend the Stated Maturity of such
Note for one or more Extension Periods specified in such Company Order, but
not beyond the Final Maturity Date specified therein. The Company may
exercise such option by notifying the Trustee of such exercise at least 45
but not more than 60 calendar days prior to the Pre-Exercise Stated Maturity
Date of such Note, and after receipt of such notification, the Trustee shall
send not later than 40 calendar days prior to such Pre-Exercise Stated
Maturity Date an Extension Notice to the Holder of such Note.
(b) Upon the sending by the Trustee of an Extension Notice to the Holder
of a Note, the Stated Maturity of such Note will be extended automatically,
and, except as modified by the Extension Notice and, subject to Section
3.05(c) and (d), such Note will have the same terms as prior to the sending
of such Extension Notice.
(c) Notwithstanding Sections 3.05(a) and (b), not later than 20 calendar
days prior to the Pre-Exercise Stated Maturity Date, the Company may, at its
option, revoke the interest rate, in the case of a Fixed Rate Note, or the
Spread and/or Spread Multiplier, in the case of a Floating Rate Note,
provided for in the Extension Notice and establish a higher interest rate, in
the case of a Fixed Rate Note, or a Spread and/or Spread Multiplier resulting
in a higher interest rate, in the case of a Floating Rate Note, for the
Extension Period by causing the Trustee to send by
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telegram, telex, facsimile transmission, hand delivery or letter (first
class, postage prepaid) notice of such higher interest rate or Spread and/or
Spread Multiplier resulting in a higher interest rate, as the case may be, to
the Holder of such Note, and such notice will be irrevocable. All Notes with
respect to which the Stated Maturity is extended will bear such higher
interest rate, in the case of a Fixed Rate Note, or Spread and/or Spread
Multiplier resulting in a higher interest rate, in the case of a Floating
Rate Note, for the Extension Period, whether or not tendered for repayment as
provided in Section 3.05(d).
(d) If the Company extends the Stated Maturity of a Note (including, if
such Stated Maturity has previously been extended, the Stated Maturity as
previously extended), the Holder of such Note shall have the option to elect
repayment of such Note, in whole but not in part, by the Company on the
Pre-Exercise Stated Maturity Date (including, if such Stated Maturity has
previously been extended, the last day of the then current Extension Period),
at a price equal to the principal amount thereof plus accrued and unpaid
interest to but excluding such date. In order for a Note to be so repaid on
the Pre-Exercise Stated Maturity Date, the Holder thereof must follow the
procedures set forth in Section 3.04 for optional repayment, except that the
period for delivery of such Note or notification to the Trustee will be at
least 25 but not more than 35 calendar days prior to the Pre-Exercise Stated
Maturity Date. A Holder who has tendered a Note for repayment following
receipt of an Extension Notice may revoke such tender for repayment by
written notice to the Trustee received prior to 5:00 P.M., New York City
time, on the tenth calendar day prior to the Pre-Exercise Stated Maturity
Date.
SECTION 3.06. RESET NOTES.
(a) If a Company Order specifies Optional Interest Reset Dates for a
Note, the Company shall have an option to reset the interest rate of a Fixed
Rate Note or the Spread and/or Spread Multiplier of a Floating Rate Note,
subject to any formula for such resetting specified in such Company Order.
The Company may exercise such option by notifying the Trustee of such
exercise at least 45 but not more than 60 calendar days prior to an Optional
Interest Reset Date for such Note. If the Company so notifies the Trustee of
such exercise, the Trustee shall send not later than 40 calendar days prior
to such Optional Interest Reset Date, by telegram, telex, facsimile
transmission, hand delivery or letter (first class, postage prepaid) to the
Holder of such Note, a Reset Notice, including the date or dates on which or
the period or periods during which and the price or prices at which
redemption of such Note may occur during the Subsequent Interest Period
commencing on such Optional Interest Reset Date.
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(b) Notwithstanding Section 3.06(a), not later than 20 calendar days
prior to an Optional Interest Reset Date for a Note, the Company may, at its
option, revoke the interest rate, in the case of a Fixed Rate Note, or the
Spread and/or Spread Multiplier, in the case of a Floating Rate Note,
provided for in a Reset Notice and establish a higher interest rate, in the
case of a Fixed Rate Note, or a Spread and/or Spread Multiplier resulting in
a higher interest rate, in the case of a Floating Rate Note, for the
Subsequent Interest Period commencing on such Optional Interest Reset Date by
causing the Trustee to send by telegram, telex, facsimile transmission, hand
delivery or letter (first class, postage prepaid) notice of such higher
interest rate or Spread and/or Spread Multiplier resulting in a higher
interest rate, as the case may be, to the Holder of such Note, and such
notice will be irrevocable. All Notes with respect to which the interest
rate or Spread and/or Spread Multiplier is reset on an Optional Interest
Reset Date to a higher interest rate or Spread and/or Spread Multiplier
resulting in a higher interest rate will bear such higher interest rate, in
the case of a Fixed Rate Note, or Spread and/or Spread Multiplier resulting
in a higher interest rate, in the case of a Floating Rate Note, whether or
not tendered for repayment as provided in Section 3.06(c).
(c) If the Company elects prior to an Optional Interest Reset Date to
reset the interest rate or the Spread and/or Spread Multiplier of a Note, the
Holder of such Note shall have the option to elect repayment of such Note, in
whole but not in part, by the Company on such Optional Interest Reset Date at
a price equal to the principal amount thereof plus accrued and unpaid
interest to but excluding such Optional Interest Reset Date. In order for a
Note to be so repaid on an Optional Interest Reset Date, the Holder thereof
must follow the procedures set forth in Section 3.04, except that the period
for delivery of such Note or notification to the Trustee will be at least 25
but not more than 35 calendar days prior to such Optional Interest Reset
Date. A Holder who has tendered a Note for repayment following receipt of a
Reset Notice may revoke such tender for repayment by written notice to the
Trustee received prior to 5:00 P.M., New York City time, on the tenth
calendar day prior to such Optional Interest Reset Date.
ARTICLE FOUR
FIRST MORTGAGE BONDS
SECTION 4.01. ISSUANCE RESTRICTIONS. So long as any Notes are
outstanding, the Company will not (a) issue additional First Mortgage Bonds
except to replace any mutilated, lost, destroyed or stolen First Mortgage
Bonds or to effect exchanges and transfers of First Mortgage Bonds or (b)
subject to the lien of
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the Bond Indenture any property which is excepted and excluded from the Bond
Indenture and the lien and operation thereof by the terms of the Bond
Indenture, unless (i) concurrently with the issuance of such First Mortgage
Bonds or subjection of any such property to such lien, the Company issues,
and the trustee under the Bond Indenture authenticates and delivers to the
Trustee, a First Mortgage Bond or Bonds in an aggregate principal amount
equal to the aggregate principal amount of the Notes then outstanding, and
(ii) concurrently with and as a condition precedent to the issuance of any
Notes thereafter, the Company issues, and the trustee under the Bond
Indenture authenticates and delivers to the Trustee, a First Mortgage Bond or
Bonds in an aggregate principal amount equal to the aggregate principal
amount of the Notes to be issued, and in each such case such First Mortgage
Bonds shall have the same Stated Maturity, bear interest at the same rates,
have redemption and other terms and provisions which are the same as, the
Notes then outstanding or to be issued, as the case may be.
SECTION 4.02. FIRST MORTGAGE BONDS HELD BY THE TRUSTEE. First Mortgage
Bonds delivered to the Trustee pursuant to Section 4.01 shall be fully
registered in the name of the Trustee, which shall hold such First Mortgage
Bonds in trust for the benefit of the Holders from time to time of the Notes,
to provide the security of the First Mortgage Bonds for (a) the full and
prompt payment of the principal of each Note when and as the same shall
become due in accordance with the terms and provisions of this Indenture,
either at the Stated Maturity thereof, upon acceleration of the maturity
thereof or upon call for redemption, and (b) the full and prompt payment of
any premium and interest on each Note when and as the same shall become due
in accordance with the terms and provisions of this Indenture.
SECTION 4.03. TRUSTEE TO EXERCISE RIGHTS OF FIRST MORTGAGE BONDHOLDER.
As a holder of First Mortgage Bonds, the Trustee shall have and exercise all
of the rights of a holder of First Mortgage Bonds possessed under the Bond
Indenture.
SECTION 4.04. NO TRANSFER OF FIRST MORTGAGE BONDS; EXCEPTION. Except as
required to effect an assignment to a successor trustee under this Indenture,
the Trustee shall not sell, assign or transfer any First Mortgage Bonds held
by it pursuant to this Indenture and the Company shall issue stop transfer
instructions to the trustee and any transfer agents under the Bond Indenture
to effect compliance with this Section 4.04.
SECTION 4.05. RELEASE OF FIRST MORTGAGE BONDS. When (a) all of the
principal of and any premium and interest on all Notes shall have been paid
or provision therefor duly made in accordance with this Indenture, or (b) all
Notes shall have been delivered to the Trustee for cancellation by or on
behalf of the Company, or (c)
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no Note is any longer outstanding under this Indenture and all conditions in
Article Five have been satisfied, the Trustee shall upon request of the
Company, within five Business Days thereafter, deliver to the Company without
charge all First Mortgage Bonds held by the Trustee under this Indenture,
together with such appropriate instruments of release as may be required; the
First Mortgage Bonds so acquired by the Company shall be delivered for
cancellation to the trustee under the Bond Indenture.
SECTION 4.06. VOTING OF FIRST MORTGAGE BONDS.
(a) The Trustee, as a holder of First Mortgage Bonds, shall attend
meetings of Bondholders under the Bond Indenture and either at such meeting,
or otherwise when the consent of such Bondholders is sought without a
meeting, the Trustee shall vote the outstanding principal amount of such
First Mortgage Bonds, or shall consent with respect thereto, proportionally
with respect to the holders all other First Mortgage Bonds then outstanding
under the Bond Indenture and eligible to vote or consent.
(b) Notwithstanding Section 4.06(a), the Trustee shall not vote any
portion of the outstanding principal amount of the First Mortgage Bonds held
by it hereunder in favor of, or give its consent to, any action which, in the
opinion of the Trustee, would materially adversely affect the interests of
the Noteholders, except with the appropriate consent of the Noteholders.
SECTION 4.07. DISCHARGE OF BOND INDENTURE. The Trustee shall surrender
for cancellation to the trustee under the Bond Indenture all First Mortgage
Bonds then held by the Trustee and issued under the Bond Indenture upon
receipt by the Trustee of:
(a) an Officers' Certificate requesting such surrender for cancellation
of such First Mortgage Bonds, and to the effect that no First Mortgage Bonds
are outstanding under the Bond Indenture other than First Mortgage Bonds held
by the Trustee hereunder and that promptly upon such surrender the Bond
Indenture will be satisfied and discharged pursuant to the terms thereof; and
(b) an Opinion of Counsel to the effect that upon satisfaction and
discharge of the Bond Indenture the property formerly subject to the lien of
the Bond Indenture will be subject to no lien except Permitted Encumbrances.
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ARTICLE FIVE
SATISFACTION AND DISCHARGE; UNCLAIMED MONEYS
SECTION 5.01. SATISFACTION AND DISCHARGE. This Indenture shall, upon
the request of the Company set forth in an Officers' Certificate, cease to be
of further effect and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture, when
(1) either
(A) all Notes theretofore authenticated and delivered (other than
(i) Notes which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.07, (ii) Notes for which payment
money has theretofore been deposited with or paid to the Trustee and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 5.03) have been delivered to the Trustee for
cancellation; or
(B) all such Notes not theretofore delivered to the Trustee for
cancellation,
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of
notice by the Trustee in the name, and at the expense, of
the Company,
and the Company, in the case of (i), (ii) or (iii) of this subclause (B),
has irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for such purpose an amount in United States dollars,
U.S. Government Obligations maturing as to principal and interest in such
amounts and at such times as will ensure the availability of United States
dollars, or a combination of United States dollars and U.S. Government
Obligations, sufficient to pay and discharge the entire indebtedness on
such Notes for principal (and premium, if any) and interest to the date of
such deposit (in the case of Notes which have become due and payable) or
to the Stated Maturity or Redemption Date, as the case may be; PROVIDED,
HOWEVER, in the event a petition for relief under
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the federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law,
is filed with respect to the Company within 91 days after the deposit
and the Trustee is required to return the deposited money to the
Company, the obligations of the Company under this Indenture with
respect to such Notes shall not be deemed terminated or discharged;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company;
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture with respect to such Notes have been complied with; and
(4) the Company has delivered to the Trustee an Opinion of Counsel
or a ruling by the Internal Revenue Service to the effect that Holders
of the Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such deposit and discharge.
Notwithstanding the satisfaction and discharge of this Indenture, this
Indenture shall continue in effect as to (i) rights of registration of
transfer and exchange of Notes, (ii) substitution of apparently mutilated,
defaced, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and any premium and interest thereon,
upon the original stated due dates therefor (but not upon acceleration of
maturity), (iv) the rights, obligations and immunities of the Trustee
hereunder and (v) the rights of the Holders of Notes as beneficiaries hereof
with respect to the property so deposited with the Trustee payable to all or
any of them), and the Trustee, on demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel and at the cost and expense
of the Company, shall execute proper instruments acknowledging such
satisfaction of and discharging this Indenture. Notwithstanding the
satisfaction and discharge of this Indenture, the obligations of the Company
to the Trustee under Section 9.07 shall survive.
SECTION 5.02. DEPOSITED MONEYS TO BE HELD IN TRUST BY TRUSTEE. Subject
to Section 5.03, all moneys and U.S. Government Obligations deposited with
the Trustee pursuant to Section 5.01 shall be held in trust and applied by it
to the payment, either directly or through any paying agent (including the
Company if acting as its own paying agent), to the Holders of the particular
Notes for the payment or redemption of which such moneys and U.S. Government
Obligations have been deposited with the Trustee, of all
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sums due and to become due thereon for principal and premium, if any, and
interest.
SECTION 5.03. RETURN OF UNCLAIMED MONEYS. Any moneys deposited with or
paid to the Trustee for payment of the principal of or any premium or
interest on any Notes and not applied but remaining unclaimed by the Holders
of such Notes for two years after the date upon which the principal of or any
premium or interest on such Notes, as the case may be, shall have become due
and payable, shall be repaid to the Company by the Trustee on written demand
and all liability of the Trustee shall thereupon cease; and any Holder of any
of such Notes shall thereafter look only to the Company for any payment which
such Holder may be entitled to collect; PROVIDED, HOWEVER, that the Trustee
before being required to make any such repayment, may at the expense of the
Company cause to be mailed to such Holder notice that such money remains
unclaimed and that, after a date specified therein which shall not be less
than 30 days from the date of such mailing, any unclaimed balance of such
money then remaining will be repaid to the Company.
SECTION 5.04. REINSTATEMENT. If the Trustee is unable to apply any
money or U.S. Government Obligations in accordance with Section 5.01 by
reason of any legal proceeding or any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture with respect to
the Notes to which such money or U.S. Government Obligations were to have
been applied shall be revived and reinstated as though no deposit had
occurred pursuant to Section 5.01 until such time as the Trustee is permitted
to apply such money or U.S. Government Obligations in accordance with Section
5.01; PROVIDED, HOWEVER, that if the Company has made any payment of
principal of or any premium or interest on any Notes because of the
reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money or
U.S. Government Obligations held by the Trustee.
ARTICLE SIX
PARTICULAR COVENANTS OF THE COMPANY
SECTION 6.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company
covenants and agrees for the benefit of the Holders of the Notes that it will
duly and punctually pay or cause to be paid the principal of and any premium
and interest on each of the Notes at the places, at the respective times and
in the manner provided in such Notes.
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SECTION 6.02. OFFICE FOR NOTICES AND PAYMENTS, ETC. So long as any of
the Notes remain outstanding, the Company will maintain in the Borough of
Manhattan, The City of New York, an office or agency where the Notes may be
presented for registration of transfer and for exchange as in this Indenture
provided, and where, at any time when the Company is obligated to make a
payment upon Notes (other than a payment as to which it is permitted to make
such payment by check), the Notes may be presented for payment, and shall
maintain at any such office or agency and at its principal office an office
or agency where notices and demands to or upon the Company in respect of the
Notes or of this Indenture may be served; PROVIDED that the Company may
maintain at its principal executive offices, one or more other offices or
agencies for any or all of the foregoing purposes; the Company hereby
appoints the Trustee as agent of the Company for the foregoing purposes. The
Company will give to the Trustee written notice of the location of each such
office or agency and of any change of location thereof. In case the Company
shall fail to maintain any such office or agency or shall fail to give such
notice of the location or of any change in the location thereof,
presentations may be made and notices and demands may be served at the
Corporate Trust Office of the Trustee.
SECTION 6.03. APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE. The
Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 9.11, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 6.04. ANNUAL STATEMENT AND NOTICE.
(a) The Company will deliver to the Trustee within 120 days after the
end of each fiscal year of the Company, beginning with the fiscal year ending
December 31, 1998, an Officers' Certificate which complies with TIA Section
314(a)(4) stating that in the course of the performance by the signers of
their duties as officers of the Company they would obtain knowledge of any
default by the Company in the performance of any covenant contained in this
Indenture or an Event of Default stating whether they have obtained knowledge
of any such default or such Event of Default, and, if so, specifying each
such default or such Event of Default of which the signers have knowledge,
and the nature and status thereof.
(b) The Company shall give to the Trustee written notice of the
occurrence of an Event of Default within five days after the Company becomes
aware of such occurrence.
SECTION 6.05. CORPORATE EXISTENCE. Subject to Article Twelve, the
Company will do or cause to be done all things necessary to preserve and keep
in full force and effect its
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corporate existence, rights (charter and statutory) and franchises; PROVIDED
HOWEVER, that the Company shall not be required to preserve any such right or
franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company.
SECTION 6.06. LIMITATION UPON MORTGAGES AND LIENS. The Company will not
at any time directly or indirectly create or assume and will not cause or
permit a Subsidiary directly or indirectly to create or assume, except in
favor of the Company or a Wholly-Owned Subsidiary, any mortgage, pledge or
other lien or encumbrance upon any Principal Facility or any interest it may
have therein or upon any stock of any Regulated Subsidiary or any
indebtedness of any Subsidiary to the Company or any other Subsidiary,
whether now owned or hereafter acquired, without making effective provision
(and the Company covenants that in such case it will make or cause to be
made, effective provision) whereby the outstanding Notes and any other
indebtedness of the Company then entitled thereto shall be secured by such
mortgage, pledge, lien or encumbrance equally and ratably with any and all
other obligations and indebtedness thereby secured, so long as any such other
obligations and indebtedness shall be so secured; PROVIDED, HOWEVER, that the
foregoing covenant shall not be applicable to the lien of the Bond Indenture
or Permitted Encumbrances.
SECTION 6.07. WAIVER OF CERTAIN COVENANTS. The Company may omit in any
particular instance to comply with any term, provision or condition set forth
in Article Four or Section 6.06 (and if so specified, any other covenant not
set forth herein and specified pursuant to Section 2.05 to be applicable to
any Notes, except as otherwise provided pursuant to Section 2.05), if before
the time for such compliance the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding shall either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no waiver shall extend to or affect such term,
provision or condition except to the extent expressly so waived, and, until
such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
ARTICLE SEVEN
NOTEHOLDER LISTS AND REPORTS BY THE COMPANY
AND THE TRUSTEE
SECTION 7.01. NOTEHOLDER LISTS. The Company will, so long as any Notes
are outstanding under this Indenture, furnish or cause to be furnished to the
Trustee within 15 days prior to each
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Interest Payment Date on Notes then outstanding, and at such other times as
the Trustee may request in writing, the information required by TIA Section
312(a), which the Trustee shall preserve as required by TIA Section 312(a).
The Trustee shall also comply with TIA Section 312(b), but the Trustee, the
Company and each Person acting on behalf of the Trustee or the Company shall
have the protection of TIA Section 312(c).
SECTION 7.02. SECURITIES AND EXCHANGE COMMISSION REPORTS. The Company
shall (a) file with the Trustee, within 15 days after the Company is required
to file the same with the Securities and Exchange Commission, copies of the
reports, information and documents (or portions thereof) required to be so
filed pursuant to TIA Section 314(a), and (b) comply with the other
provisions of TIA Section 314(a).
SECTION 7.03. REPORTS BY THE TRUSTEE. The Trustee shall (a) transmit
within 60 days after May 15 in each year, beginning with the year 1999, to
the Noteholders specified in TIA Section 3.13(c) and to the Securities and
Exchange Commission, a brief report dated as of such May 15 and complying
with the requirements of TIA Section 313(a), but no report shall be required
if no event described in TIA Section 313(a) shall have occurred within the
previous twelve months ending on such date. The Trustee shall also comply
with the other provisions of TIA Section 313(b)(2).
ARTICLE EIGHT
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON EVENT OF DEFAULT
SECTION 8.01. EVENTS OF DEFAULT. "Event of Default" wherever used
herein with respect to any Notes means any one of the following events
(whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law, pursuant to any
judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(1) default in the payment of any interest upon any Note when it
becomes due and payable, and continuance of such default for a period of
30 days; or
(2) default in the payment of the principal of (and premium, if
any, on) any Note at its Maturity; or
(3) default in the performance or breach of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose
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breach is elsewhere in this Section 8.01 specifically dealt with), and
continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least
25% in aggregate principal amount of the Notes then outstanding, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(4) default (i) in the payment of any principal of or interest on
any Indebtedness of the Company or any Subsidiary of the Company (other
than Notes), aggregating more than $10,000,000 in principal amount, when
due after giving effect to any applicable grace period or (ii) in the
performance of any other term or provision of any Indebtedness of the
Company or any Subsidiary of the Company (other than Notes) in excess of
$10,000,000 principal amount that results in such Indebtedness becoming
or being declared due and payable prior to the date on which it would
otherwise become due and payable, and such acceleration shall not have
been rescinded or annulled, or such Indebtedness shall not have been
discharged, within a period of 15 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding, a written notice
specifying such default or defaults and stating that such notice is a
"Notice of Default" hereunder; or
(5) the entry against the Company or any Subsidiary of the Company
of one or more judgments, decrees or orders by a court having
jurisdiction in the premises from which no appeal may be or is taken for
the payment of money, either individually or in the aggregate, in excess
of $10,000,000, and the continuance of such judgment, decree or order
unsatisfied and in effect for any period of 45 consecutive days after
the amount thereof is due without a stay of execution and there has been
given, by registered or certified mail, to the Company by the Trustee or
to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding, a written
notice specifying such entry and continuance of such judgment, decree or
order and stating that such notice is a "Notice of Default" hereunder;
or
(6) the entry of a decree or order for relief in respect of the
Company by a court having jurisdiction in the premises in an involuntary
case under the federal bankruptcy laws, as now or hereafter constituted,
or any other applicable federal
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or state bankruptcy, insolvency or other similar law, or a decree or order
adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any applicable federal
or state law, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Company or of
any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days; or
(7) the commencement by the Company of a voluntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law,
or the consent by it to the entry of an order for relief in an
involuntary case under any such law or to the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property, or
the making by it of an assignment for the benefit of its creditors, or
the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the
Company in furtherance of any such action; or
(8) any other Event of Default provided with respect to the
particular Note specified in the applicable Company Order.
SECTION 8.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default with respect to the Notes then outstanding occurs and is
continuing, then in every such case the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Notes then outstanding may
declare the principal amount of all the Notes to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if
given by Holders), and upon any such declaration such principal amount shall
become immediately due and payable. Upon payment of such amount in United
States dollars, all obligations of the Company in respect of the payment of
principal of the Notes shall terminate.
At the time after such a declaration of acceleration with respect to the
Notes has been made and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter in this Article provided,
the Holders of a majority in aggregate principal amount of the Notes then
outstanding, by written notice to the Company and the Trustee, may rescind
and annul such declaration and its consequences if
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(1) the Company has paid or deposited with the Trustee a sum in
United States dollars sufficient to pay
(A) all overdue installments of interest on all Notes,
(B) the principal of (and premium, if any, on) any Notes which have
become due otherwise than by such declaration of acceleration and
interest thereon at the rate or rates prescribed therefor in such
Notes,
(C) to the extent that payment of such interest is lawful, interest
upon overdue installments of interest on each Note at the rate
borne by such Note, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel;
and
(2) All Events of Default with respect to the Notes, other than the
nonpayment of the principal of Notes which has become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 8.11.
No such rescission and waiver shall affect any subsequent default or impair
any right consequent thereon.
SECTION 8.03. COLLECTION AND SUITS FOR ENFORCEMENT BY TRUSTEE. The
Company covenants that if
(1) default is made in the payment of any installment of interest on
any Note when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of principal of (or premium, if
any, on) any Notes as and when the name shall have become due and payable,
the Company shall, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Notes, the amount then due and payable on such Notes for
principal (and premium, if any) and interest, if any, and, to the extent that
payment of such interest shall be legally enforceable, interest upon the
overdue principal (and premium, if any) and upon overdue installments of
interest at the rate borne by the Notes; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
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collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amount forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the
same against the Company or any other obligor under such Notes, and collect
the moneys adjudged or decreed to be payable in the manner provided by law
out of the property of the Company or any other obligor upon such Notes
wherever situated.
If an Event of Default with respect to any Notes occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of the Notes by such appropriate
judicial proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any covenant
or agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
SECTION 8.04. TRUSTEE MAY FILE PROOFS OF CLAIM. In the case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceedings, or any voluntary or involuntary case under the federal
bankruptcy laws, as now or hereafter constituted, relative to the Company or
any other obligor upon the Notes or the property of the Company or of such
other obligor or their creditors, the Trustee (irrespective of whether the
principal of such Notes shall then be due and payable as therein expressed or
by declaration of acceleration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in
such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (or,
if any Notes are Original Issue Discount Securities, the Amortized Face
Amount thereof or such other portion of the principal amount as may be due
and payable with respect to such Original Issue Discount Notes pursuant to
a declaration in accordance with Section 8.02) (and premium, if any) and
interest owning and unpaid in respect of the Notes and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of
the Holders of such Notes allowed in such judicial proceeding, and
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(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, custodian, liquidator, sequestrator (or
other similar official) in any such proceeding is hereby authorized by each
such Holder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to such
Holders, to pay to the Trustee and amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 9.06.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 8.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of such
Notes or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name,
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit
of the Holders of the Notes in respect of which such judgment has been
recovered.
SECTION 8.06. APPLICATION OF MONEYS COLLECTED BY TRUSTEE. Any moneys
collected by the Trustee with respect to any of the Notes shall be applied in
the order following, at the date or dates fixed by the Trustee for the
distribution of such moneys, upon presentation of the several Notes, and
stamping thereon the payment, if only partially paid, and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due to the Trustee pursuant
to Section 9.07;
SECOND: In case the principal of the Notes then outstanding in
respect of which such moneys have been collected shall not have become
due and be unpaid, to the payment of interest on the Notes, in the
order of the maturity of the installments of such interest, with
interest (to the extent allowed by law and to the extent
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that such interest has been collected by the Trustee) upon the overdue
installments of interest at the rate borne by the Notes, such payments
to be made ratably to the persons entitled thereto;
THIRD: In case the principal of the Notes then outstanding in
respect of which such moneys have been collected shall have become
due, by declaration or otherwise, to the payment of the whole amount
then owing and unpaid upon the Notes for principal and any premium and
interest thereon, with interest on the overdue principal and any
premium and (to the extent allowed by law and to the extent that such
interest has been collected by the Trustee) upon overdue installments
of interest at the rate borne by the Notes; and in case such moneys
shall be insufficient to pay in full the whole amount so due and
unpaid upon the Notes, then to the payment of such principal and any
premium and interest without preference or priority of principal and
any premium over interest, or of interest over principal and any
premium or of any installment of interest over any other installment
of interest, or of any Note over any other Note, ratably to the
aggregate of such principal and any premium and accrued and unpaid
interest; and
FOURTH: To the payment of the remainder, if any, to the Company,
its successors or assigns, or to whomsoever may lawfully be entitled
to the same, or as a court of competent jurisdiction may determine.
SECTION 8.07. PROCEEDINGS BY NOTEHOLDERS.
(a) No Holder of any Note shall have any right by virtue of or by
availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless such Holder previously shall have given to the
Trustee written notice of default with respect to such Note and of the
continuance thereof, as hereinabove provided, and unless also the Holders of
not less than a majority in aggregate principal amount of the Notes then
outstanding shall have made written request upon the Trustee to institute
such action, suit or proceeding in its own name as Trustee hereunder and
shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute
any such action, suit or proceeding, it being understood and intended, and
being expressly covenanted by the taker and the Holder of every
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Note with every other taker and Holder and the Trustee that no one or more
Holders of Notes shall have any right in any manner whatever by virtue of or
by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of any other Holder of Notes, or to obtain or seek to
obtain priority over or preference to any other such Holder, or to enforce
any right under this Indenture, except in the manner herein provided and for
the equal, ratable and common benefit of all Holders of Notes.
(b) Notwithstanding any other provision in this Indenture, however, the
rights of any Holder of any Note to receive payment of the principal of and
any premium and interest on such Note, on or after the respective due dates
expressed in such Note (or, in the case of redemption, on the Redemption
Date), or to institute suit for the enforcement of any such payment on or
after such respective dates shall not be impaired or affected without the
consent of such Holder.
SECTION 8.08. PROCEEDINGS BY TRUSTEE. In case of an Event of Default
hereunder the Trustee may in its discretion proceed to protect and enforce
the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce
any of such rights, either by suit in equity or by action at law or by
proceeding in bankruptcy or otherwise, whether for the specific enforcement
of any covenant or agreement contained in this Indenture or in aid of the
exercise of any power granted in this Indenture, or to enforce any other
legal or equitable right vested in the Trustee by this Indenture or by law.
SECTION 8.09. REMEDIES CUMULATIVE AND CONTINUING. All powers and
remedies given by this Article Eight to the Trustee or to the Noteholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive
of any powers and remedies hereof or of any other powers and remedies
available to the Trustee or the Holders of the Notes, by judicial proceedings
or otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the
Trustee or of any Holder of any of the Notes in exercising any right or power
accruing upon any default occurring and continuing as aforesaid shall impair
any such right or power, or shall be construed to be a waiver of any such
default or an acquiescence therein; and, subject to Section 8.07, every power
and remedy given by this Article Eight or by law to the Trustee or to the
Noteholders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Noteholders.
SECTION 8.10. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
Noteholder has instituted any proceeding to enforce any right or remedy under
this Indenture and such
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proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Noteholder, then and in every
such case, subject to any determination in such proceeding, the Company, the
Trustee and the Noteholders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of
the Company, the Trustee and the Noteholders shall continue as though no such
proceeding had been instituted.
SECTION 8.11. DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY
MAJORITY NOTEHOLDERS. The Holders of a majority in aggregate principal
amount of the Notes then outstanding shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee;
PROVIDED, HOWEVER, that (subject to Section 9.01) the Trustee shall have the
right to decline to follow any such direction if the Trustee being advised by
counsel determines that the action or proceeding so directed may not lawfully
be taken or if the Trustee in good faith by its board of directors or
trustees, executive committee, or a trust committee of directors or trustees
or responsible officers shall determine that the action or proceeding so
directed would involve the Trustee in personal liability or would be unduly
prejudicial to the rights of Noteholders not joining in such directions.
Prior to any declaration accelerating the Maturity of the Notes, the Holders
of a majority in aggregate principal amount of the Notes then outstanding may
on behalf of all of the Holders of all of the Notes waive any past default or
Event of Default hereunder and its consequences, except a default (i) in the
payment of principal of or any premium or interest on any Note or (ii) in
respect of a covenant or provision hereof which pursuant to Section 13.02
cannot be modified or amended without the consent of the Holder of each Note
then outstanding that would be affected thereby. Upon any such waiver, such
default will cease to exist, and any Event of Default arising therefrom will
be deemed to have been cured, for every purpose of the Indenture and the
Notes, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.
SECTION 8.12. NOTICE OF DEFAULT. The Trustee shall, within 90 days
after the occurrence of a default with respect to the Notes, give to all
Holders of the Notes specified in TIA Section 3.13(c), in the manner provided
in Section 15.10, notice of such default, unless such default shall have been
cured before the giving of such notice, the term "default" for the purpose of
this Section 8.12 being hereby defined to be any event which is or after
notice or lapse of time or both would become an Event of Default; PROVIDED
that, except in the case of default in the payment of the principal of or any
premium or interest on any of the Notes, the Trustee shall be protected in
withholding such notice if and so
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long as its board of directors or trustees, executive committee, or a trust
committee of directors or trustees or responsible officers in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Notes. The Trustee shall not be charged with knowledge of any
Event of Default unless a responsible officer of the Trustee assigned to the
corporate trust division of the Trustee shall have actual knowledge of such
Event of Default.
SECTION 8.13. UNDERTAKING TO PAY COSTS. All parties to this Indenture
agree, and each Holder of any Note by acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but this Section 8.13 shall not apply
to any suit instituted by the Trustee, or to any suit instituted by any
Noteholder, or group of Noteholders, holding in the aggregate more than 10%
in principal amount of the Notes then outstanding, or to any suit instituted
by any Noteholder for the enforcement of the payment of the principal of or
any premium or interest on any Note on or after the due date expressed in
such Note.
ARTICLE NINE
CONCERNING THE TRUSTEE
SECTION 9.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the
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same to determine whether or not they conform to the requirements of
this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section 9.01.
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of not less than a majority in principal amount of the Notes
at the time outstanding, determined as provided in Section 10.04, relating
to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture with respect to the Notes; and
(4) no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section 9.01.
SECTION 9.02. NOTICE OF DEFAULTS. Within 90 days after the occurrence
of any default hereunder the Trustee shall transmit by mail to all Holders as
their names and addresses appear in the Note register, notice of such default
hereunder known to the Trustee, unless such default shall have been cured or
waived;
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PROVIDED, HOWEVER, that, except in the case of a default in the payment of
the principal of (or premium, if any) or interest on any Note or in the
payment of any sinking fund installment with respect to any Notes, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
or Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interest of the Holders of such Notes;
and PROVIDED, FURTHER, that in the case of any default of the character
specified in Section 8.01(3), no such notice to Holders shall be given until
at least 30 days after occurrence thereof. For the purpose of this Section
9.02, the term "default" means any event which is, or after notice or lapse
of time or both would become, an Event of Default.
SECTION 9.03. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of
Section 9.01:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officers' Certificate and any resolution of the
Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and
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liabilities which might be incurred by it in compliance with such request
or direction;
(f) prior to the occurrence of an Event of Default and after the curing
or waiving of all such Events of Default which may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, approval or other paper or
document, or the books and records of the Company, unless requested in
writing to do so by the Holders of a majority in aggregate principal amount
of the Notes then outstanding; PROVIDED, HOWEVER, that if the payment within
a reasonable time to the Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation is not, in the
opinion of the Trustee, reasonably assured to the Trustee by the security
afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such costs, expenses or liabilities as a
condition to so proceeding; the reasonable expense of every such
investigation shall be paid by the Company or, if paid by the Trustee, shall
be repaid by the Company upon demand; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 9.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES. The
recitals contained herein and in the Notes, except the Trustee's certificates
of authentication, shall be taken as the statements of the Company, and the
Trustee or any Authenticating Agent assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Notes. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Notes or the proceeds thereof.
SECTION 9.05. MAY HOLD NOTES. The Trustee, any Authenticating Agent,
any Paying Agent, any Note registrar or any other agent of the Company, in
its individual or any other capacity, may become the owner or pledgee of
Notes and, subject to Sections 9.08 and 9.13, may otherwise deal with the
Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Note registrar or such other agent.
SECTION 9.06. MONEY HELD IN TRUST. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under
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no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 9.07. COMPENSATION AND REIMBURSEMENT. The Company agrees:
(1) to pay to the Trustee such compensation that the Company and
Trustee shall from time to time agree in writing for all services rendered
by it hereunder (which compensation shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnity the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any its powers or duties hereunder.
The provisions of this Section 9.07 shall survive this Indenture.
SECTION 9.08. DISQUALIFICATION; CONFLICTING INTERESTS.
(a) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section 9.08, with respect to the Notes, it shall, within 90
days after ascertaining that it has such conflicting interest, either
eliminate such conflicting interest or resign in the manner and with the
effect hereinafter specified in this Article Nine.
(b) In the event that the Trustee shall fail to comply with the
provisions of Subsection (a) of this Section 9.08, the Trustee shall, within
10 days after the expiration of such 90-day period, transmit by mail to all
Holders as their names and addresses appear in the Note registrar, notice of
such failure.
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(c) For the purposes of this Section 9.08, the Trustee shall be deemed
to have a conflicting interest with respect to the Notes if
(1) the Trustee is trustee under another indenture under which any
securities, or certificates of interest or participation in any other
securities, of the Company are outstanding, unless such other indenture is
a collateral trust indenture under which the only collateral consists of
Notes, PROVIDED that there shall be excluded from the operation of this
paragraph this Indenture with respect to any other indenture or indenture
under which securities, or certificates of interest or participation in
other securities, of the Company are outstanding, if
(i) this Indenture and such other indenture or indentures are
wholly unsecured and such other indenture or indentures are hereafter
qualified under the TIA, unless the Securities and Exchange Commission
shall have found and declared by order pursuant to Section 305(b) or
Section 307(c) of the TIA that differences exist between the
provisions of this Indenture and the provisions of such other
indenture or indentures which are so likely to involve a material
conflict of interest as to make it necessary in the public interest or
for the protection of investors to disqualify the Trustee from acting
as such under this Indenture with respect to such other indenture or
indentures, or
(ii) the Company shall have sustained the burden of proving, on
application to the Securities and Exchange Commission and after
opportunity for hearing thereon, that trusteeship under this Indenture
with respect to such other indenture or indentures is not so likely to
involve a material conflict of interest as to make it necessary in the
public interest or for the protection of investors to disqualify the
Trustee from acting as such under this Indenture with respect to such
other indenture or indentures;
(2) the Trustee or any of its directors or executive officers is an
obligor upon the Notes or an underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control with
the Company or an underwriter for the Company;
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(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company, or of an underwriter (other than the Trustee itself) for the
Company who is currently engaged in the business of underwriting, except
that (i) one individual may be a director or an executive officer, or both,
of the Trustee and a director or an executive officer, or both, of the
Company but may not be at the same time an executive officer of both the
Trustee and the Company; (ii) if and so long as the number of directors of
the Trustee in office is more than nine, one additional individual may be a
director or an executive officer, or both, of the Trustee and a director of
the Company; and (iii) the Trustee may be designated by the Company or by
any underwriter for the Company to act in the capacity of transfer agent,
registrar, custodian, paying agent, fiscal agent, escrow agent or
depositary, or in any other similar capacity, or, subject to the provisions
of paragraph (1) of this Subsection, to act as trustee, whether under an
indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner or
executive officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons; or
10% or more of the voting securities of the Trustee is beneficially owned
either by an underwriter for the Company or by any director, partner or
executive officer thereof, or is beneficially owned, collectively, by any
two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), (i) 5% or more of the voting securities, or 10% or
more of any other class of security, of the Company not including the Notes
and securities issued under any other indenture under which the Trustee is
also trustee, or (ii) 10% or more of any class of security of an
underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 5% or more of the voting securities of any person who,
to the knowledge of the Trustee, owns 10% or more of the voting securities
of, or controls directly or indirectly or is under direct or indirect
common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 10% or more of any
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class of security of any person who, to the knowledge of the Trustee, owns
50% or more of the voting securities of the Company; or
(9) the Trustee owns, on May 15 in any calendar year, in the capacity
of executor, administrator, testamentary or inter vivos trustee, guardian,
committee or conservator, or in any other similar capacity, an aggregate of
25% or more of the voting securities, or of any class of security, of any
person, the beneficial ownership of a specified percentage of which would
have constituted a conflicting interest under paragraph (6), (7) or (8) of
this Subsection. As to any such securities of which the Trustee acquired
ownership through becoming executor, administrator or testamentary trustee
of an estate which included them, the provisions of the preceding sentence
shall not apply, for a period of two years from the date of such
acquisition, to the extent that such securities included in such estate do
not exceed 25% of such voting securities or 25% of any such class of
security. Promptly after May 15 in each calendar year, the Trustee shall
make a check of its holdings of such securities in any of the above-
mentioned capacities as of such May 15. If the Company fails to make
payment in full of the principal of (or premium, if any) or interest on any
of the Notes when and as the same becomes due and payable, and such failure
continues for 30 days thereafter, the Trustee shall make a prompt check of
its holdings of such securities in any of the above-mentioned capacities as
of the date of the expiration of such 30-day period, and after such date,
notwithstanding the foregoing provisions of this paragraph, all such
securities so held by the Trustee, with sole or joint control over such
securities vested in it, shall, but only so long as such failure shall
continue, be considered as though beneficially owned by the Trustee for the
purposes of paragraphs (6), (7) and (8) of this Subsection.
The specification of percentages in paragraphs (5) to (9), inclusive,
of this Subsection shall not be construed as indicating that the ownership of
such percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (3) or (7) of this Subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this
Subsection only, (i) the terms "security" and "securities" shall include only
such securities as are generally known as corporate securities, but shall not
include any note or other evidence of indebtedness issued to evidence an
obligation to repay moneys lent to a person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
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any such note or evidence of indebtedness; (ii) an obligation shall be deemed to
be "in default" when a default in payment of principal shall have continued for
30 days or more and shall not have been cured; and (iii) the Trustee shall not
be deemed to be the owner or holder of (A) any security which it holds as
collateral security, as trustee or otherwise, for an obligation which is not in
default as defined in clause (ii) above, or (B) any security which it holds as
collateral security under this Indenture, irrespective of any default hereunder,
or (C) any security which it holds as agent for collection, or as custodian,
escrow agent or depositary, or in any similar representative capacity.
(d) For the purposes of this Section 9.08:
(1) The term "underwriter", when used with reference to the Company,
means every person who, within three years prior to the time as of which
the determination is made, has purchased from the Company with a view to,
or has offered or sold for the Company in connection with, the distribution
of any security of the Company outstanding at such time, or has
participated or has had a direct or indirect participation in any such
undertaking, or has participated or has had a participation in the direct
or indirect underwriting of any such undertaking, but such term shall not
include a person whose interest was limited to a commission from an
underwriter or dealer not in excess of the usual and customary
distributors' or sellers' commission.
(2) The term "director" means any director of a corporation or any
individual performing similar functions with respect to any organization,
whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an
unincorporated organization or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only a
trust where the interest or interests of the beneficiary or beneficiaries
are evidenced by a security.
(4) The term "voting security" means any security presently entitling
the owner or holder thereof to vote in the direction or management of the
affairs of a person, or any security issued under or pursuant to any trust,
agreement or arrangement whereby a trustee or trustees or agent or agents
for the owner or holder of such security are presently entitled to vote in
the direction or management of the affairs of a person.
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(5) The term "Company" means any obligor upon the Notes.
(6) The term "executive officer" means the president, every vice
president, every trust officer, the cashier, the secretary and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization whether incorporated or
unincorporated, but shall not include the chairman of the board of
directors.
(e) The percentages of voting securities and other securities
specified in this Section 9.08 shall be calculated in accordance with the
following provisions:
(1) A specified percentage of the voting securities of the Trustee,
the Company or any other person referred to in this Section 9.08 (each of
whom is referred to as a "person" in this paragraph) means such amount of
the outstanding voting securities of such person as entitles the holder or
holders thereof to cast such specified percentage of the aggregate votes
which the holders of all the outstanding voting securities of such person
are entitled to cast in the direction or management of the affairs of such
person.
(2) A specified percentage of a class of securities of a person means
such percentage of the aggregate amount of securities of the class
outstanding.
(3) The term "amount", when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the number of
shares if relating to capital shares and the number of units if relating to
any other kind of security.
(4) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating to
securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating to
another class of securities of the issuer, if the obligation evidenced
by such other class of securities is not in default as to principal or
interest or otherwise;
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(iii) securities pledged by the issuer thereof as security for an
obligation of the issuer not in default as to principal or interest or
otherwise; and
(iv) securities held in escrow if placed in escrow by the issuer
thereof;
PROVIDED, HOWEVER, that any voting securities of an issuer shall be deemed
outstanding if any person other than the issuer is entitled to exercise the
voting rights thereof.
(5) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; PROVIDED, HOWEVER, that, in
the case of secured evidences of indebtedness, all of which are issued
under a single indenture, differences in the interest rates or maturity
dates of various series thereof shall not be deemed sufficient to
constitute such series different classes and PROVIDED, FURTHER, that, in
the case of unsecured evidences of indebtedness, differences in the
interest rates or maturity dates thereof shall not be deemed sufficient to
constitute them securities of different classes, whether or not they are
issued under a single indenture.
SECTION 9.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall
at all times be a Trustee hereunder which shall be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $50,000,000
subject to supervision or examination by Federal or State authority and having
its Corporate Trust Office in Columbus, Ohio or New York, New York, to the
extent there is such an institution eligible and willing to serve. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of said supervising or examining authority, then for the
purposes of this Section 9.09, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
9.09, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article Nine.
SECTION 9.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article Nine
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shall become effective until the acceptance of appointment by the successor
Trustee in accordance with the applicable requirements of Section 9.11.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 9.11 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by the Holders of a
majority in aggregate principal amount of the Notes then outstanding, delivered
to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 9.08(a) after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section 9.09 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 8.13, any Holder who has been a bona fide
Holder of a Note for at least six months may, on behalf of such Holder and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee or
Trustees and shall comply with the applicable requirements of Section 9.11. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by the
Holders of a majority in aggregate principal amount of the Notes then
outstanding delivered to the Company and the retiring
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Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements
of Section 9.11, become the successor Trustee and supersede the successor
Trustee appointed by the Company. If no successor Trustee shall have been so
appointed by the Company or the Holders and accepted appointment in the
manner required by Section 9.11, any Holder who has been a bona fide Holder
of a Note for at least six months may, on behalf of such Holder and all
others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Note register. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
SECTION 9.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) Every successor Trustee shall execute, acknowledge and deliver to
the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of the
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder.
(b) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) of this Section 9.11.
(c) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article Nine.
SECTION 9.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation
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to which the Trustee shall be a party, or any corporation succeeding to all
or substantially all the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto. In case any Notes shall have been authenticated, but not delivered,
by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication
and deliver the Notes so authenticated with the same effect as if such
successor Trustee had itself authenticated such Notes.
SECTION 9.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
(a) Subject to Subsection (b) of this Section 9.13, if the Trustee
shall be or shall become a creditor, directly or indirectly, secured or
unsecured, of the Company within four months prior to a default, as defined in
Subsection (c) of this Section 9.13, or subsequent to such a default, then,
unless and until such default shall be cured, the Trustee shall set apart and
hold in a special account for the benefit of the Trustee individually, the
Holders of the Notes and the holders of other indenture securities, as defined
in Subsection (c) of this Section 9.13:
(1) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or interest,
effected after the beginning of such four months' period and valid as
against the Company and its other creditors, except any such reduction
resulting from the receipt or disposition of any property described in
paragraph (2) of this Subsection, or from the exercise of any right of
set-off which the Trustee could have exercised if a petition in bankruptcy
had been filed by or against the Company upon the date of such default; and
(2) all property received by the Trustee in respect of any claims as
such creditor, either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such four months'
period, or an amount equal to the proceeds of any such property, if
disposed of, subject, however, to the rights, if any, of the Company and
its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the
Trustee:
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(A) to retain for its own account (i) payments made on account of any
such claim by any Person (other than the Company) who is liable thereon,
and (ii) the proceeds of the bona fide sale of any such claim by the
Trustee to a third Person, and (iii) distributions made in cash, securities
or other property in respect of claims filed against the Company in
bankruptcy or receivership or in proceedings for reorganization pursuant to
the Federal Bankruptcy Act or applicable State law;
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such four months' period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such four
months' period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee shall sustain
the burden of proving that at the time such property was so received the
Trustee had no reasonable cause to believe that a default, as defined in
Subsection (c) of this Section 9.13, would occur within four months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for such claim as
provided in paragraph (B) or (C), as the case may be, to the extent of the
fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such four months' period for property held as security at
the time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned among
the Trustee, the Holders and the holders of other indenture securities in such
manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the
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Federal Bankruptcy Act or applicable State law, the same percentage of their
respective claims, figured before crediting to the claim of the Trustee
anything on account of the receipt by it from the Company of the funds and
property in such special account and before crediting to the respective
claims of the Trustee and the Holders and the holders of other indenture
securities dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law, but after crediting thereon receipts
on account of the indebtedness represented by their respective claims from
all sources other than from such dividends and from the funds and property so
held in such special account. As used in this paragraph, with respect to any
claim, the term "dividends" shall include any distribution with respect to
such claim, in bankruptcy or receivership or proceedings for reorganization
pursuant to the Federal Bankruptcy Act or applicable State law, whether such
distribution is made in cash, securities or other property, but shall not
include any such distribution with respect to the secured portion, if any, of
such claim. The court in which such bankruptcy, receivership or proceedings
for reorganization is pending shall have jurisdiction (i) to apportion among
the Trustee, the Holders and the holders of other indenture securities, in
accordance with the provisions of this paragraph, the funds and property held
in such special account and proceeds thereof, or (ii) in lieu of such
apportionment, in whole or in part, to give to the provisions of this
paragraph due consideration in determining the fairness of the distributions
to be made to the Trustee and the Holders and the holders of other indenture
securities with respect to their respective claims, in which event it shall
not be necessary to liquidate or to appraise the value of any securities or
other property held in such special account or as security for any such
claim, or to make a specific allocation of such distributions as between the
secured and unsecured portions of such claims, or otherwise to apply the
provisions of this paragraph as a mathematical formula.
Any Trustee which has resigned or been removed after the beginning of
such four months' period shall be subject to the provisions of this Subsection
as though such resignation or removal had not occurred. If any Trustee has
resigned or been removed prior to the beginning of such four months' period, it
shall be subject to the provisions of this Subsection if and only if the
following conditions exist:
(i) the receipt of property or reduction of claim, which would have
given rise to the obligation to account, if such Trustee had continued as
Trustee, occurred after the beginning of such four months' period; and
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(ii) such receipt of property or reduction of claim occurred within
four months after such resignation or removal.
(b) There shall be excluded from the operation of Subsection (a) of
this Section 9.13 a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction or by this Indenture, for the purposes of preserving
any property which shall at any time be subject to the lien of this
Indenture or of discharging tax liens or other prior liens or encumbrances
thereon, if notice of such advances and of the circumstances surrounding
the making thereof is given to the Holders at the time and in the manner
provided in this Indenture;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction, as defined in Subsection (c) of this
Section 9.13;
(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve Act,
as amended, which is directly or indirectly a creditor of the Company; and
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within the
classification of self-liquidating paper, as defined in Subsection (c) of
this Section 9.13.
(c) For the purposes of this Section 9.13 only:
(1) the term "default" means any failure to make payment in full of
the principal of or interest on any of the Notes or upon the other
indenture securities when and as such principal or interest becomes due and
payable;
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(2) the term "other indenture securities" means securities upon which
the Company is an obligor outstanding under any other indenture (i) under
which the Trustee is also trustee, (ii) which contains provisions
substantially similar to the provisions of this Section 9.13, and (iii)
under which a default exists at the time of the apportionment of the funds
and property held in such special account;
(3) the term "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand;
(4) the term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security is
received by the Trustee simultaneously with the creation of the creditor
relationship with the Company arising from the making, drawing, negotiating
or incurring of the draft, bill of exchange, acceptance or obligation;
(5) the term "Company" means any obligor upon the Notes; and
(6) the term "Federal Bankruptcy Act" means the Bankruptcy Act or
Title 11 of the United States Code.
SECTION 9.14. APPOINTMENT OF AUTHENTICATING AGENT. At any time when
any of the Notes remain outstanding the Trustee may appoint an Authenticating
Agent or Agents with respect to the Notes which shall be authorized to act on
behalf of the Trustee to authenticate Notes issued upon exchange, registration
of transfer or partial redemption thereof or pursuant to Section 2.06, and Notes
so authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Notes by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be
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acceptable to the Company and shall at all times be a corporation organized
and doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section 9.14, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section 9.14, such
Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section 9.14.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section 9.14, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 9.14, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall mail
written notice of such appointment by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Note register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section 9.14.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 9.14, and the
Trustee shall be entitled to be
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reimbursed for such payments, subject to the provisions of Section 9.07.
If an appointment is made pursuant to this Section 9.07, the Notes may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
Trustee's Certificate of Authentication
This is one of the Notes referred to in the within-mentioned
Indenture.
BANK ONE, N.A., as Trustee
By___________________________________
As Authenticating Agent
By___________________________________
Authorized Officer
ARTICLE TEN
CONCERNING THE NOTEHOLDERS
SECTION 10.01. ACTION BY NOTEHOLDERS. (a) Whenever in this
Indenture it is provided that the Holders of a specified percentage in aggregate
principal amount of the Notes may take any action (the making of any demand or
request, or the giving of any notice, consents or waivers in lieu of a
Noteholders' meeting or the taking of any other action), the fact that at the
time of taking any such action the Holders of such specified percentage have
joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Noteholders in person or by agent
or proxy appointed in writing, or (b) by the record of such Noteholders voting
in favor thereof at any meeting of Noteholders duly called and held in
accordance with Article Eleven, or (c) by a combination of such instrument or
instruments and any such record of such a meeting of Noteholders.
(b) Whenever in this Indenture it is provided that the Holders of a
specified percentage in aggregate principal amount of the Notes may take any
action, any party designated in writing by the Depositary, or by any party so
designated by the Depositary, as the owner of a beneficial interest of a
specified principal amount
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of any Global Note held by such Depositary shall be deemed to be a Holder of
Notes in such principal amount for such purpose.
SECTION 10.02. PROOF OF EXECUTION BY NOTEHOLDERS.
(a) Subject to Sections 9.01 and 11.05, proof of the execution of any
instruments by a Noteholder or the agent or proxy for such Noteholder shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee. The ownership of Notes shall be proved by the Note register of the
Company or by a certificate of the Note registrar.
(b) The record of any Noteholders' meeting shall be proven in the
manner provided for in Section 11.06.
SECTION 10.03. WHO DEEMED ABSOLUTE OWNERS. Subject to Sections
2.04(f) and 10.01, the Company, the Trustee, any Authenticating Agent and Note
registrar may deem the person in whose name any Note shall be registered upon
the Note register of the Company to be, and may treat such person as, the
absolute owner of such Note (whether or not such Note shall be overdue) for the
purpose of receiving payment of or on account of the principal of and any
premium and interest on such Note, and for all other purposes; and neither the
Company nor the Trustee nor any Authenticating Agent nor any Note registrar
shall be affected by any notice to the contrary. All such payments shall be
valid and effectual to satisfy and discharge the liability upon any such Note to
the extent of the sum or sums so paid.
SECTION 10.04. COMPANY-OWNED NOTES DISREGARDED. In determining
whether the Holders of the requisite aggregate principal amount of Notes then
outstanding have concurred in any direction, consent or waiver under this
Indenture, Notes which are owned by the Company or any other obligor on the
Notes or by any person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company or any other obligor on
the Notes shall be disregarded and deemed not to be outstanding for the purpose
of any such determination; PROVIDED that for the purposes of determining whether
the Trustee shall be protected in relying on any such direction, consent or
waiver only Notes which the Trustee knows are so owned shall be so disregarded.
Notes so owned which have been pledged in good faith may be regarded as
outstanding for the purposes of this Section 10.04 if the pledgee shall
establish to the satisfaction of the Trustee the pledgee's right to vote such
Notes and that the pledgee is not a person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or any
such
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other obligor. In the case of a dispute as to such right, any decision by
the Trustee taken upon the advice of counsel shall be full protection to the
Trustee.
SECTION 10.05. REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND. At any
time prior to the taking of any action by the holders of the percentage in
aggregate principal amount of the Notes specified in this Indenture in
connection with such action, any Holder of a Note, which is shown by the
evidence to be included in the Notes the Holders of which have consented to such
action may, by filing written notice with the Trustee at the Corporate Trust
Office of the Trustee and upon proof of ownership as provided in Section
10.02(a), revoke such action so far as it concerns such Note. Except as
aforesaid any such action taken by the Holder of any Note shall be conclusive
and binding upon such Holder and upon all future Holders and owners of such Note
and of any Notes issued in exchange or substitution therefor, irrespective of
whether or not any notation thereof is made upon such Note or such other Notes.
SECTION 10.06. RECORD DATE FOR NOTEHOLDER ACTS. If the Company shall
solicit from the Noteholders any request, demand, authorization, direction,
notice, consent, waiver or other act, the Company may, at its option, by Board
Resolution, fix in advance a record date in compliance with TIA Section 3.16(c)
for the determination of Noteholders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other act, but the Company
shall have no obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other act
may be given before or after the record date, but only the Noteholders of record
at the close of business on the record date shall be deemed to be Noteholders
for the purpose of determining whether Holders of the requisite aggregate
principal amount of Notes then outstanding have authorized or agreed or
consented to such request, demand, authorization, direction, notice, consent,
waiver or other act, and for that purpose the outstanding Notes shall be
computed as of the record date; PROVIDED, HOWEVER, that no such authorization,
agreement or consent by the Noteholders on the record date shall be deemed
effective unless it shall become effective pursuant to this Indenture not later
than six months after the record date.
ARTICLE ELEVEN
NOTEHOLDERS' MEETING
SECTION 11.01. PURPOSES OF MEETINGS. A meeting of Noteholders may be
called at any time and from time to time pursuant to this Article Eleven for any
of the following purposes:
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(a) to give any notice to the Company or to the Trustee, or to
give any directions to the Trustee, or to consent to the waiving of
any default hereunder and its consequences, or to take any other
action authorized to be taken by Noteholders pursuant to
Article Eight;
(b) to remove the Trustee and nominate a successor Trustee
pursuant to Article Nine;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to Section 13.02; or
(d) to take any other action authorized to be taken by or on
behalf of the Holders of any specified aggregate principal amount of
the Notes, as the case may be, under any other provision of this
Indenture or under applicable law.
SECTION 11.02. CALL OF MEETINGS BY TRUSTEE. The Trustee may at any
time call a meeting of Holders of Notes to take any action specified in
Section 11.01, to be held at such time and at such place as the Trustee shall
determine. Notice of every such meeting of Noteholders, setting forth the time
and the place of such meeting and in general terms the action proposed to be
taken at such meeting, shall be given to Holders of the Notes that may be
affected by the action proposed to be taken at such meeting in the manner
provided in Section 15.10. Such notice shall be given not less than 20 nor more
than 90 days prior to the date fixed for such meeting.
SECTION 11.03. CALL OF MEETINGS BY COMPANY OR NOTEHOLDERS. In case
at any time the Company, pursuant to a Board Resolution, or the Holders of at
least 10% in aggregate principal amount of the Notes then outstanding, shall
have requested the Trustee to call a meeting of Noteholders, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed the notice of such meeting within
20 days after receipt of such request, then the Company or such Noteholders may
determine the time and the place for such meeting and may call such meeting to
take any action authorized in Section 11.01, by giving notice thereof as
provided in Section 11.02.
SECTION 11.04. QUALIFICATIONS FOR VOTING. To be entitled to vote at
any meetings of Noteholders a Person shall (a) be a Holder of one or more Notes
affected by the action proposed to be taken or (b) be a Person appointed by an
instrument in writing as proxy by a Holder of one or more such Notes. The only
Persons who shall be entitled to be present or to speak at any
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meeting of Noteholders shall be the Persons entitled to vote at such meeting
and their counsel and any representatives of the Trustee and its counsel and
any representatives of the Company and its counsel.
SECTION 11.05. REGULATIONS.
(a) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Noteholders, in regard to proof of the holding of Notes and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by the Noteholders as provided in Section 11.03, in which case
the Company or Noteholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by the Holders of a majority in
aggregate principal amount of the Notes present in person or by proxy at the
meeting.
(c) Subject to Section 10.04, at any meeting each Noteholder or proxy
shall be entitled to one vote for each $1,000 principal amount of Notes held or
represented by such Noteholder; PROVIDED, HOWEVER, that no vote shall be cast or
counted at any meeting in respect of any Note challenged as not outstanding and
ruled by the chairman of the meeting to be not outstanding. The chairman of the
meeting shall have no right to vote other than by virtue of Notes held by such
chairman or instruments in writing as aforesaid duly designating such chairman
as the person to vote on behalf of other Noteholders. At any meeting of
Noteholders duly called pursuant to Section 11.02 or 11.03, the presence of
persons holding or representing Notes in an aggregate principal amount
sufficient to take action on any business for the transaction for which such
meeting was called shall constitute a quorum. Any meeting of Noteholders duly
called pursuant to Section 11.02 or 11.03 may be adjourned from time to time by
the Holders of a majority in aggregate principal amount of the Notes present in
person or by proxy at the meeting, whether or not constituting a quorum, and the
meeting may be held as so adjourned without further notice.
SECTION 11.06. VOTING. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballots on which shall be subscribed
the signatures of the Holders of Notes
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or of their representatives by proxy and the principal amount of Notes held
or represented by them. The permanent chairman of the meeting shall appoint
two inspectors of votes who shall count all votes cast at the meeting for or
against any resolution and who shall make and file with the secretary of the
meeting their verified written reports in duplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each meeting of
Noteholders shall be prepared by the secretary of the meeting and there shall
be attached to said record the original reports of the inspectors of votes on
any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 11.02. The record
shall show the principal amount of the Notes voting in favor of or against
any resolution. The record shall be signed and verified by the affidavits of
the permanent chairman and secretary of the meeting and one of the duplicates
shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
SECTION 11.07. RIGHT OF TRUSTEE OR NOTEHOLDERS NOT DELAYED. Nothing
in this Article Eleven contained shall be deemed or construed to authorize or
permit, by reason of any call of a meeting of Noteholders or any rights
expressly or impliedly conferred hereunder to make such call, any hindrance or
delay in the exercise of any right or rights conferred upon or reserved to the
Trustee or to the Holders of Notes under any of the provisions of this Indenture
or of the Notes.
ARTICLE TWELVE
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 12.01. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other corporation or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person unless:
(1) the corporation formed by such consolidation or into which
the Company is merged (the "successor corporation") or the Person
which acquires by conveyance or transfer, or which leases, the
properties and assets of the Company substantially as an entirety
shall be a corporation organized and existing under the laws of the
United States of America or any State or the District of Columbia, and
shall expressly assume, by an indenture supplemental hereto, executed
and delivered to the
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Trustee, in form satisfactory to the Trustee, the due and punctual
payment of the principal of (and premium, if any) and interest on all
Notes and the performance of every covenant of this Indenture on the
part of the Company to be performed or observed;
(2) immediately after giving effect to such consolidation,
merger, conveyance, transfer or lease, no Event of Default, and no
event which, after notice or lapse of time, or both, would become an
Event of Default, shall have occurred and be continuing;
(3) if, as a result of such consolidation, merger, conveyance,
transfer or lease, properties or assets of the Company would become subject
to a mortgage, pledge, lien, security interest or other encumbrance which
would not otherwise be permitted by this Indenture without making effective
provision whereby the Notes then outstanding and any other indebtedness of
the Company then entitled thereto will be equally and ratably secured with
any and all indebtedness and obligations secured thereby, the Company or
the successor corporation or Person, as the case may be, will take such
action as will be necessary effectively to secure all Notes equally and
ratably with (or prior to) all indebtedness secured thereby; and
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance, transfer or lease and such
supplemental indenture comply with this Article Twelve and that all
conditions precedent herein provided for relating to such
consolidation, merger, conveyance or transfer have been complied with.
SECTION 12.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any
consolidation or merger, or any conveyance, transfer or lease as an entirety in
accordance with Section 12.01, the successor corporation formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor corporation had been named as the Company
herein; PROVIDED, HOWEVER, that no such conveyance or transfer shall have the
effect of releasing the Person named as the "Company" in the first paragraph of
this Indenture or any successor corporation which shall theretofore have become
such in the manner prescribed in this Article Twelve from its liability as
obligor and maker on any of the Notes.
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ARTICLE THIRTEEN
SUPPLEMENTAL INDENTURES
SECTION 13.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
NOTEHOLDERS.
(a) The Company, when authorized by Board Resolution, and the Trustee
may at any time and from time to time enter into an indenture or indentures
supplemental hereto for one or more of the following purposes:
(1) to make such provision in regard to matters or questions
arising under this Indenture as may be necessary or desirable and not
inconsistent with this Indenture or for the purpose of supplying any
omission, curing any ambiguity, or curing, correcting or supplementing
any defective or inconsistent provision; PROVIDED that such provision
shall not adversely affect the interests of Holders of outstanding
Notes created prior to the execution of such supplemental indenture in
any material respect;
(2) to change or eliminate any of the provisions of this Indenture;
PROVIDED that any such change or elimination shall become effective only
when there is no Note outstanding created prior to the execution of such
supplemental indenture which is entitled to the benefit of such provision;
(3) to secure the Notes;
(4) to establish the form of Notes as permitted by Section 2.01 or to
establish or reflect any terms of any Note determined pursuant to Section
2.05;
(5) to evidence the succession of another corporation to the Company,
and the assumption by any such successor of the covenants of the Company
herein and in the Notes;
(6) to grant to or confer upon the Trustee for the benefit of the
Holders any additional rights, remedies, powers or authority;
(7) to permit the Trustee to comply with any duties imposed upon it by
law;
(8) to specify further the duties and responsibilities of, and to
define further the relationships among, the Trustee, any Authenticating
Agent and any paying agent;
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(9) to add to the covenants of the Company for the benefit of the
Holders of all or any Notes (and if such covenants are to be for the
benefit of less than all Notes, stating that such covenants are expressly
being included solely for the benefit of such Notes) or to surrender a
right or power conferred on the Company herein; and
(10) to add any additional Events of Default (and if such Events of
Default are to be applicable to less than all Notes, stating that such
Events of Default are expressly being included for the benefit of such
Notes).
(b) The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
(c) Any supplemental indenture authorized by this Section 13.01 may
be executed by the Company and the Trustee without the consent of the Holders of
any of the Notes then outstanding, notwithstanding any of the provisions of
Section 13.02.
SECTION 13.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS.
(a) With the consent (evidenced as provided in Section 10.01) of the
Holders of not less than a majority in aggregate principal amount of the Notes
then outstanding that would be affected by the particular supplemental
indenture, the Company, when authorized by Board Resolution, and the Trustee may
from time to time and at any time enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the
Noteholders; PROVIDED, HOWEVER, that no such supplemental indenture shall:
(1) change the Stated Maturity of any Note; or reduce the rate
of interest on any Note; or change the method of calculating interest,
or any term used in the calculation of interest, or the period for
which interest is payable, on any Floating Rate Note; or reduce the
principal amount of any Note or any premium thereon; reduce the amount
of the principal of an Original Issue Discount Note that would be due
and payable upon a
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declaration of acceleration of the Maturity thereof, or adversely affect
the right of repayment or renewal, if any, at the option of the Holder;
or change the coin or currency in which the principal of any Note or any
premium or interest thereon is payable; or change the date on which any
Note may be redeemed; or adversely affect the rights of any Noteholder
to institute suit for the enforcement of any payment of principal of or
any premium or interest on any Note; in each case without the consent of
the Holder of each Note then outstanding that would be affected thereby
(for purposes of this Section 13.02 (a)(1) only, the term "Note" shall
include Notes for which an offer to purchase has been accepted by the
Company); or
(2) reduce the aforesaid percentage of Notes, the Holders of
which are required to consent to any such supplemental indenture, or
the percentage in aggregate principal amount of the Notes then
outstanding the consent of the Holders of which is required for any
waiver of certain past defaults or Events of Default hereunder or the
consequences thereof, in each case without the consent of the Holders
of all of the Notes then outstanding.
(b) Upon the request of the Company, accompanied by a copy of the
Board Resolution authorizing the execution of any such supplemental indenture,
and upon the filing with the Trustee of evidence of the consent of Noteholders
as aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
(c) It shall not be necessary for the consent of the Holders of Notes
under this Section 13.02 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall approve
the substance thereof.
(d) Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to this Section 13.02, the Company shall
give notice in the manner provided in Section 15.10, setting forth in general
terms the substance of such supplemental indenture, to all Noteholders. Any
failure of the Company to give such notice, or any defect therein shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.
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SECTION 13.03. COMPLIANCE WITH TRUST INDENTURE ACT; EFFECT OF
SUPPLEMENTAL INDENTURES. Any supplemental indenture executed pursuant to this
Article Thirteen shall comply with the TIA. Upon the execution of any
supplemental indenture pursuant to this Article Thirteen, this Indenture shall
be and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the Noteholders shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 13.04. NOTATION ON NOTES. Notes authenticated and delivered
after the execution of any supplemental indenture pursuant to this
Article Thirteen may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Notes so modified as to conform in the opinion
of the Trustee and the Board of Directors to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by the
Company, authenticated by the Trustee and delivered in exchange for the Notes
then outstanding.
SECTION 13.05. EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE
FURNISHED TRUSTEE. The Trustee, subject to Section 9.01, may receive an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant hereto complies with the requirements
of this Article Thirteen.
ARTICLE FOURTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 14.01. INDENTURE AND NOTES SOLELY CORPORATE OBLIGATIONS. No
recourse for the payment of the principal of or any premium or interest on any
Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company,
contained in this Indenture or in any supplemental indenture, or in any Note, or
because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or any successor corporation, either directly
or through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
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penalty or otherwise; it being expressly understood that all such liability is
hereby expressly waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issue of the Notes.
ARTICLE FIFTEEN
MISCELLANEOUS PROVISIONS
SECTION 15.01. PROVISIONS BINDING ON COMPANY'S SUCCESSORS. All the
covenants, stipulations, promises and agreements made by the Company in this
Indenture shall bind its successors and assigns whether so expressed or not.
SECTION 15.02. OFFICIAL ACTS BY SUCCESSOR CORPORATION. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful successor of the
Company.
SECTION 15.03. ADDRESSES FOR NOTICES, ETC. Any notice or demand
which by any provision of this Indenture is required or permitted to be given or
served by the Trustee or by the Noteholders on the Company may be given or
served by being deposited postage prepaid in a post office letter box addressed
(until another address is filed by the Company with the Trustee) to Madison Gas
and Electric Company, 133 South Blair Street, Madison, Wisconsin 53701, to the
attention of the Corporate Secretary. Any notice, direction, request or demand
by any Noteholder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made in writing at the
Corporate Trust Office of the Trustee.
SECTION 15.04. GOVERNING LAW. This Indenture and each Note shall be
deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of said State.
SECTION 15.05. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
(a) Upon any application or demand by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee
an Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an
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<PAGE>
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
(b) Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (1) a statement that each Person
making such certificate or opinion has read such covenant or condition and the
definitions relating thereto; (2) a brief statement as to the nature and scope
of the examination or investigation upon which the statements or opinion
contained in such certificate or opinion are based; (3) a statement that, in the
opinion of each such Person, such Person has made such examination or
investigation as is necessary to enable such Person to express an informed
opinion as to whether or not such covenant or condition has been complied with;
and (4) a statement as to whether or not, in the opinion of each such Person,
such condition or covenant has been complied with.
(c) In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
(d) Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such person knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
(e) Any certificate, statement or opinion of any officer of the
Company, or of counsel, may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant or
firm of accountants, unless such officer or counsel, as the case may be, knows
that the certificate or opinion or representations with respect to the
accounting matters upon which the certificate, statement or opinion of such
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<PAGE>
officer or counsel may be based as aforesaid are erroneous, or in the exercise
of reasonable care should know that the same are erroneous. Any certificate or
opinion of any firm of independent public accountants filed with the Trustee
shall contain a statement that such firm is independent.
(f) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 15.06. BUSINESS DAYS. Unless otherwise provided herein, in
any case where the date of Maturity of the principal of or any premium or
interest on any Note or the Redemption Date of any Note is not a Business Day,
then payment of such principal or any premium or interest need not be made on
such date but may be made on the next succeeding Business Day with the same
force and effect as if made on the date of Maturity or the Redemption Date, and,
in the case of payment, no interest shall accrue for the period from and after
such date.
SECTION 15.07. TRUST INDENTURE ACT TO CONTROL. If and to the extent
that any provision of this Indenture limits, qualifies or conflicts with
another provision included in this Indenture which is required to be included in
this Indenture by any of Sections 310 to 317, inclusive, of the TIA, such
required provision shall control.
SECTION 15.08. TABLE OF CONTENTS, HEADINGS, ETC. The table of
contents and the titles and headings of the articles and sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
SECTION 15.09. EXECUTION IN COUNTERPARTS. This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
SECTION 15.10. MANNER OF MAILING NOTICE TO NOTEHOLDERS. Any notice
or demand which by any provision of this Indenture is required or permitted to
be given or served by the Trustee or the Company to or on the Holders of Notes,
as the case may be, shall be given or served by first-class mail, postage
prepaid, addressed to the Holders of such Notes at their last addresses as the
same appear on the Note register referred to in Section 2.06, and any such
notice shall be deemed to be given or served by being deposited in a post office
letter box in the form and manner provided in this Section 15.10.
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IN WITNESS WHEREOF, Madison Gas and Electric Company has caused this
Indenture to be signed and acknowledged by its Chairman, President and Chief
Executive Officer and its Senior Vice President - Administration and Corporate
Secretary, and Bank One, N.A. has caused this Indenture to be signed and
acknowledged by one of its authorized signatories and its corporate seal to be
affixed hereunto, and the same to be attested by one of its _________, as of
the day and year first written above.
MADISON GAS AND ELECTRIC COMPANY
By
-----------------------------------------
David C. Mebane
Chairman, President and
Chief Executive Officer
By
-----------------------------------------
Gary J. Wolter
Senior Vice President - Administration and
Corporate Secretary
BANK ONE, N.A., as Trustee
[Seal] By
-------------------------------
Name:
Title:
Attest:
- ------------------------------
Name:
Title:
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<PAGE>
STATE OF WISCONSIN )
) ss:
COUNTY OF DANE )
I, ________________________, a Notary Public in and for said County
and State aforesaid, do hereby certify that ______________________ of Madison
Gas and Electric Company, a Wisconsin corporation, and _______________ of said
corporation, who are personally known to me to be the same persons whose names
are subscribed to the foregoing instrument and who are both personally known
to me to be ______________________________ and Secretary of said corporation,
respectively, appeared before me this day in person and severally
acknowledged that they this day signed and delivered the said instrument as
their free and voluntary act as such _________ and Secretary, respectively,
of said corporation and as the free and voluntary act of said corporation,
for the uses and purposes therein set forth, and that the said instrument was
signed and delivered on behalf of said corporation by authority of its Board
of Directors, and acknowledged said instrument to be the free and voluntary
act of said corporation.
GIVEN under my hand and notarial seal this _______ day of _________,
1998.
----------------------
Notary Public
My commission expires:
-98-
<PAGE>
STATE OF _________)
) ss:
COUNTY OF ________)
I, _______________________, a Notary Public in and for said
County and State aforesaid, do hereby certify that
____________________ of Bank One, N.A., a national banking
association organized and existing under the laws of the United States of
America, and ____________ of said corporation, who are personally known
to me to be the same persons whose names are subscribed to the foregoing
instrument and who are both personally known to me to be an
______________ and _________________ of said corporation, appeared
before me this day in person and severally acknowledged that they this day
signed, sealed and delivered the said instrument as their free and voluntary
act as such an _____________ and ________________, respectively, of
said corporation, and as the free and voluntary act of said corporation, for
the uses and purposes therein set forth, and that the seal affixed to said
instrument is the corporate seal of said corporation and that the said
instrument was signed, sealed and delivered on behalf of said corporation by
authority of its By-laws, and acknowledged said instrument to be the free and
voluntary act of said corporation.
GIVEN under my hand and notarial seal this _____ day of ______, 1998.
--------------------------------------
Notary Public
My commission expires:
-99-
<PAGE>
EXHIBIT A
Global Fixed Rate Note
REGISTERED REGISTERED
NO.
MADISON GAS AND ELECTRIC COMPANY
Fixed Rate
Medium-Term Note
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Company
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co., or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
The following summary of terms is subject to the provisions set forth
below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CUSIP: EXTENSION PERIOD:
ORIGINAL ISSUE DATE(S): NUMBER OF EXTENSION PERIODS:
PRINCIPAL AMOUNT: FINAL MATURITY DATE:
MATURITY DATE: OPTIONAL INTEREST RESET: / / Yes / / No
INTEREST RATE: OPTIONAL INTEREST RESET
DATES:
INTEREST PAYMENT DATES:
ORIGINAL ISSUE DISCOUNT
RECORD DATES: NOTE: / / Yes / / No
OPTIONAL REDEMPTION: / / Yes / / No ISSUE PRICE (percentage of principal):
INITIAL REDEMPTION DATE: YIELD TO MATURITY:
AMORTIZING NOTE: / / Yes / / No RENEWABLE AT OPTION OF
HOLDER: / / Yes / / No
OPTION TO ELECT
REPAYMENT: / / Yes / / No ANNEX ATTACHED (and
incorporated by reference
OPTIONAL EXTENSION OF herein): / / Yes / / No
ORIGINAL MATURITY DATE: / / Yes / / No
</TABLE>
<PAGE>
Madison Gas and Electric Company, a Wisconsin corporation (herein
called the "Company", which term includes any successor Person under the
Indenture referred to on the reverse hereof), for value received, hereby
promises to pay to
or registered assigns the principal sum specified above, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, on the Maturity date
specified above and to pay interest thereon, in such coin or currency, from
and including the Original Issue Date (or if this Global Note has two or more
Original Issue Dates, interest shall, beginning on each such Original Issue
Date, begin to accrue for that part of the principal amount to which such
Original Issue Date is applicable) specified above, or from and including the
most recent Interest Payment Date specified above to which interest has been
paid or duly provided for, as the case may be. Interest shall be paid in
arrears semiannually on each Interest Payment Date in each year commencing on
(a) the first such Interest Payment Date next succeeding the earliest
Original Issue Date or Dates, or (b) if such Original Issue Date is after a
Record Date and prior to the first Interest Payment Date, on the second
Interest Payment Date, at the per annum Interest Rate set forth above until
Maturity and the principal hereof is paid or made available for payment. The
interest so payable and punctually paid or duly provided for on any Interest
Payment Date will, as provided in the Indenture, be paid to the Person in
whose name this Note is registered at the close of business on the Record
Date specified above next preceding such Interest Payment Date; PROVIDED,
HOWEVER, that if an Original Issue Date falls between a Record Date and the
next Interest Payment Date, the first payment of interest with respect to
such Original Issue Date will be paid on the second Interest Payment Date
subsequent to such Original Issue Date to the Person in whose name this Note
is registered at the close of business on the Record Date for such second
Interest Payment Date; and PROVIDED, FURTHER, that interest payable on the
Maturity date or, if applicable, upon redemption, shall be payable to the
Person to whom principal shall be payable. Except as otherwise provided in
the Indenture, any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Record Date and
shall be paid to the Person in whose name this Note is registered at the
close of business on a Record Date for the payment of such defaulted interest
to be fixed by the Company, notice whereof shall be given to Noteholders not
less than fifteen days prior to such Record Date. Payment of the principal
of and any premium and interest on this Note shall be made on or before 10:30
A.M., New York City time or such other time as shall be agreed upon between
the Trustee and the Depositary, of the day on which such payment is due, by
wire transfer into the account specified by the Depositary; PROVIDED,
HOWEVER, that as a condition
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to the payment at the Maturity date of any part of the principal and any
applicable premium of this Global Note, the Depositary shall surrender, or
cause to be surrendered, this Global Note to the Trustee. The Company will
pay any administrative costs imposed by banks in connection with making
payments by wire transfer, but not any tax, assessment or governmental charge
imposed on the Holder of this Note.
Under certain circumstances, this Global Note is exchangeable in whole
or from time to time in part for a definitive individual Note or Notes, with the
same Original Issue Date or Dates, Maturity date, Interest Rate and redemption
and other provisions as provided herein or in the Indenture.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS GLOBAL NOTE
SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof, directly or through an
Authenticating Agent, by manual signature of an authorized signatory, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated:
MADISON GAS AND ELECTRIC COMPANY
By
President
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION By
This is one of the Notes referred Secretary
to in the within-mentioned Indenture.
BANK ONE, N.A., as Trustee
By
----------------------------------
Authorized Signatory
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<PAGE>
MADISON GAS AND ELECTRIC COMPANY
MEDIUM-TERM NOTE
This Global Note is one of, and a global security which represents
Notes which are part of, the duly authorized Notes of the Company (herein called
the "Notes"), issued and to be issued under an Indenture dated as of __________,
1998 (herein called the "Indenture") between the Company and Bank One, N.A., as
Trustee (herein called the "Trustee", which term includes any successor Trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Noteholders, and of the terms upon which the Notes are, and are to be,
authenticated and delivered.
Each Note shall be dated the date of its authentication by the
Trustee. Each Note shall also bear an Original Issue Date or Dates which with
respect to this Global Note (or any portion thereof) shall mean the date or
dates of the original issue of the Notes represented hereby as specified on the
face hereof, and such Original Issue Date or Dates shall remain the same for all
Notes subsequently issued upon transfer, exchange or substitution of such
original Note (or such subsequently issued Notes) regardless of their dates of
authentication. The Notes may bear different dates, mature at different times,
bear interest at different rates, be subject to different redemption provisions,
if any, and may otherwise vary, all as provided in the Indenture.
Interest on this Note will be payable on the Interest Payment Date or
Interest Payment Dates as specified on the face hereof and, in either case, at
Maturity. Unless otherwise specified on the face hereof, payments on this Note
with respect to any particular Interest Payment Date or the Maturity date will
include interest accrued from and including the applicable Original Issue Date,
or from and including the most recent Interest Payment Date to which interest
has been paid or duly provided for, to but excluding the particular Interest
Payment Date or the Maturity date. Interest on this Note will be computed and
paid on the basis of a 360-day year of twelve 30-day months.
Unless otherwise specified on the face hereof, if this Note is an
Amortizing Note, payments with respect to this Note will be applied first to
interest due and payable hereon and then to the reduction of the unpaid
principal amount hereof. If this Note is an Amortizing Note, a table setting
forth the schedule of dates and amounts of payments of principal of and interest
on this Note or the formula for the amortization of principal and/or interest is
set forth in an annex attached to this Note.
A-4
<PAGE>
All percentages resulting from any calculation with respect to this
Note will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point (with five one-millionths of a percentage point rounded upward)
and all dollar amounts used in or resulting from any such calculation with
respect to this Note will be rounded to the nearest cent (with one-half cent
being rounded upward).
"Business Day" means, unless otherwise specified on the face hereof,
any Monday, Tuesday, Wednesday, Thursday or Friday that in The City of New York
is not a day on which banking institutions are authorized or obligated by law,
regulation or executive order to close. If an Interest Payment Date or Maturity
for this Note falls on a day that is not a Business Day, payment of principal,
premium, if any, and interest to be made on such day with respect to this Note
will be made on the next day that is a Business Day with the same force and
effect as if made on the due date, and no additional interest will be payable on
the date of payment for the period from and after the due date as a result of
such delayed payment.
This Note will be redeemable at the option of the Company prior to its
Stated Maturity only if an Initial Redemption Date is specified on the face
hereof. If so specified, this Note will be subject to redemption at the option
of the Company on any date on and after such Initial Redemption Date in whole or
from time to time in part in increments of $1,000 or integral multiples thereof,
at the redemption prices specified in an annex attached to this Note, plus
accrued and unpaid interest to but excluding the date of redemption, but
payments due with respect to this Note prior to the date of redemption will be
payable to the Holder of this Note of record at the close of business on the
relevant Record Date specified on the face hereof, all as provided in the
Indenture. The Company may exercise such option by causing the Trustee to mail
a notice of such redemption, at least 30 but not more than 60 calendar days
prior to the date of redemption, in accordance with the provisions of the
Indenture. In the event of redemption of this Note in part only, this Note will
be cancelled and a new Note or Notes representing the unredeemed portion hereof
will be issued in the name of the Holder hereof. This Note is not subject to a
sinking fund unless otherwise specified in an annex attached hereto.
If so specified on the face of this Note, (i) this Note shall be
subject to repayment, in whole or in part, prior to Stated Maturity at the
option of the Holder on a certain date or dates and at a certain price or
prices, plus accrued and unpaid interest to but excluding the date of payment;
(ii) the Stated Maturity of this Note may be extended at the option of the
Company for one or more
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<PAGE>
Extension Periods of from one to five years, as specified on the face hereof,
up to but not beyond the Final Maturity Date specified on the face hereof;
(iii) the interest rate specified on the face hereof may be reset by the
Company in accordance with a formula or otherwise on the Optional Interest
Reset Date or Dates specified on the face hereof; and/or (iv) this Note shall
be renewable at the option of the Holder, in each case in accordance with the
provisions of the Indenture applicable thereto and/or as specified in an
annex attached to this Note.
Notwithstanding anything herein to the contrary, if this Note is an
Original Issue Discount Note as specified on the face hereof, the amount payable
in the event the principal amount hereof is declared to be due and payable
immediately by reason of an Event of Default or in the event of redemption or
repayment hereof prior to the Stated Maturity hereof, in lieu of the principal
amount due at the Stated Maturity hereof, shall be the Amortized Face Amount of
this Note as of the date of declaration, redemption or repayment, as the case
may be. The "Amortized Face Amount" of this Note shall be the amount equal to
the principal amount of this Note multiplied by the Issue Price specified on the
face hereof plus (b) the portion of the difference between the dollar amount
thus obtained and the principal amount hereof that has accreted at the Yield to
Maturity specified on the face hereof (computed in accordance with generally
accepted United States bond yield computation principles) to such date of
declaration, redemption or repayment but in no event shall the Amortized Face
Amount of this Note exceed the principal amount stated on the face hereof.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Noteholders to be affected under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of not
less than a majority in aggregate principal amount of the Notes then outstanding
that would be affected thereby. The Indenture also contains provisions
permitting the Holders of not less than a majority in aggregate principal amount
of the Notes then outstanding, on behalf of the Holders of all Notes, to waive
compliance by the Company with certain covenants in the Indenture. The
Indenture also provides that the Holders of not less than a majority in
aggregate principal amount of the Notes then outstanding may waive certain past
defaults and their consequences on behalf of the Holders of all Notes. Any such
consent or waiver by the Holder of this Global Note (if not timely revoked in
accordance with the Indenture) shall be conclusive and binding upon such Holder
and upon all future Holders of this Global Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu
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<PAGE>
hereof, whether or not notation of such consent or waiver is made upon this
Global Note or such Note.
As set forth in, and subject to, the provisions of the Indenture, no
Holder of any Notes will have any right to institute any proceeding with respect
to the Indenture or for any remedy thereunder, unless such Holder shall have
previously given to the Trustee written notice of a continuing default with
respect to the Notes, the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding shall have made written request,
and offered reasonable indemnity, to the Trustee to institute such proceeding as
Trustee, and the Trustee shall have failed to institute such proceeding within
60 days; PROVIDED, HOWEVER, that such limitations do not apply to a suit
instituted by the Holder hereof for the enforcement of payment of the principal
of and any premium or interest on this Global Note on or after the respective
due dates expressed herein.
THIS NOTE IS A GLOBAL NOTE REGISTERED IN THE NAME OF THE DEPOSITARY OR
A NOMINEE THEREOF AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
THE INDIVIDUAL NOTES REPRESENTED HEREBY, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY.
If at any time the Depositary for this Global Note notifies the
Company that it is unwilling or unable to continue as Depositary for this Global
Note or if at any time the Depositary for this Global Note shall no longer be
registered as a clearing agency under the Securities Exchange Act of 1934, as
amended, or any successor statute or regulation, the Company may appoint a
successor Depositary with respect to this Global Note. If (A) a successor
Depositary for this Global Note is not appointed by the Company within 90 days
after the Company receives such notice or becomes aware of such ineligibility,
or (B) any Notes are represented by this Global Note at a time when an Event of
Default with respect to the Notes shall have occurred and be continuing, then in
each case the Company's election to issue this Note in global form shall no
longer be effective with respect to this Global Note and the Company will
execute, and the Trustee, upon receipt of a Company Order for the authentication
and delivery of individual Notes in exchange for this Global Note, shall
authenticate and make available for delivery, individual Notes of like tenor and
terms in definitive form in an aggregate principal amount equal to the principal
amount of this Global Note in exchange for this Global Note.
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<PAGE>
If agreed by the Company and the Depositary with respect to Notes
issued in the form of this Global Note, the Depositary for such Global Note
shall surrender this Global Note in exchange in whole or in part for individual
Notes of like tenor and terms in definitive form on such terms as are acceptable
to the Company and such Depositary. Thereupon the Company shall execute, and
the Trustee shall authenticate and make available for delivery, without a
service charge, (1) to each Person specified by such Depositary, a new Note or
Notes of like tenor and terms, and of any authorized denominations as requested
by such Person in aggregate principal amount equal to and in exchange for the
beneficial interest of such Person in this Global Note, and (2) to such
Depositary a new Global Note of like tenor and terms and in a denomination equal
to the difference, if any, between the principal amount of this Global Note and
the aggregate principal amount of Notes delivered to Holders thereof.
Under certain circumstances specified in the Indenture, the Depositary
may be required to surrender any two or more Global Notes which have identical
terms (but which may have differing Original Issue Dates) to the Trustee, and
the Company shall execute and the Trustee shall authenticate and deliver to, or
at the direction of, the Depositary a Global Note in principal amount equal to
the aggregate principal amount of, and with all terms identical to, the Global
Notes surrendered to the Trustee, and such new Global Note shall indicate each
applicable Original Issue Date and the principal amount applicable to each such
Original Issue Date.
No reference herein to the Indenture and no provision of this Global
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and any premium and
interest on this Global Note at the times, places and rates, and in the coin or
currency, herein prescribed.
The Indenture contains provisions for the satisfaction and discharge
of the Indenture upon compliance by the Company with certain conditions
specified therein, which provisions apply to this Note.
Prior to due presentment of this Global Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Global Note is registered as the owner
hereof for all purposes, whether or not this Global Note is overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
A-8
<PAGE>
The Indenture and the Notes shall be governed by, and construed in
accordance with, the laws of the State of New York.
All terms used in the Note which are defined in the Indenture but are
not defined in this Note shall have the meanings assigned to them in the
Indenture.
A-9
<PAGE>
OPTION TO ELECT REPAYMENT
[To be completed only if this Note is repayable at the option
of the Holder and the Holder elects to exercise such rights]
The undersigned owner of this Note hereby irrevocably elects to have
the Company repay (i) the principal amount of this Note or portion hereof below
designated at the applicable optional repayment price indicated on an annex
attached hereto plus accrued and unpaid interest to but excluding the date of
repayment, if this election is being made pursuant to the option referred to
under "Option to Elect Repayment" on the face hereof, or (ii) 100% of the
principal amount of this Note plus accrued and unpaid interest to but excluding
the Optional Interest Reset Date, if this election is being made following an
exercise by the Company of the option referred to under "Optional Interest
Reset" on the face hereof, or to but excluding the Pre-Exercise Stated Maturity
Date (as defined in the Indenture), if this election is being made following an
exercise by the Company of the option referred to under "Optional Extension of
Original Maturity Date" on the face hereof. If a portion of this Note is not
being repaid pursuant to clause (i) above, specify the principal amount to be
repaid and the denomination or denominations (which will be $1,000 or an
integral multiple thereof) of the Note or Notes to be issued to the Holder for
the portion of this Note not being repaid (in the absence of any specification,
one such Note will be issued for the portion not being repaid):
Dated:
------------------------------ ------------------------------------
Signature
Sign exactly as name appears on the
front of this Note
Principal amount to be repaid if Indicate address where check is
amount to be repaid is pursuant to be sent:
to clause (i) above and is less than
the entire principal amount of this ------------------------------------
Note (principal amount remaining
must be an authorized denomination) ------------------------------------
$
- -----------------------------------
(Which must be an integral multiple
of $1,000)
Denomination or denominations of the SOCIAL SECURITY OR OTHER TAXPAYER
Note or Notes to be issued for the ID NUMBER:
portion of this Note not being
repaid pursuant to clause (i) above: ----------------------------------
- ------------------------------------
- ------------------------------------
A-10
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIT GIFT
MIN ACT - Custodian
----- ------
TEN ENT - as tenants by the (Cust) (Minor)
entireties Under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with
right of survivorship and
not as tenants in common ---------------------
State
Additional abbreviations may also be used though not in the above
list.
---------------------
FOR VALUE RECEIVED the undersigned hereby sell(s)
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------
- ------------------------
- -------------------------------------------------------------------------------
Please print or typewrite name and address
including postal zip code of assignee
- ------------------------------------------------------------------------------
the within note and all rights thereunder, hereby irrevocably constituting and
appointing
--------------------------------------------------------------------
attorney to transfer said note on the books of the
- -------------------
Company, with full power of substitution in the premises.
Dated:
---------------------------
------------------------------------------------
NOTICE: The signature(s) to this assignment must
correspond with the name(s) as written upon the
face of the within instrument in every particular,
without alteration or enlargement or any change
whatever. The signature(s) must be guaranteed by
an "eligible guarantor institution" that is a
member or participant in the Securities Transfer
Agents Medallion Program, the Stock Exchange
Medallion Program or the New York Stock Exchange,
Inc. Medallion Program.
A-11
<PAGE>
EXHIBIT B
Fixed Rate Note
REGISTERED REGISTERED
NO.
MADISON GAS AND ELECTRIC COMPANY
Fixed Rate
Medium-Term Note
The following summary of terms is subject to the provisions set forth
below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CUSIP: EXTENSION PERIOD:
ORIGINAL ISSUE DATE: NUMBER OF EXTENSION PERIODS:
PRINCIPAL AMOUNT: FINAL MATURITY DATE:
MATURITY DATE: OPTIONAL INTEREST RESET: Yes No
INTEREST RATE: OPTIONAL INTEREST RESET
DATES:
INTEREST PAYMENT DATES:
ORIGINAL ISSUE DISCOUNT
RECORD DATES: NOTE: Yes No
OPTIONAL REDEMPTION: Yes No ISSUE PRICE (percentage of
principal):
INITIAL REDEMPTION DATE:
YIELD TO MATURITY:
AMORTIZING NOTE: Yes No
RENEWABLE AT OPTION OF
OPTION TO ELECT HOLDER: Yes No
REPAYMENT: Yes No
ANNEX ATTACHED (and
OPTIONAL EXTENSION OF incorporated by
ORIGINAL MATURITY DATE: Yes No reference herein): Yes No
</TABLE>
<PAGE>
Madison Gas and Electric Company, a Wisconsin corporation (herein
called the "Company", which term includes any successor Person under the
Indenture referred to on the reverse hereof), for value received, hereby
promises to pay to or registered assigns the principal sum specified above,
in such coin to currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts, on the
Maturity date specified above, and to pay interest thereon, in such coin or
currency, from and including the Original Issue Date specified above, or from
the most recent Interest Payment Date specified above to which interest has
been paid or duly provided for, as the case may be. Interest shall be paid
in arrears semiannually on each Interest Payment Date in each year commencing
on (a) the first such Interest Payment Date next succeeding the Original
Issue Date specified above, or (b) if such Original Issue Date is after a
Record Date and prior to the first Interest Payment Date, on the second
Interest Payment Date, at the per annum Interest Rate set forth above until
Maturity and the principal hereof is paid or made available for payment. The
interest so payable and punctually paid or duly provided for on any Interest
Payment Date will, as provided in the Indenture, be paid to the Person in
whose name this Note is registered at the close of business on the Record
Date specified above next preceding such Interest Payment Date; PROVIDED,
HOWEVER, that if the Original Issue Date falls between a Record Date and the
next Interest Payment Date, the first payment of interest will be paid on the
second Interest Payment Date subsequent to such Original Issue Date to the
Person in whose name this Note is registered at the close of business on the
Record Date for such second Interest Payment Date; and PROVIDED, FURTHER,
that interest payable on the Maturity date, or, if applicable, upon
redemption, shall be payable to the Person to whom principal shall be
payable. Except as otherwise provided in the Indenture, any such interest
not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Record Date and shall be paid to the Person in
whose name this Note is registered at the close of business on a Record Date
for the payment of such defaulted interest to be fixed by the Company, notice
whereof shall be given to Noteholders not less than fifteen days prior to
such Record Date. Payment of the principal of and any premium and interest
on this Note due at the Maturity of this Note shall be payable in immediately
available funds when due upon presentation and surrender of such Note at the
Corporate Trust Office of the Trustee in the Borough of Manhattan, The City
of New York; PROVIDED that this Note is presented to the Trustee in time for
the Trustee to make such payment in such funds in accordance with its normal
procedures. Accrued Interest on (and, if this Note is an Amortizing Note,
installments of principal of) this Note (other than Accrued Interest or such
installments payable at Maturity) shall be paid by a clearinghouse funds
check mailed on
B-2
<PAGE>
the Interest Payment Date; PROVIDED, HOWEVER, that if any
Holder of Notes, the aggregate principal amount of which equals or exceeds
$10,000,000, provides a written request to the Trustee on or before the
applicable Record Date for such Interest Payment Date, Accrued Interest (and
such installments of principal) shall be paid by wire transfer of immediately
available funds to a bank within the continental United States or by direct
deposit into the account of such Holder if such account is maintained with
the Trustee. The Company will pay any administration costs imposed by banks
in connection with making payments by wire transfer, but not any tax,
assessment or governmental charge imposed upon the Holder of this Note.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof, directly or through an
Authenticating Agent, by manual signature of an authorized signatory, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated:
MADISON GAS AND ELECTRIC COMPANY
By
President
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION By
Secretary
This is one of the Notes referred
to in the within-mentioned Indenture.
BANK ONE, N.A., as Trustee
By
Authorized Signatory
B-3
<PAGE>
MADISON GAS AND ELECTRIC COMPANY
MEDIUM-TERM NOTE
This Global Note is one of, and a global security which represents
Notes which are part of, the duly authorized Notes of the Company (herein called
the "Notes"), issued and to be issued under an Indenture dated as of __________,
1998 (herein called the "Indenture") between the Company and Bank One, N.A., as
Trustee (herein called the "Trustee", which term includes any successor Trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Noteholders, and of the terms upon which the Notes are, and are to be,
authenticated and delivered.
Each Note shall be dated the date of its authentication by the
Trustee. Each Note shall also bear an Original Issue Date or Dates which with
respect to this Global Note (or any portion thereof) shall mean the date or
dates of the original issue of the Notes represented hereby as specified on the
face hereof, and such Original Issue Date or Dates shall remain the same for all
Notes subsequently issued upon transfer, exchange or substitution of such
original Note (or such subsequently issued Notes) regardless of their dates of
authentication. The Notes may bear different dates, mature at different times,
bear interest at different rates, be subject to different redemption provisions,
if any, and may otherwise vary, all as provided in the Indenture.
Interest on this Note will be payable on the Interest Payment Date or
Interest Payment Dates as specified on the face hereof and, in either case, at
Maturity. Unless otherwise specified on the face hereof, payments on this Note
with respect to any particular Interest Payment Date or the Maturity date will
include interest accrued from and including the applicable Original Issue Date,
or from and including the most recent Interest Payment Date to which interest
has been paid or duly provided for, to but excluding the particular Interest
Payment Date or the Maturity date. Interest on this Note will be computed and
paid on the basis of a 360-day year of twelve 30-day months.
Unless otherwise specified on the face hereof, if this Note is an
Amortizing Note, payments with respect to this Note will be applied first to
interest due and payable hereon and then to the reduction of the unpaid
principal amount hereof. If this Note is an Amortizing Note, a table setting
forth the schedule of dates and amounts of payments of principal of and interest
on this Note or the formula for the amortization of principal and/or interest is
set forth in an annex attached to this Note.
B-4
<PAGE>
All percentages resulting from any calculation with respect to this
Note will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point (with five one-millionths of a percentage point rounded upward)
and all dollar amounts used in or resulting from any such calculation with
respect to this Note will be rounded to the nearest cent (with one-half cent
being rounded upward).
"Business Day" means, unless otherwise specified on the face hereof,
any Monday, Tuesday, Wednesday, Thursday or Friday that in The City of New York
is not a day on which banking institutions are authorized or obligated by law,
regulation or executive order to close. If an Interest Payment Date or Maturity
for this Note falls on a day that is not a Business Day, payment of principal,
premium, if any, and interest to be made on such day with respect to this Note
will be made on the next day that is a Business Day with the same force and
effect as if made on the due date, and no additional interest will be payable on
the date of payment for the period from and after the due date as a result of
such delayed payment.
This Note will be redeemable at the option of the Company prior to its
Stated Maturity only if an Initial Redemption Date is specified on the face
hereof. If so specified, this Note will be subject to redemption at the option
of the Company on any date on and after such Initial Redemption Date in whole or
from time to time in part in increments of $1,000 or integral multiples thereof,
at the redemption prices specified in an annex attached to this Note, plus
accrued and unpaid interest to but excluding the date of redemption, but
payments due with respect to this Note prior to the date of redemption will be
payable to the Holder of this Note of record at the close of business on the
relevant Record Date specified on the face hereof, all as provided in the
Indenture. The Company may exercise such option by causing the Trustee to mail
a notice of such redemption, at least 30 but not more than 60 calendar days
prior to the date of redemption, in accordance with the provisions of the
Indenture. In the event of redemption of this Note in part only, this Note will
be cancelled and a new Note or Notes representing the unredeemed portion hereof
will be issued in the name of the Holder hereof. This Note is not subject to a
sinking fund unless otherwise specified in an annex attached hereto.
If so specified on the face of this Note, (i) this Note shall be
subject to repayment, in whole or in part, prior to Stated Maturity at the
option of the Holder on a certain date or dates and at a certain price or
prices, plus accrued and unpaid interest to but excluding the date of payment;
(ii) the Stated Maturity of this Note may be extended at the option of the
Company for one or more Extension Periods of from one to five years, as
specified on the
B-5
<PAGE>
face hereof, up to but not beyond the Final Maturity Date specified on the
face hereof; (iii) the interest rate specified on the face hereof may be
reset by the Company in accordance with a formula or otherwise on the
Optional Interest Reset Date or Dates specified on the face hereof; and/or
(iv) this Note shall be renewable at the option of the Holder, in each case
in accordance with the provisions of the Indenture applicable thereto and/or
as specified in an annex attached to this Note.
Notwithstanding anything herein to the contrary, if this Note is an
Original Issue Discount Note as specified on the face hereof, the amount payable
in the event the principal amount hereof is declared to be due and payable
immediately by reason of an Event of Default or in the event of redemption or
repayment hereof prior to the Stated Maturity hereof, in lieu of the principal
amount due at the Stated Maturity hereof, shall be the Amortized Face Amount of
this Note as of the date of declaration, redemption or repayment, as the case
may be. The "Amortized Face Amount" of this Note shall be the amount equal to
the principal amount of this Note multiplied by the Issue Price specified on the
face hereof plus (b) the portion of the difference between the dollar amount
thus obtained and the principal amount hereof that has accreted at the Yield to
Maturity specified on the face hereof (computed in accordance with generally
accepted United States bond yield computation principles) to such date of
declaration, redemption or repayment but in no event shall the Amortized Face
Amount of this Note exceed the principal amount stated on the face hereof.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Noteholders to be affected under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of not
less than a majority in aggregate principal amount of the Notes then outstanding
that would be affected thereby. The Indenture also contains provisions
permitting the Holders of not less than a majority in aggregate principal amount
of the Notes then outstanding, on behalf of the Holders of all Notes, to waive
compliance by the Company with certain covenants in the Indenture. The
Indenture also provides that the Holders of not less than a majority in
aggregate principal amount of the Notes then outstanding may waive certain past
defaults and their consequences on behalf of the Holders of all Notes. Any such
consent or waiver by the Holder of this Global Note (if not timely revoked in
accordance with the Indenture) shall be conclusive and binding upon such Holder
and upon all future Holders of this Global Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Global Note
or such Note.
B-6
<PAGE>
As set forth in, and subject to, the provisions of the Indenture, no
Holder of any Notes will have any right to institute any proceeding with respect
to the Indenture or for any remedy thereunder, unless such Holder shall have
previously given to the Trustee written notice of a continuing default with
respect to the Notes, the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding shall have made written request,
and offered reasonable indemnity, to the Trustee to institute such proceeding as
Trustee, and the Trustee shall have failed to institute such proceeding within
60 days; PROVIDED, HOWEVER, that such limitations do not apply to a suit
instituted by the Holder hereof for the enforcement of payment of the principal
of and any premium or interest on this Note on or after the respective due dates
expressed herein.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times, places and rates, and in the coin or currency, herein
prescribed.
The Indenture contains provisions for the satisfaction and discharge
of the Indenture upon compliance by the Company with certain conditions
specified therein, which provisions apply to this Note.
Unless otherwise specified in an annex attached hereto, the Notes are
issuable only in registered form, without coupons, in denominations of $1,000
and integral multiples thereof. As provided in the Indenture and subject to
certain limitations specified therein, this Note may be exchanged for one or
more new Notes, of any authorized denominations and of a like aggregate
principal amount and Stated Maturity and having the same terms and Original
Issue Date, as requested by the Holder surrendering this Note.
As provided in the Indenture and subject to the limitations specified
therein, upon due presentment of this Note for registration of transfer at an
office or agency of the Trustee in the Borough of Manhattan, The City of New
York, maintained for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the note
registrar duly executed by, the Holder hereof or the attorney of such Holder
duly authorized in writing, the Company shall execute and register or cause to
be registered and the Trustee shall authenticate and make available for
delivery, in the name of the transferee or transferees one or more new Notes of
any authorized denominations and of a like aggregate principal amount
B-7
<PAGE>
and Stated Maturity and having the same terms and Original Issue Date.
No service charge will be made for any such exchange or registration
of transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note is overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture and the Notes shall be governed by, and construed in
accordance with, the laws of the State of New York.
All terms used in the Note which are defined in the Indenture but are
not defined in this Note shall have the meanings assigned to them in the
Indenture.
B-8
<PAGE>
OPTION TO ELECT REPAYMENT
[To be completed only if this Note is repayable at the option
of the Holder and the Holder elects to exercise such rights]
The undersigned owner of this Note hereby irrevocably elects to have
the Company repay (i) the principal amount of this Note or portion hereof below
designated at the applicable optional repayment price indicated on an annex
attached hereto plus accrued and unpaid interest to but excluding the date of
repayment, if this election is being made pursuant to the option referred to
under "Option to Elect Repayment" on the face hereof, or (ii) 100% of the
principal amount of this Note plus accrued and unpaid interest to but excluding
the Optional Interest Reset Date, if this election is being made following an
exercise by the Company of the option referred to under "Optional Interest
Reset" on the face hereof, or to but excluding the Pre-Exercise Stated Maturity
Date (as defined in the Indenture), if this election is being made following an
exercise by the Company of an option referred to under "Optional Extension of
Original Maturity Date" on the face hereof. If a portion of this Note is not
being repaid pursuant to clause (i) above, specify the principal amount to be
repaid and the denomination or denominations (which will be $1,000 or an
integral multiple thereof) of the Note or Notes to be issued to the Holder for
the portion of this Note not being repaid (in the absence of any specification,
one such Note will be issued for the portion not being repaid):
Dated:
-------------------------- --------------------------------------------
Signature
Sign exactly as name appears on the
front of this Note
Principal amount to be repaid if Indicate address where check is
amount to be repaid is pursuant to be sent:
to clause (i) above and is less than
the entire principal amount of this ---------------------------------------
Note (principal amount remaining
must be an authorized denomination) ---------------------------------------
$
-----------------------------------
(Which must be an integral multiple
of $1,000)
Denomination or denominations of the SOCIAL SECURITY OR OTHER TAXPAYER
Note or Notes to be issued for the ID NUMBER:
portion of this Note not being
repaid pursuant to clause (i) above: ---------------------------------------
- --------------------------------------
- --------------------------------------
B-9
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIT GIFT
MIN ACT - Custodian
TEN ENT - as tenants by the ----- -----
entireties (Cust) (Minor)
Under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with
right of survivorship and
not as tenants in common -------------------
State
Additional abbreviations may also be used though not in the above
list.
----------------------
FOR VALUE RECEIVED the undersigned hereby sell(s)
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------
- ---------------------------------------
- -----------------------------------------------------------------
Please print or typewrite name and address
including postal zip code of assignee
- -----------------------------------------------------------------
the within note and all rights thereunder, hereby irrevocably constituting and
appointing _____________________________________
_______________________ attorney to transfer said note on the books of the
Company, with full power of substitution in the premises.
Dated:--------------------
-----------------------------------
NOTICE: The signature(s) to this assignment must
correspond with the name(s) as written upon the
face of the within instrument in every particular,
without alteration or enlargement or any change
whatever. The signature(s) must be guaranteed by
an "eligible guarantor institution" that is a
member or participant in the Securities Transfer
Agents Medallion Program, the Stock Exchange
Medallion Program or the New York Stock Exchange,
Inc. Medallion Program.
B-10
<PAGE>
EXHIBIT C
Global Floating Rate Note
REGISTERED REGISTERED
NO.
MADISON GAS AND ELECTRIC COMPANY
Floating Rate
Medium-Term Note
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Company
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co., or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
The following summary of terms is subject to the provisions set forth
below:
CUSIP: INITIAL REDEMPTION DATE:
ORIGINAL ISSUE DATE(S): AMORTIZING NOTE: / / Yes / / No
PRINCIPAL AMOUNT: OPTION TO ELECT
REPAYMENT: / / Yes / / No
MATURITY DATE:
OPTIONAL EXTENSION OF
INITIAL INTEREST RATE: ORIGINAL MATURITY DATE: / / Yes / / No
INTEREST RATE BASIS OR BASE RATE EXTENSION PERIOD:
(including any Designated LIBOR
Page): NUMBER OF EXTENSION PERIODS:
INDEX MATURITY: FINAL MATURITY DATE:
INTEREST DETERMINATION DATES: OPTIONAL INTEREST RESET: / / Yes / / No
INTEREST RESET PERIOD: OPTIONAL INTEREST RESET
DATES:
INTEREST RESET DATES:
ORIGINAL ISSUE DISCOUNT
SPREAD: NOTE: / / Yes / / No
SPREAD MULTIPLIER: ISSUE PRICE (percentage of
principal):
MAXIMUM INTEREST RATE:
YIELD TO MATURITY:
MINIMUM INTEREST RATE:
RENEWABLE AT OPTION OF
INTEREST PAYMENT DATES: HOLDER: / / Yes / / No
RECORD DATES: ANNEX ATTACHED (and
incorporated by
OPTIONAL REDEMPTION: / / Yes / / No reference herein): / / Yes / / No
<PAGE>
Madison Gas and Electric Company, a Wisconsin corporation (herein
called the "Company", which term includes any successor Person under the
Indenture referred to on the reverse hereof), for value received, hereby
promises to pay to
or registered assigns the principal sum specified above, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, on the Maturity date specified
above and to pay interest thereon, in such coin or currency, from and including
the Original Issue Date (or if this Global Note has two or more Original Issue
Dates, interest shall, beginning on each such Original Issue Date, begin to
accrue for that part of the principal amount to which such Original Issue Date
is applicable) specified above, or from and including the most recent Interest
Payment Date specified above to which interest has been paid or duly provided
for, as the case may be. Interest shall be paid in arrears monthly, quarterly,
semiannually or annually as specified above under Interest Payment Dates, on
each Interest Payment Date in each year and at Maturity, commencing on (a) the
first such Interest Payment Date next succeeding the earliest Original Issue
Date or Dates, or (b) if such Original Issue Date is after a Record Date and
prior to the first Interest Payment Date, on the second Interest Payment Date,
at a rate per annum equal to the Initial Interest Rate specified above until the
initial Interest Reset Date specified above, and thereafter at a rate per annum
determined in accordance with the provisions in the Indenture for calculating
the Interest Rate for Notes having the Interest Rate Basis specified above,
until Maturity and the principal hereof is paid or made available for payment.
The interest so payable and punctually paid or duly provided for on any Interest
Payment Date will, as provided in the Indenture, be paid to the Person in whose
name this Note is registered at the close of business on the Record Date
specified above next preceding such Interest Payment Date; PROVIDED, HOWEVER,
that if an Original Issue Date falls between a Record Date and the next Interest
Payment Date, the first payment of interest with respect to such Original Issue
Date will be paid on the second Interest Payment Date subsequent to such
Original Issue Date to the Person in whose name this Note is registered at the
close of business on the Record Date for such second Interest Payment Date; and
PROVIDED, FURTHER, that interest payable on the Maturity date or, if applicable,
upon redemption, shall be payable to the Person to whom principal shall be
payable. Except as otherwise provided in the Indenture, any such interest not
so punctually paid or duly provided for will forthwith cease to be payable to
the Holder on such Record Date and shall be paid to the Person in whose name
this Note is registered at the close of business on a Record Date for the
payment of such defaulted interest to be fixed by the Company, notice whereof
shall be given to Noteholders not less than fifteen days prior to such Record
Date. Payment of the principal of and any premium and interest on this Note
shall be made on or before
C-2
<PAGE>
10:30 A.M., New York City time or such other time as shall be agreed upon
between the Trustee and the Depositary, of the day on which such payment is
due, by wire transfer into the account specified by the Depositary; PROVIDED,
HOWEVER, that as a condition to the payment at the Maturity date of any part
of the principal and any applicable premium of this Global Note, the
Depositary shall surrender, or cause to be surrendered, this Global Note to
the Trustee. The Company will pay any administrative costs imposed by banks
in connection with making payments by wire transfer, but not any tax,
assessment or governmental charge imposed on the Holder of this Note.
Under certain circumstances, this Global Note is exchangeable in whole
or from time to time in part for a definitive individual Note or Notes, with the
same Original Issue Date or Dates, Maturity date, Interest Rate and redemption
and other provisions as provided herein or in the Indenture.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS GLOBAL NOTE
SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof, directly or through an
Authenticating Agent, by manual signature of an authorized signatory, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated:
MADISON GAS AND ELECTRIC COMPANY
By
------------------------------------
President
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION By
------------------------------------
This is one of the Notes referred Secretary
to in the within-mentioned Indenture.
BANK ONE, N.A., as Trustee
By
-------------------------------
Authorized Signatory
C-3
<PAGE>
MADISON GAS AND ELECTRIC COMPANY
MEDIUM-TERM NOTE
This Global Note is one of, and a global security which represents
Notes which are part of, the duly authorized Notes of the Company (herein called
the "Notes"), issued and to be issued under an Indenture dated as of __________,
1998 (herein called the "Indenture") between the Company and Bank One, N.A., as
Trustee (herein called the "Trustee", which term includes any successor Trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Noteholders, and of the terms upon which the Notes are, and are to be,
authenticated and delivered.
Each Note shall be dated the date of its authentication by the
Trustee. Each Note shall also bear an Original Issue Date or Dates which with
respect to this Global Note (or any portion thereof) shall mean the date or
dates of the original issue of the Notes represented hereby as specified on the
face hereof, and such Original Issue Date or Dates shall remain the same for all
Notes subsequently issued upon transfer, exchange or substitution of such
original Note (or such subsequently issued Notes) regardless of their dates of
authentication. The Notes may bear different dates, mature at different times,
bear interest at different rates, be subject to different redemption provisions,
if any, and may otherwise vary, all as provided in the Indenture.
Interest on this Note will be payable on the Interest Payment Date or
Interest Payment Dates as specified on the face hereof and, in either case, at
Maturity. Unless otherwise specified on the face hereof, payments on this Note
with respect to any particular Interest Payment Date or the Maturity date will
include interest accrued from and including the applicable Original Issue Date,
or from and including the most recent Interest Payment Date to which interest
has been paid or duly provided for, to but excluding the particular Interest
Payment Date or the Maturity date. Interest on this Note shall be calculated
for each day during such period by dividing the interest rate applicable to such
day by 360, if the Interest Rate Basis specified on the face hereof is the
Commercial Paper Rate, LIBOR or Prime Rate, or by the actual number of days in
the year, if the Interest Rate Basis specified on the face hereof is the
Treasury Rate. Unless otherwise provided in an annex attached hereto, the
Trustee, acting in the capacity of Calculation Agent, will calculate the
Interest Rate on this Note. Upon the request of any Holder of this Note, the
Trustee shall provide to such Holder the Interest Rate then in effect and, if
then determined, the interest rate that will become effective on the next
Interest Reset Date with respect to this Note. Each such determination of an
Interest Rate will be final and binding in the absence of manifest error.
C-4
<PAGE>
Unless otherwise specified in an annex attached hereto, if this Note
is an Amortizing Note, payments with respect to this Note will be applied first
to interest due and payable hereon and then to the reduction of the unpaid
principal amount hereof. If this Note is an Amortizing Note, a table setting
forth the schedule of dates and amounts of payments of principal of and interest
on this Note or the formula for the amortization of principal and/or interest is
set forth in an annex attached to this Note.
All percentages resulting from any calculation with respect to this
Note will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point (with five one-millionths of a percentage point rounded upward)
and all dollar amounts used in or resulting from any such calculation with
respect to this Note will be rounded to the nearest cent (with one-half cent
being rounded upward).
"Business Day" means, unless otherwise specified on the face hereof,
any Monday, Tuesday, Wednesday, Thursday or Friday that in The City of New York
is not a day on which banking institutions are authorized or obligated by law,
regulation or executive order to close. If an Interest Payment Date or Maturity
for this Note falls on a day that is not a Business Day, payment of principal,
premium, if any, and interest to be made on such day with respect to this Note
will be made on the next day that is a Business Day with the same force and
effect as if made on the due date, and no additional interest will be payable on
the date of payment for the period from and after the due date as a result of
such delayed payment.
This Note will be redeemable at the option of the Company prior to its
Stated Maturity only if an Initial Redemption Date is specified on the face
hereof. If so specified, this Note will be subject to redemption at the option
of the Company on any date on and after such Initial Redemption Date in whole or
from time to time in part in increments of $1,000 or integral multiples thereof,
at the redemption prices specified in an annex attached to this Note, plus
accrued and unpaid interest to but excluding the date of redemption, but
payments due with respect to this Note prior to the date of redemption will be
payable to the Holder of this Note of record at the close of business on the
relevant Record Date specified on the face hereof, all as provided in the
Indenture. The Company may exercise such option by causing the Trustee to mail
a notice of such redemption, at least 30 but not more than 60 calendar days
prior to the date of redemption, in accordance with the provisions of the
Indenture. In the event of redemption of this Note in part only, this Note will
be cancelled and a new Note or Notes representing the unredeemed portion hereof
will be issued in the name of the Holder hereof. This Note is not subject to a
sinking fund unless otherwise specified in an annex attached hereto.
C-5
<PAGE>
If so specified on the face of this Note, (i) this Note shall be
subject to repayment, in whole or in part, prior to Stated Maturity at the
option of the Holder on a certain date or dates and at a certain price or
prices, plus accrued and unpaid interest to but excluding the date of payment;
(ii) the Stated Maturity of this Note may be extended at the option of the
Company for one or more Extension Periods of from one to five years, as
specified on the face hereof, up to but not beyond the Final Maturity Date
specified on the face hereof; (iii) the interest rate specified on the face
hereof may be reset by the Company in accordance with a formula or otherwise on
the Optional Interest Reset Date or Dates specified on the face hereof; and/or
(iv) this Note shall be renewable at the option of the Holder, in each case in
accordance with the provisions of the Indenture applicable thereto and/or as
specified in an annex attached to this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Noteholders to be affected under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of not
less than a majority in aggregate principal amount of the Notes then outstanding
that would be affected thereby. The Indenture also contains provisions
permitting the Holders of not less than a majority in aggregate principal amount
of the Notes then outstanding, on behalf of the Holders of all Notes, to waive
compliance by the Company with certain covenants in the Indenture. The
Indenture also provides that the Holders of not less than a majority in
aggregate principal amount of the Notes then outstanding may waive certain past
defaults and their consequences on behalf of the Holders of all Notes. Any such
consent or waiver by the Holder of this Global Note (if not timely revoked in
accordance with the Indenture) shall be conclusive and binding upon such Holder
and upon all future Holders of this Global Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Global Note
or such Note.
As set forth in, and subject to, the provisions of the Indenture, no
Holder of any Notes will have any right to institute any proceeding with respect
to the Indenture or for any remedy thereunder, unless such Holder shall have
previously given to the Trustee written notice of a continuing default with
respect to the Notes, the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding shall have made written request,
and offered reasonable indemnity, to the Trustee to institute such proceeding as
Trustee, and the Trustee shall have failed to institute such proceeding within
60 days; PROVIDED, HOWEVER, that such limitations do not apply to a suit
instituted by the Holder hereof for the enforcement of payment of the principal
C-6
<PAGE>
of and any premium or interest on this Global Note on or after the respective
due dates expressed herein.
THIS NOTE IS A GLOBAL NOTE REGISTERED IN THE NAME OF THE DEPOSITARY OR A
NOMINEE THEREOF AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
THE INDIVIDUAL NOTES REPRESENTED HEREBY, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY.
If at any time the Depositary for this Global Note notifies the
Company that it is unwilling or unable to continue as Depositary for this Global
Note or if at any time the Depositary for this Global Note shall no longer be
registered as a clearing agency under the Securities Exchange Act of 1934, as
amended, or any successor statute or regulation, the Company may appoint a
successor Depositary with respect to this Global Note. If (A) a successor
Depositary for this Global Note is not appointed by the Company within 90 days
after the Company receives such notice or becomes aware of such ineligibility,
or (B) any Notes are represented by this Global Note at a time when an Event of
Default with respect to the Notes shall have occurred and be continuing, then in
each case the Company's election to issue this Note in global form shall no
longer be effective with respect to this Global Note and the Company will
execute, and the Trustee, upon receipt of a Company Order for the authentication
and delivery of individual Notes in exchange for this Global Note, shall
authenticate and make available for delivery, individual Notes of like tenor and
terms in definitive form in an aggregate principal amount equal to the principal
amount of this Global Note in exchange for this Global Note.
If agreed by the Company and the Depositary with respect to Notes
issued in the form of this Global Note, the Depositary for such Global Note
shall surrender this Global Note in exchange in whole or in part for individual
Notes of like tenor and terms in definitive form on such terms as are acceptable
to the Company and such Depositary. Thereupon the Company shall execute, and
the Trustee shall authenticate and make available for delivery, without a
service charge, (1) to each Person specified by such Depositary, a new Note or
Notes of like tenor and terms, and of any authorized denominations as requested
by such Person in aggregate principal amount equal to and in exchange for the
beneficial interest of such Person in this Global Note, and (2) to such
Depositary a new Global Note of like tenor and terms and in a denomination equal
to the difference, if any, between the principal amount of this Global Note and
the aggregate principal amount of Notes delivered to Holders thereof.
C-7
<PAGE>
Under certain circumstances specified in the Indenture, the Depositary
may be required to surrender any two or more Global Notes which have identical
terms (but which may have differing Original Issue Dates) to the Trustee, and
the Company shall execute and the Trustee shall authenticate and deliver to, or
at the direction of, the Depositary a Global Note in principal amount equal to
the aggregate principal amount of, and with all terms identical to, the Global
Notes surrendered to the Trustee, and such new Global Note shall indicate each
applicable Original Issue Date and the principal amount applicable to each such
Original Issue Date.
No reference herein to the Indenture and no provision of this Global
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and any premium and
interest on this Global Note at the times, places and rates, and in the coin or
currency, herein prescribed.
The Indenture contains provisions for the satisfaction and discharge
of the Indenture upon compliance by the Company with certain conditions
specified therein, which provisions apply to this Note.
Prior to due presentment of this Global Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Global Note is registered as the owner
hereof for all purposes, whether or not this Global Note is overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture and the Notes shall be governed by, and construed in
accordance with, the laws of the State of New York.
All terms used in the Note which are defined in the Indenture but are
not defined in this Note shall have the meanings assigned to them in the
Indenture.
C-8
<PAGE>
OPTION TO ELECT REPAYMENT
[To be completed only if this Note is repayable at the option
of the Holder and the Holder elects to exercise such rights]
The undersigned owner of this Note hereby irrevocably elects to have
the Company repay (i) the principal amount of this Note or portion hereof below
designated at the applicable optional repayment price indicated on an annex
attached hereto plus accrued and unpaid interest to but excluding the date of
repayment, if this election is being made pursuant to the option referred to
under "Option to Elect Repayment" on the face hereof, or (ii) 100% of the
principal amount of this Note plus accrued and unpaid interest to but excluding
the Optional Interest Reset Date, if this election is being made following an
exercise by the Company of the option referred to under "Optional Interest
Reset" on the face hereof, or to but excluding the Pre-Exercise Stated Maturity
Date (as defined in the Indenture), if this election is being made following an
exercise by the Company of the option referred to under "Optional Extension of
Original Maturity Date" on the face hereof. If a portion of this Note is not
being repaid pursuant to clause (i) above, specify the principal amount to be
repaid and the denomination or denominations (which will be $1,000 or an
integral multiple thereof) of the Note or Notes to be issued to the Holder for
the portion of this Note not being repaid (in the absence of any specification,
one such Note will be issued for the portion not being repaid):
Dated:
------------------------- --------------------------------------
Signature
Sign exactly as name appears on the
front of this Note
Principal amount to be repaid if Indicate address where check is
amount to be repaid is pursuant to be sent:
to clause (i) above and is less than
the entire principal amount of this --------------------------------------
Note (principal amount remaining
must be an authorized denomination) --------------------------------------
$
----------------------------------
(Which must be an integral multiple
of $1,000)
Denomination or denominations of the SOCIAL SECURITY OR OTHER TAXPAYER
Note or Notes to be issued for the ID NUMBER:
portion of this Note not being
repaid pursuant to clause (i) above: --------------------------------------
- -----------------------------------
- -----------------------------------
C-9
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIT GIFT
MIN ACT - _____Custodian_____
TEN ENT - as tenants by the (Cust) (Minor)
entireties Under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with
right of survivorship and
not as tenants in common --------------------
State
Additional abbreviations may also be used though not in the above
list.
----------------------
FOR VALUE RECEIVED the undersigned hereby sell(s)
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------
- --------------------------------------------------------------------------------
Please print or typewrite name and address
including postal zip code of assignee
- --------------------------------------------------------------------------------
the within note and all rights thereunder, hereby irrevocably constituting
and appointing _________________________________________________________________
_______________________ attorney to transfer said note on the books of the
Company, with full power of substitution in the premises.
Dated:
-------------------
--------------------------------------------------
NOTICE: The signature(s) to this assignment must
correspond with the name(s) as written upon the
face of the within instrument in every particular,
without alteration or enlargement or any change
whatever. The signature(s) must be guaranteed by
an "eligible guarantor institution" that is a
member or participant in the Securities Transfer
Agents Medallion Program, the Stock Exchange
Medallion Program or the New York Stock Exchange,
Inc. Medallion Program.
C-10
<PAGE>
EXHIBIT D
Floating Rate Note
REGISTERED REGISTERED
NO.
MADISON GAS AND ELECTRIC COMPANY
Floating Rate
Medium-Term Note
The following summary of terms is subject to the provisions set forth
below:
CUSIP: INITIAL REDEMPTION DATE:
ORIGINAL ISSUE DATE: AMORTIZING NOTE: / / Yes / / No
PRINCIPAL AMOUNT: OPTION TO ELECT
REPAYMENT: / / Yes / / No
MATURITY DATE:
OPTIONAL EXTENSION OF
INITIAL INTEREST RATE: ORIGINAL MATURITY DATE: / / Yes / / No
INTEREST RATE BASIS OR BASE RATE EXTENSION PERIOD:
(including any Designated LIBOR
Page): NUMBER OF EXTENSION PERIODS:
INDEX MATURITY: FINAL MATURITY DATE:
INTEREST DETERMINATION DATES: OPTIONAL INTEREST RESET: / / Yes / / No
INTEREST RESET PERIOD: OPTIONAL INTEREST RESET
DATES:
INTEREST RESET DATES:
ORIGINAL ISSUE DISCOUNT
SPREAD: NOTE: / / Yes / / No
SPREAD MULTIPLIER: ISSUE PRICE (percentage
of principal):
MAXIMUM INTEREST RATE: YIELD TO MATURITY:
MINIMUM INTEREST RATE: RENEWABLE AT OPTION OF
HOLDER: / / Yes / / No
INTEREST PAYMENT DATES:
ANNEX ATTACHED (and
RECORD DATES: incorporated by
reference herein): / / Yes / / No
OPTIONAL REDEMPTION: / / Yes / / No
<PAGE>
Madison Gas and Electric Company, a Wisconsin corporation (herein
called the "Company", which term includes any successor Person under the
Indenture referred to on the reverse hereof), for value received, hereby
promises to pay to
or registered assigns the principal sum specified above, in such coin to
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, on the Maturity date specified
above, and to pay interest thereon, in such coin or currency, from and including
the Original Issue Date specified above, or from the most recent Interest
Payment Date specified above to which interest has been paid or duly provided
for, as the case may be. Interest shall be paid in arrears monthly, quarterly,
semiannually or annually as specified above under Interest Payment Dates, on
each Interest Payment Date in each year and at Maturity, commencing on (a) the
first such Interest Payment Date next succeeding the Original Issue Date
specified above, or (b) if such Original Issue Date is after a Record Date and
prior to the first Interest Payment Date, on the second Interest Payment Date,
at a rate per annum equal to the Initial Interest Rate specified above until the
initial Interest Reset Date specified above, and thereafter at a rate per annum
determined in accordance with the provisions in the Indenture for calculating
the Interest Rate for Notes having the Interest Rate Basis specified above,
until Maturity and the principal hereof is paid or made available for payment.
The interest so payable and punctually paid or duly provided for on any Interest
Payment Date will, as provided in the Indenture, be paid to the Person in whose
name this Note is registered at the close of business on the Record Date
specified above next preceding such Interest Payment Date; PROVIDED, HOWEVER,
that if the Original Issue Date falls between a Record Date and the next
Interest Payment Date, the first payment of interest will be paid on the second
Interest Payment Date subsequent to such Original Issue Date to the Person in
whose name this Note is registered at the close of business on the Record Date
for such second Interest Payment Date; and PROVIDED, FURTHER, that interest
payable on the Maturity date, or, if applicable, upon redemption, shall be
payable to the Person to whom principal shall be payable. Except as otherwise
provided in the Indenture, any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Record
Date and shall be paid to the Person in whose name this Note is registered at
the close of business on a Record Date for the payment of such defaulted
interest to be fixed by the Company, notice whereof shall be given to
Noteholders not less than fifteen days prior to such Record Date. Payment of
the principal of and any premium and interest on this Note due at the Maturity
of this Note shall be payable in immediately available funds when due upon
presentation and surrender of such Note at the Corporate Trust Office of the
Trustee in the Borough of Manhattan, The City of New York; PROVIDED that
D-2
<PAGE>
this Note is presented to the Trustee in time for the Trustee to make such
payment in such funds in accordance with its normal procedures. Accrued
Interest on (and, if this Note is an Amortizing Note, installments of
principal of) this Note (other than Accrued Interest or such installments
payable at Maturity) shall be paid by a clearinghouse funds check mailed on
the Interest Payment Date; PROVIDED, HOWEVER, that if any Holder of Notes,
the aggregate principal amount of which equals or exceeds $10,000,000,
provides a written request to the Trustee on or before the applicable Record
Date for such Interest Payment Date, Accrued Interest (and such installments
of principal) shall be paid by wire transfer of immediately available funds
to a bank within the continental United States or by direct deposit into the
account of such Holder if such account is maintained with the Trustee. The
Company will pay any administration costs imposed by banks in connection with
making payments by wire transfer, but not any tax, assessment or governmental
charge imposed upon the Holder of this Note.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof, directly or through an
Authenticating Agent, by manual signature of an authorized signatory, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated:
----------------------------
MADISON GAS AND ELECTRIC COMPANY
By
--------------------------
President
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION By
--------------------------
Secretary
This is one of the Notes referred
to in the within-mentioned Indenture.
BANK ONE, N.A., as Trustee
By
-------------------------------
Authorized Signatory
D-3
<PAGE>
MADISON GAS AND ELECTRIC COMPANY
MEDIUM-TERM NOTE
This Note is one of the duly authorized Notes of the Company (herein
called the "Notes"), issued and to be issued under an Indenture dated as of
__________, 1998 (herein called the "Indenture") between the Company and Bank
One, N.A., as Trustee (herein called the "Trustee", which term includes any
successor Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Noteholders, and of the terms upon which the Notes are, and
are to be, authenticated and delivered.
Each Note shall be dated the date of its authentication by the
Trustee. Each Note shall also bear an Original Issue Date which with respect to
this Note (or any portion thereof) shall mean the date of its original issue as
specified on the face hereof, and such Original Issue Date shall remain the same
for all Notes subsequently issued upon transfer, exchange or substitution of
such original Note (or such subsequently issued Notes) regardless of their dates
of authentication. The Notes may bear different dates, mature at different
times, bear interest at different rates, be subject to different redemption
provisions, if any, and may otherwise vary, all as provided in the Indenture.
Interest on this Note will be payable on the Interest Payment Date or
Interest Payment Dates as specified on the face hereof and, in either case, at
Maturity. Unless otherwise specified on the face hereof, payments on this Note
with respect to any particular Interest Payment Date or the Maturity date will
include interest accrued from and including the Original Issue Date, or from and
including the most recent Interest Payment Date to which interest has been paid
or duly provided for, to but excluding such Interest Payment Date or the
Maturity date. Interest on this Note shall be calculated for each day during
such period by dividing the interest rate applicable to such day by 360, if the
Interest Rate Basis specified on the face hereof is the Commercial Paper Rate,
LIBOR or Prime Rate, or by the actual number of days in the year, if the
Interest Rate Basis specified on the face hereof is the Treasury Rate. Unless
otherwise provided in an annex attached hereto, the Trustee, acting in the
capacity of Calculation Agent, will calculate the Interest Rate on this Note.
Upon the request of any Holder of this Note, the Trustee shall provide to such
Holder the Interest Rate then in effect and, if then determined, the interest
rate that will become effective on the next Interest Reset Date with respect to
this Note. Each such
D-4
<PAGE>
determination of an Interest Rate will be final and binding in the absence of
manifest error.
Unless otherwise specified in an annex attached hereto, if this Note
is an Amortizing Note, payments with respect to this Note will be applied first
to interest due and payable hereon and then to the reduction of the unpaid
principal amount hereof. If this Note is an Amortizing Note, a table setting
forth the schedule of dates and amounts of payments of principal of and interest
on this Note or the formula for the amortization of principal and/or interest is
set forth in an annex attached to this Note.
All percentages resulting from any calculation with respect to this
Note will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point (with five one-millionths of a percentage point rounded upward)
and all dollar amounts used in or resulting from any such calculation with
respect to this Note will be rounded to the nearest cent (with one-half cent
being rounded upward).
"Business Day" means, unless otherwise specified on the face hereof,
any Monday, Tuesday, Wednesday, Thursday or Friday that in The City of New York
is not a day on which banking institutions are authorized or obligated by law,
regulation or executive order to close. If an Interest Payment Date or Maturity
for this Note falls on a day that is not a Business Day, payment of principal,
premium, if any, and interest to be made on such day with respect to this Note
will be made on the next day that is a Business Day with the same force and
effect as if made on the due date, and no additional interest will be payable on
the date of payment for the period from and after the due date as a result of
such delayed payment.
This Note will be redeemable at the option of the Company prior to its
Stated Maturity only if an Initial Redemption Date is specified on the face
hereof. If so specified, this Note will be subject to redemption at the option
of the Company on any date on and after such Initial Redemption Date in whole or
from time to time in part in increments of $1,000 or integral multiples thereof,
at the redemption prices specified in an annex attached to this Note, plus
accrued and unpaid interest to but excluding the date of redemption, but
payments due with respect to this Note prior to the date of redemption will be
payable to the Holder of this Note of record at the close of business on the
relevant Record Date specified on the face hereof, all as provided in the
Indenture. The Company may exercise such option by causing the Trustee to mail
a notice of such redemption, at least 30 but not more than 60 calendar days
prior to the date of redemption, in accordance with the provisions of the
Indenture. In the event of redemption of this Note in part only, this Note will
be cancelled and a new Note
D-5
<PAGE>
or Notes representing the unredeemed portion hereof will be issued in the
name of the Holder hereof. This Note is not subject to a sinking fund unless
otherwise specified in an annex attached hereto.
If so specified on the face of this Note, (i) this Note shall be
subject to repayment, in whole or in part, prior to Stated Maturity at the
option of the Holder on a certain date or dates and at a certain price or
prices, plus accrued and unpaid interest to but excluding the date of payment;
(ii) the Stated Maturity of this Note may be extended at the option of the
Company for one or more Extension Periods of from one to five years, as
specified on the face hereof, up to but not beyond the Final Maturity Date
specified on the face hereof; (iii) the interest rate specified on the face
hereof may be reset by the Company in accordance with a formula or otherwise on
the Optional Interest Reset Date or Dates specified on the face hereof; and/or
(iv) this Note shall be renewable at the option of the Holder, in each case in
accordance with the provisions of the Indenture applicable thereto and/or as
specified in an annex attached to this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Noteholders to be affected under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of not
less than a majority in aggregate principal amount of the Notes then outstanding
that would be affected thereby. The Indenture also contains provisions
permitting the Holders of not less than a majority in aggregate principal amount
of the Notes then outstanding, on behalf of the Holders of all Notes, to waive
compliance by the Company with certain covenants in the Indenture. The
Indenture also provides that the Holders of not less than a majority in
aggregate principal amount of the Notes then outstanding may waive certain past
defaults and their consequences on behalf of the Holders of all Notes. Any such
consent or waiver by the Holder of this Global Note (if not timely revoked in
accordance with the Indenture) shall be conclusive and binding upon such Holder
and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note or such
Note.
As set forth in, and subject to, the provisions of the Indenture, no
Holder of any Notes will have any right to institute any proceeding with respect
to the Indenture or for any remedy thereunder, unless such Holder shall have
previously given to the Trustee written notice of a continuing default with
respect to the Notes, the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding shall have made
D-6
<PAGE>
written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as Trustee, and the Trustee shall have failed to
institute such proceeding within 60 days; PROVIDED, HOWEVER, that such
limitations do not apply to a suit instituted by the Holder hereof for the
enforcement of payment of the principal of and any premium or interest on
this Note on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times, places and rates, and in the coin or currency, herein
prescribed.
The Indenture contains provisions for the satisfaction and discharge
of the Indenture upon compliance by the Company with certain conditions
specified therein, which provisions apply to this Note.
Unless otherwise specified in an annex attached hereto, the Notes are
issuable only in registered form, without coupons, in denominations of $1,000
and integral multiples thereof. As provided in the Indenture and subject to
certain limitations specified therein, this Note may be exchanged for one or
more new Notes, of any authorized denominations and of a like aggregate
principal amount and Stated Maturity and having the same terms and Original
Issue Date, as requested by the Holder surrendering this Note.
As provided in the Indenture and subject to the limitations specified
therein, upon due presentment of this Note for registration of transfer at an
office or agency of the Trustee in the Borough of Manhattan, The City of New
York, maintained for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the note
registrar duly executed by, the Holder hereof or the attorney of such Holder
duly authorized in writing, the Company shall execute and register or cause to
be registered and the Trustee shall authenticate and make available for
delivery, in the name of the transferee or transferees one or more new Notes of
any authorized denominations and of a like aggregate principal amount and Stated
Maturity and having the same terms and Original Issue Date.
No service charge will be made for any such exchange or registration
of transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
D-7
<PAGE>
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note is overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture and the Notes shall be governed by, and construed in
accordance with, the laws of the State of New York.
All terms used in the Note which are defined in the Indenture but are
not defined in this Note shall have the meanings assigned to them in the
Indenture.
D-8
<PAGE>
OPTION TO ELECT REPAYMENT
[To be completed only if this Note is repayable at the option
of the Holder and the Holder elects to exercise such rights]
The undersigned owner of this Note hereby irrevocably elects to have
the Company repay (i) the principal amount of this Note or portion hereof below
designated at the applicable optional repayment price indicated on an annex
attached hereto plus accrued and unpaid interest to but excluding the date of
repayment, if this election is being made pursuant to the option referred to
under "Option to Elect Repayment" on the face hereof, or (ii) 100% of the
principal amount of this Note plus accrued and unpaid interest to but excluding
the Optional Interest Reset Date, if this election is being made following an
exercise by the Company of the option referred to under "Optional Interest
Reset" on the face hereof, or to but excluding the Pre-Exercise Stated Maturity
Date (as defined in the Indenture), if this election is being made following an
exercise by the Company of an option referred to under "Optional Extension of
Original Maturity Date" on the face hereof. If a portion of this Note is not
being repaid pursuant to clause (i) above, specify the principal amount to be
repaid and the denomination or denominations (which will be $1,000 or an
integral multiple thereof) of the Note or Notes to be issued to the Holder for
the portion of this Note not being repaid (in the absence of any specification,
one such Note will be issued for the portion not being repaid):
Dated:
------------------------------ ---------------------------------------
Signature
Sign exactly as name appears on the
front of this Note
Principal amount to be repaid if Indicate address where check is
amount to be repaid is pursuant to be sent:
to clause (i) above and is less than
the entire principal amount of this ---------------------------------------
Note (principal amount remaining
must be an authorized denomination) ---------------------------------------
$
-----------------------------------
(Which must be an integral multiple
of $1,000)
Denomination or denominations of the SOCIAL SECURITY OR OTHER TAXPAYER
Note or Notes to be issued for the ID NUMBER:
portion of this Note not being
repaid pursuant to clause (i) above: ---------------------------------------
- ------------------------------------
- ------------------------------------
D-9
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIT GIFT
MIN ACT - _____Custodian_____
TEN ENT - as tenants by the (Cust) (Minor)
entireties Under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with
right of survivorship and
not as tenants in common --------------------
State
Additional abbreviations may also be used though not in the above
list.
----------------------
FOR VALUE RECEIVED the undersigned hereby sell(s)
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------
- ---------------------------------------
- -------------------------------------------------------------------------------
Please print or typewrite name and address
including postal zip code of assignee
- -------------------------------------------------------------------------------
the within note and all rights thereunder, hereby irrevocably constituting and
appointing ____________________________________________________________________
_______________________ attorney to transfer said note on the books of the
Company, with full power of substitution in the premises.
Dated:
----------------------
-------------------------------------------------
NOTICE: The signature(s) to this assignment must
correspond with the name(s) as written upon the
face of the within instrument in every particular,
without alteration or enlargement or any change
whatever. The signature(s) must be guaranteed by
an "eligible guarantor institution" that is a
member or participant in the Securities Transfer
Agents Medallion Program, the Stock Exchange
Medallion Program or the New York Stock Exchange,
Inc. Medallion Program.
<PAGE>
EXHIBIT 4.9
INTEREST CALCULATION AGENCY AGREEMENT
INTEREST CALCULATION AGENCY AGREEMENT between MADISON GAS AND ELECTRIC
COMPANY (the "Issuer") and ____________________ ("_____ _______") dated as of
________ __, 1998.
PRELIMINARY STATEMENT
1. The Issuer proposes to issue and sell its Medium-Term Notes due
from 9 Months to 30 Years from Date of Issue (the "Notes") from time to time
under, and pursuant to, the terms of an Indenture, dated as of ________ _, 1998
between the Company and ____________, as Trustee (in such capacity, the
"Trustee"), (the "Indenture"). Capitalized terms not otherwise defined herein
shall have the meanings assigned to them in the Indenture and if not defined
therein then as defined in the Prospectus and Prospectus Supplement relating to
the Notes.
2. The Issuer desires to appoint an agent of the Issuer to calculate
the base rates applicable to those Notes on which interest is to accrue, at any
time, at a variable or floating rate ("Floating Rate Notes"), determined by
references to the Commercial Paper Rate, LIBOR, the Prime Rate, the Treasury
Rate or other interest rate basis as is set forth in a pricing supplement
(collectively, the "Base Rates") as are specified and described in the Floating
Rate Notes.
NOW, THEREFORE, the Issuer and _____________ hereby agree as follows:
Section 1. APPOINTMENT OF CALCULATION AGENT. The Issuer hereby
appoints _____________ as Calculation Agent (in such capacity, the "Calculation
Agent") of the Issuer with respect to any Floating Rate Notes to be issued by
the Issuer under and pursuant to the terms of the Indenture, and the Calculation
Agent hereby accepts its obligations as set forth in this Agreement upon the
terms and conditions set forth herein.
SECTION 2. CALCULATION OF BASE RATES. The calculation date (the
"Calculation Date") for each applicable Interest Determination Date for any Note
shall be the earlier of (i) the tenth calendar day after such Interest
Determination Date or, if any such day is not a Business Day, the next
succeeding Business Day and (ii) the Business Day preceding the applicable
Interest Payment Date or date of Maturity, as the case may be. The Calculation
Agent shall notify the Issuer and the Trustee of the applicable interest rate on
or prior to each such Calculation Date.
<PAGE>
If at any time the Calculation Agent is not also acting as Trustee under the
Indenture, the Issuer shall, upon the issuance of each Floating Rate Note having
a different Base Rate or different Interest Determination Dates than the Base
Rate or Interest Determination Dates for any prior Floating Rate Note, notify
such Calculation Agent of such Interest Determination Dates and the applicable
interest rate base(s) or formula for such Floating Rate Note.
SECTION 3. NEW BASE RATES. If the Issuer proposes to issue Floating
Rate Notes whose interest rate will be determined on a basis or formula not
referred to above (a "New Base Rate"), the Issuer shall give a description of
such New Base Rate to the Calculation Agent. The Calculation Agent shall
determine if it is able and willing to calculate the New Base Rate and upon its
agreement in writing to do so the term "Base Rate" shall be deemed to include
the New Base Rate. If the Calculation Agent notifies the Issuer that it is not
able or willing to calculate the New Base Rate, or that it is only willing to do
so on the basis of an increase of its fees not acceptable to the Issuer, the
Calculation Agent shall have no responsibility with respect to such New Base
Rate and the Issuer shall appoint a different calculation agent to determine the
New Base Rate.
SECTION 4. FEES AND EXPENSES. The Calculation Agent shall be
entitled to such compensation for its services under this Agreement as may be
agreed upon with the Issuer, and the Issuer shall pay such compensation and
shall reimburse the Calculation Agent for all reasonable expenses, disbursements
and advances incurred or made by the Calculation Agent in connection with the
services rendered by it under this Agreement, including reasonable legal fees
and expenses, upon receiving an accounting therefor from the Calculation Agent.
SECTION 5. RIGHTS AND LIABILITIES OF CALCULATION AGENT. The
Calculation Agent shall incur no liability for, or in respect of, any action
taken, omitted to be taken or suffered by it in reliance upon any Floating Rate
Note, certificate, affidavit, instruction, notice, request, direction, order,
statement or other paper, document or communication reasonably believed by it to
be genuine. Any certificate, affidavit, instruction, notice, request,
direction, order, statement or other communication from the Issuer made or given
by it and sent, delivered or directed to the Calculation Agent under, pursuant
to or as permitted by any provision of this Agreement shall be sufficient for
purposes of this Agreement if such communication is in writing and signed by any
officer of the Issuer. The Calculation Agent may consult with counsel
satisfactory to it and the opinion of such counsel shall
-2-
<PAGE>
constitute full and complete authorization and protection of the Calculation
Agent with respect to any action taken, omitted to be taken or suffered by it
hereunder in good faith and in accordance with and in reliance upon the opinion
of such counsel. In acting under this Agreement, the Calculation Agent (in its
capacity as such) does not assume any obligation towards, or any relationship of
agency or trust for or with the holders of the Notes.
SECTION 6. RIGHT OF CALCULATION AGENT TO OWN FLOATING RATE NOTES.
The Calculation Agent may act as Trustee under the Indenture and it and its
officers, employees and shareholders may become owners of, or acquire any
interests in, Floating Rate Notes, with the same rights as if the Calculation
Agent were not the Calculation Agent, and it may engage in, or have an interest
in, any financial or other transaction with the Issuer as if the Calculation
Agent were not the Calculation Agent.
SECTION 7. DUTIES OF CALCULATION AGENT. The Calculation Agent shall
be obligated only to perform such duties as are specifically set forth herein
and no other duties or obligations on the part of the Calculation Agent, in its
capacity as such, shall be implied by this Agreement.
SECTION 8. TERMINATION, RESIGNATION OR REMOVAL OF CALCULATION AGENT.
The Calculation Agent may at any time terminate this Agreement by giving no less
than 90 days written notice to the Issuer unless the Issuer consents in writing
to a shorter time. Upon receipt of notice of termination by the Calculation
Agent, the Issuer agrees promptly to appoint a successor Calculation Agent. The
Issuer may terminate this Agreement at any time by giving written notice to the
Calculation Agent and specifying the date when the termination shall become
effective; provided, however, that no termination by the Calculation Agent or by
the Issuer shall become effective prior to the date of the appointment by the
Issuer, as provided in Section 9 hereof, of a successor Calculation Agent and
the acceptance of such appointment by such successor Calculation Agent. If an
instrument of acceptance by a successor Calculation Agent shall not have been
delivered to the Calculation Agent within 30 days after the giving of such
notice of resignation, the resigning Calculation Agent may petition any court of
competent jurisdiction for the appointment of a successor Calculation Agent.
Upon termination by either party pursuant to the provisions of this Section, the
Calculation Agent shall be entitled to the payment of any compensation owed to
it by the Issuer hereunder and to the reimbursement of reasonable expenses,
disbursements and advances incurred or made by the Calculation Agent in
connection with the services rendered by it hereunder, as provided by Section 4
hereof.
-3-
<PAGE>
SECTION 9. APPOINTMENT OF SUCCESSOR CALCULATION AGENT. Any successor
Calculation Agent appointed by the Issuer or by a court following termination of
this Agreement pursuant to the provisions of Section 8 hereof shall execute and
deliver to the Calculation Agent and to the Issuer an instrument accepting such
appointment, and thereupon such successor Calculation Agent shall, without any
further act or instrument become vested with all the rights, immunities, duties
and obligations of the Calculation Agent, with like effect as if originally
named as Calculation Agent hereunder, and the resigning Calculation Agent shall
thereupon be obligated to transfer and deliver, and such successor Calculation
Agent shall be entitled to receive and accept, copies of any available records
maintained by the resigning Calculation Agent in connection with the performance
of its obligations hereunder.
SECTION 10. INDEMNIFICATION. The Issuer shall indemnity and hold
harmless the Calculation Agent, its officers and employees from and against all
actions, claims, damages, liabilities, losses and expenses (including reasonable
legal fees and expenses) relating to or arising out of actions or omissions in
any capacity hereunder, except actions, claims, damages, liabilities, losses and
expenses relating to or arising from the negligence or willful misconduct of the
Calculation Agent, its officers or employees. The Calculation Agent shall
indemnity and hold harmless the Issuer, its officers and employees from and
against all actions, claims, damages, liabilities, losses and expenses
(including reasonable legal fees and expenses) relating to or arising from the
negligence or willful misconduct of the Calculation Agent, its officers or
employees. This Section 10 shall survive the payment in full of all obligations
under the Notes, whether by redemption, repayment or otherwise.
SECTION 11. MERGER, CONSOLIDATION OR SALE OF BUSINESS BY CALCULATION
AGENT. Any corporation into which the Calculation Agent may be merged,
converted or consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Calculation Agent may be a party, or
any corporation to which the Calculation Agent may sell or otherwise transfer
all or substantially all of its corporate trust business, shall, to the extent
permitted by applicable law, become the Calculation Agent under this Agreement
without the execution of any document or any further act by the parties hereto.
SECTION 12. NOTICES. Any notice or other communication given
hereunder shall be delivered in person, sent by letter, telecopy or communicated
by telephone (subject, in the case of communication by telephone, to written
confirmation dispatched
-4-
<PAGE>
within 24 hours) to the addresses given below or such other address as the party
to receive such notice may have previously specified:
To the Issuer:
Madison Gas and Electric Company
133 South Blair Street
P.O. Box 1231
Madison, Wisconsin 53701-1231
Telephone: (608)252-7000
Telecopier: (608) -
---- ----
To the Calculation Agent:
-------------------------------
-------------------------------
-------------------------------
-------------------------------
Attention:
-------------------
Telephone: ( )
--- --------
Telecopier: ( ) -
--- ---- ----
To the Trustee:
-------------------------------
-------------------------------
-------------------------------
-------------------------------
Attention: -------------------
Telephone: ( ) -
--- ---- ----
Telecopier: ( ) -
--- ---- ----
Any notice hereunder given by letter or telecopy shall be deemed to have been
received when it would have been received in the ordinary course of post or
transmission, as the case may be.
SECTION 13. BENEFIT OF AGREEMENT. Except as provided herein, this
Agreement is solely for the benefit of the parties hereto and their successors
and assigns and no other person shall acquire or have any rights under or by
virtue hereof.
SECTION 14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of ________.
SECTION 15. AMENDMENT. This Agreement shall be amended only in a
writing signed by both parties hereto.
-5-
<PAGE>
SECTION 16. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same Agreement.
IN WITNESS WHEREOF, this Agreement has been entered into the day and
year first above written.
MADISON GAS AND ELECTRIC COMPANY
By:
-----------------------------
Title:
---------------------------------
By:
-----------------------------
Title:
-6-
<PAGE>
[Letterhead of Gary Wolter, Esq.]
Exhibit 5.1
July 20, 1998
Madison Gas & Electric Company
133 South Blair Street
P.O. Box 1231
Madison, Wisconsin 53701-1231
Subject: Madison Gas and Electric Company Registration Statement on Form S-3
Ladies and Gentlemen:
I am Senior Vice President - Administration and Secretary of Madison Gas and
Electric Company (the "Company") and an attorney licensed to practice law in the
State of Wisconsin. In that connection, I am familiar with the filing of a
Registration Statement on Form S-3 (the "Registration Statement") relating to
shares of Common Stock, par value $1 per share, of the Company ("Common Stock")
which may be purchased under the Company's Investors Plus Plan (the "Plan").
I am also familiar with the Restated Articles of Incorporation and the By-Laws
of the Company and all amendments thereto and resolutions of the Board of
Directors of the Company relating to the Plan and the Registration Statement.
In this connection, I have examined or caused to be examined and am familiar
with originals or copies, certified or otherwise identified to my satisfaction,
of all such records of the Company and others as I have deemed necessary or
appropriate as a basis for the opinions set forth herein. In my examination, I
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to me as certified or photostatic copies, and the
authenticity of the originals of such latter documents. As to any facts material
to the opinion expressed herein which were not independently established or
verified by me, I have relied upon statements and representations of certain
officers and other representatives of the Company and others.
Based upon the foregoing, I am of the opinion that:
1. The Company is duly incorporated and validly existing under the laws of the
State of Wisconsin.
2. Any shares of Common Stock purchased by an independent agent selected by
the Company on the open market for the consideration provided in the Plan
are legally issued, fully paid and non-assessable, except to the extent
that such shares are assessable as provided in Section 180.0622 of the
Wisconsin Business Corporation Law.
3. If the Company's Board of Directors, or a duly authorized committee
thereof, and the Public Service Commission of the State of Wisconsin
authorize the issuance of authorized and unissued shares of Common Stock
for the consideration (but not less than the par value) provided in the
Plan, such shares will, when certificates representing such shares shall
have been duly executed, countersigned and registered, and duly delivered
against the receipt by the Company of the consideration provided in the
Plan, be legally issued, fully paid and non-assessable, except to the
extent that such shares are assessable as provided in Section 180.0622 of
the Wisconsin Business Corporation Law.
4. If the Company legally and validly reacquires issued and outstanding shares
of Common Stock and thereafter, pursuant to the authorization by the Board
of Directors or a duly authorized committee thereof, resells such issued
but not outstanding shares for the consideration (but not less than par
value) provided in the Plan, such shares will upon delivery against receipt
by the Company of the consideration provided in the Plan, be legally
issued, fully paid and non-assessable, except to the extent that such
shares are assessable as provided in Section 180.0622 of the Wisconsin
Business Corporation Law.
I do not find it necessary for the purposes of such opinions to cover, and
accordingly I express no opinion as to the application of the securities or blue
sky laws of, the various states to the sale of shares of Common Stock.
Such opinions are limited to the General Corporation Law of the State of
Wisconsin. I assume no obligation to update or supplement this opinion to
reflect any facts or circumstances which may hereafter come to my attention with
respect to the opinions expressed above, including any changes in applicable law
which may hereafter occur.
1
<PAGE>
I hereby consent to the filing of this opinion letter as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Gary J. Wolter
----------------------------
Gary J. Wolter
Senior Vice President - Administration
and Secretary
2
<PAGE>
Exhibit 5.2
[Letterhead of Stafford, Rosenthal Rieser & Hansen]
July 20, 1998
Madison Gas and Electric Company
133 South Blair Street
P.O. Box 1231
Madison, Wisconsin 53701-1231
Ladies and Gentlemen:
We refer to the proposed issuances and sales by you ("Company") of a presently
indeterminate number of medium-term notes ("Notes") pursuant to the terms of an
indenture from the Company to Bank One, N.A., as trustee ("Note Indenture"), and
the registration of a presently indeterminate number of shares of Common Stock
("Common Stock") of the Company in underwritten public offerings, as
contemplated in the Registration Statement on Form S-3 to be filed by the
Company on or about the date hereof ("Registration Statement") with the
Securities and Exchange Commission ("Commission") under the Securities Act of
1933, as amended ("Act").
We have examined such documents and satisfied ourselves as to such matters of
procedure, law and fact as we deem relevant for the purposes of the opinions
expressed herein, and based upon the foregoing, we advise you that, in our
opinion, (a) the Company is a duly incorporated and validly existing corporation
under the laws of the State of Wisconsin, and (b) when the following additional
steps have been taken:
1. The issuance, execution, delivery and sale of the Notes, and Common
Stock and execution and delivery of the Note Indenture shall have been
authorized by your Board of Directors;
2. Such Note Indenture and any applicable Supplemental Indentures thereto
shall have been qualified under the Trust Indenture Act of 1939, as amended ("39
Act");
3. Your proposed Registration Statement being filed with the Commission
under the Act, and any required amendments and post-effective amendments
thereto, shall have become effective under the Act;
4. The Public Service Commission of Wisconsin shall have issued its
appropriate order or orders upon applications with respect to the Notes and
Common Stock; and
5. The Notes and Common Stock shall have been issued and sold in
accordance with the authorizations of the Board of Directors of the Company, and
the appropriate order or orders of the Public Service Commission of Wisconsin;
then
(i) the Notes will be legally issued and will constitute legal, valid and
binding obligations of the Company enforceable in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy, insolvency or other
laws affecting enforcement of creditors' rights, or by general principles of
equity, and
(ii) the Notes will be entitled to the benefits provided by the Note
Indenture.
(iii) Upon the issuance of authorized and unissued shares of Common Stock
for consideration (but not less than the par value), such shares will, when
certificates representing such shares shall have been duly executed,
countersigned and registered, and duly delivered against the receipt by the
Company of such consideration be legally issued, fully paid and non-assessable,
except to the extent that such shares are assessable as provided in Section
180.0622 of the Wisconsin Business Corporation Law.
We are further of the opinion that no approval of any state or federal
regulatory authority, other than the Public Service Commission of Wisconsin and
the Commission under the Act and the 39 Act is required with respect to the
proposed offering, issuance and sale of the Notes and Common Stock.
We do not find it necessary for the purposes of such opinions, and accordingly
do not purport herein, to cover the application of state securities or "blue
sky" laws relating to sales and securities.
<PAGE>
We consent that copies of this opinion letter may be filed with the Commission
as an exhibit to the Registration Statement on Form S-3 with respect to the
Securities, and to the references to my name under the captions "Legal Matters"
in such Registration Statement.
Very truly yours,
/s/ Stafford, Rosenbaurm, Rieser & Hansen
STAFFORD, ROSENBAUM, RIESER & Hansen
DWS:csc
2
<PAGE>
[Letterhead of Sidley & Austin]
Exhibit 5.3
July 22, 1998
Madison Gas and Electric Company
133 South Blair Street
P.O. Box 1231
Madison, Wisconsin 53701-1231
Ladies and Gentlemen:
We have acted as counsel to you in connection with the proposed offering by
your corporation (the "Company"), of Medium-Term Notes (the "Notes") as
described in the Registration Statement on Form S-3 (the "Registration
Statement"), which is being filed by the Company with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended. The
Registration Statement includes a Prospectus relating to such offering of Notes.
In rendering the opinion expressed below, we have examined the Prospectus
and such other documents as we have deemed relevant and necessary, including,
without limitation, the form of Indenture attached as an Exhibit to the
Registration Statement. Such opinion is conditioned, among other things, upon
the accuracy and completeness of the facts, information and representations
contained in the Prospectus as of the date hereof and the continuing accuracy
and completeness thereof as of the date of the issuance of the Notes. We have
assumed that the transactions contemplated by the Prospectus and such other
documents will occur as provided therein and that there will be no material
change to the Prospectus or any of such other documents between the date hereof
and the date of the issuance of the Notes.
Based upon and subject to the foregoing, we are of the opinion that the
discussion set forth in the Prospectus under the caption "UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES" is a fair and accurate summary of the matters addressed
therein, based upon current law and the assumptions stated or referred to
therein.
We assume no obligation to update or supplement this letter to reflect any
facts or circumstances which may hereafter come to our attention with respect to
the opinion expressed above, including any changes in applicable law which may
hereafter occur.
We hereby consent to the filing of this opinion letter as an Exhibit to the
Registration Statement and to all references to our Firm included in or made a
part of the Registration Statement.
Very truly yours,
/s/ Sidley & Austin
SIDLEY & AUSTIN
<PAGE>
Exhibit No. 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Madison Gas and Electric Company ( the "Company") on Form S-3 of
our report dated February 6, 1998, on our audits of the consolidated financial
statements of the Company as of December 31, 1997 and 1996, and for the years
ended December 31, 1997, 1996 and 1995, which report is included in the
Company's annual report on Form 10-K. We also consent to the reference to our
Firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
July 21, 1998
<PAGE>
Registration No._________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
BANK ONE, N.A.
Not Applicable 31-4148768
(State of Incorporation (I.R.S. Employer
if not a national bank) Identification No.)
100 East Broad Street, Columbus, Ohio 43271-0181
(Address of trustee's principal (Zip Code) executive offices)
c/o Bank One Trust Company, NA
100 East Broad Street
Columbus, Ohio 43271-0181
(614) 248-6229
(Name, address and telephone number of agent for service)
MADISON GAS AND ELECTRIC COMPANY
(Exact name of obligor as specified in its charter)
Wisconsin 39-0444025
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
133 South Blair Street 53701-1231
P.O. Box 1231, Madison, Wisconsin (Zip Code)
(Address of principal executive
office)
Medium Term Notes due September, 2008
(Title of the Indenture securities)
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GENERAL
1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of Cleveland, Cleveland, Ohio
Federal Deposit Insurance Corporation, Washington, D.C.
The Board of Governors of the Federal Reserve System, Washington, D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee.
16. LIST OF EXHIBITS
LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY
AND QUALIFICATION. (EXHIBITS IDENTIFIED IN PARENTHESES, ON FILE WITH THE
COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS EXHIBITS HERETO.)
Exhibit 1 - A copy of the Articles of Association of the trustee as now in
effect.
Exhibit 2 - A copy of the Certificate of Authority of the trustee to commence
business, see Exhibit 2 to Form T-1, filed in connection with Form S-3
relating to Wheeling-Pittsburgh Corporation 9 3/8% Senior Notes due 2003,
Securities and Exchange Commission File No. 33-50709.
Exhibit 3 - A copy of the Authorization of the trustee to exercise corporate
trust powers, see Exhibit 3 to Form T-1, filed in connection with Form S-3
relating to Wheeling-Pittsburgh Corporation 9 3/8% Senior Notes due 2003,
Securities and Exchange Commission File No. 33-50709.
Exhibit 4 - A copy of the Bylaws of the trustee as now in effect.
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Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939, as amended.
Exhibit 7 - Report of Condition of the trustee as of the close of business on
March 31, 1998, published pursuant to the requirements of the Comptroller of the
Company, see attached.
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
Items 3 through 15 are not answered pursuant to General Instruction B which
requires responses to Item 1, 2 and 16 only, if the obligor is not in default.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, Bank One, NA, a national banking association organized
under the National Banking Act, has duly caused this statement of eligibility
and qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in Columbus, Ohio, on July 22, 1998.
Bank One, NA
By: /s/ David Knox
-----------------------------
Authorized Signer
<PAGE>
Exhibit 1
BANK ONE, COLUMBUS, NATIONAL ASSOCIATION
ARTICLES OF ASSOCIATION
For the purpose of organizing an association to carry on the business of
banking under the laws of the United States, the following Articles of
Association are entered into:
FIRST. The title of this Association shall be BANK ONE, COLUMBUS, NATIONAL
ASSOCIATION.
SECOND. The main office of the Association shall be in Columbus, County of
Franklin, State of Ohio. The general business of the Association shall be
conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of not
less than five nor more than twenty-five Directors, the exact number of
Directors within such minimum and maximum limits to be fixed and determined from
time-to-time by resolution of the shareholders at any annual or special meeting
thereof, provided, however, that the Board of Directors, by resolution of a
majority thereof, shall be authorized to increase the number of its members by
not more than two between regular meetings of the shareholders. Each Director,
during the full term of his directorship, shall own, as qualifying shares, the
minimum number of shares of either this Association or of its parent bank
holding company in accordance with the provisions of applicable law. Unless
otherwise provided by the laws of the United States, any vacancy in the Board of
Directors for any reason, including an increase in the number thereof, may be
filled by action of the Board of Directors.
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FOURTH. The annual meeting of the shareholders for the election of
Directors and the transaction of whatever other business may be brought before
said meeting shall be held at the main office of this Association or such other
place as the Board of Directors may designate, on the day of each year specified
therefor in the By-Laws, but if no election is held on that day, it may be held
on any subsequent business day according to the provisions of law; and all
elections shall be held according to such lawful regulations as may be
prescribed by the Board of Directors.
FIFTH. The authorized amount of capital stock of this Association shall
be 2,073,750 shares of common stock of the par value of Ten Dollars ($10)
each; but said capital stock may be increased or decreased from time-to-time,
in accordance with the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the
Association shall have the preemptive or preferential right of subscription to
any share of any class of stock of this Association, whether now or hereafter
authorized or to any obligations convertible into stock of this Association,
issued or sold, nor any right of subscription to any thereof other than such, if
any, as the Board of Directors, in its discretion, may from time-to-time
determine and at such price as the Board of Directors may from time-to-time fix.
This Association, at any time and from time-to-time, may authorize and
issue debt obligations, whether or not subordinated, without the approval of the
shareholders.
SIXTH. The Board of Directors shall appoint one of its members President
of the Association, who shall be Chairman of the Board, unless the Board
appoints another director to be the Chairman. The Board of Directors shall have
the power to appoint one or more Vice Presidents and to appoint a Secretary and
such other officers and employees as may be required to transact the business of
this Association.
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The Board of Directors shall have the power to define the duties of
the officers and employees of this Association; to fix the salaries to be paid
to them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of this
Association shall be made; to manage and administer the business and affairs of
this Association; to make all By-Laws that it may be lawful for them to make;
and generally to do and perform all acts that it may be legal for a Board of
Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of the City of
Columbus, Ohio, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of this Association
to any other location, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than 10 percent of the stock of
this Association, may call a special meeting of shareholders at any time.
Unless otherwise provided by the laws of the United States, a notice of the
time, place and purpose of every annual and special meeting of the shareholders
shall be given by first-class mail, postage prepaid, mailed at least ten days
prior to the date of such meeting to each shareholder of record at his address
as shown upon the books of this Association.
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TENTH. Every person who is or was a Director, officer or employee of
the Association or of any other corporation which he served as a Director,
officer or employee at the request of the Association as part of his
regularly assigned duties may be indemnified by the Association in accordance
with the provisions of this paragraph against all liability (including,
without limitation, judgments, fines, penalties and settlements) and all
reasonable expenses (including, without limitation, attorneys' fees and
investigative expenses) that may be incurred or paid by him in connection
with any claim, action, suit or proceeding, whether civil, criminal or
administrative (all referred to hereafter in this paragraphs as "Claims") or
in connection with any appeal relating thereto in which he may become
involved as a party or otherwise or with which he may be threatened by reason
of his being or having been a Director, officer or employee of the
Association or such other corporation, or by reason of any action taken or
omitted by him in his capacity as such Director, officer or employee, whether
or not he continues to be such at the time such liability or expenses are
incurred, provided that nothing contained in this paragraph shall be
construed to permit indemnification of any such person who is adjudged guilty
of, or liable for, willful misconduct, gross neglect of duty or criminal
acts, unless, at the time such indemnification is sought, such
indemnification in such instance is permissible under applicable law and
regulations, including published rulings of the Comptroller of the Currency
or other appropriate supervisory or regulatory authority, and provided
further that there shall be no indemnification of directors, officers, or
employees against expenses, penalties, or other payments incurred in an
administrative proceeding or action instituted by an appropriate regulatory
agency which proceeding or action results in a final order assessing civil
money penalties or requiring affirmative action by an individual or
individuals in the form of payments to the Association. Every person who may
be indemnified under the provisions of this paragraph and who has been wholly
successful on the merits with respect to any Claim shall be entitled to
indemnification as of right. Except as provided in the preceding sentence,
any indemnification under this paragraph shall be at the sole discretion of
the Board of Directors and shall be made only if the Board of Directors or
the Executive Committee acting by a quorum consisting of
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Directors who are not parties to such Claim shall find or if independent legal
counsel (who may be the regular counsel of the Association) selected by the
Board of Directors or Executive Committee whether or not a disinterested quorum
exists shall render their opinion that in view of all of the circumstances then
surrounding the Claim, such indemnification is equitable and in the best
interests of the Association. Among the circumstances to be taken into
consideration in arriving at such a finding or opinion is the existence or
non-existence of a contract of insurance or indemnity under which the
Association would be wholly or partially reimbursed for such indemnification,
but the existence or non-existence of such insurance is not the sole
circumstance to be considered nor shall it be wholly determinative of whether
such indemnification shall be made. In addition to such finding or opinion, no
indemnification under this paragraph shall be made unless the Board of Directors
or the Executive Committee acting by a quorum consisting of Directors who are
not parties to such Claim shall find or if independent legal counsel (who may be
the regular counsel of the Association) selected by the Board of Directors or
Executive Committee whether or not a disinterested quorum exists shall render
their opinion that the Director, officer or employee acted in good faith in what
he reasonably believed to be the best interests of the Association or such other
corporation and further in the case of any criminal action or proceeding, that
the Director, officer or employee reasonably believed his conduct to be lawful.
Determination of any Claim by judgment adverse to a Director, officer or
employee by settlement with or without Court approval or conviction upon a plea
of guilty or of NOLO CONTENDERE or its equivalent shall not create a presumption
that a Director, officer or employee failed to meet the standards of conduct set
forth in this paragraph. Expenses incurred with respect to any Claim may be
advanced by the Association prior to the final disposition thereof upon receipt
of an undertaking satisfactory to the Association by or on behalf of the
recipient to repay such amount unless it is ultimately determined that he is
entitled to indemnification under this paragraph. The rights of indemnification
provided in this paragraph shall be in addition to any rights to which any
Director, officer or employee may otherwise be entitled by contract or as a
matter of law.
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Every person who shall act as a Director, officer or employee of this
Association shall be conclusively presumed to be doing so in reliance upon the
right of indemnification provided for in this paragraph.
ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount.
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<PAGE>
Exhibit 4
BY-LAWS
OF
BANK ONE, COLUMBUS, NATIONAL ASSOCIATION
ARTICLE I
MEETING OF SHAREHOLDERS
SECTION 1.01. ANNUAL MEETING. The regular annual meeting of the Shareholders
of the Bank for the election of Directors and for the transaction of such
business as may properly come before the meeting shall be held at its main
banking house, or other convenient place duly authorized by the Board of
Directors, on the third Monday of January of each year, or on the next
succeeding banking day, if the day fixed falls on a legal holiday. If from any
cause, an election of directors is not made on the day fixed for the regular
meeting of shareholders or, in the event of a legal holiday, on the next
succeeding banking day, the Board of Directors shall order the election to be
held on some subsequent day, as soon thereafter as practicable, according to the
provisions of law; and notice thereof shall be given in the manner herein
provided for the annual meeting. Notice of such annual meeting shall be given
by or under the direction of the Secretary or such other officer as may be
designated by the Chief Executive Officer by first-class mail, postage prepaid,
to all shareholders of record of the Bank at their respective addresses as shown
upon the books of the Bank mailed not less than ten days prior to the date fixed
for such meeting.
SECTION 1.02. SPECIAL MEETINGS. A special meeting of the shareholders of this
Bank may be called at any time by the Board of Directors or by any three or more
shareholders owning, in the aggregate, not less than ten percent of the stock of
this Bank. The notice of any special meeting of the shareholders called by the
Board of Directors, stating the time, place and purpose of the meeting, shall be
given by or under the direction of the Secretary, or such other officer as is
designated by the Chief Executive Officer, by first-class mail, postage prepaid,
to all shareholders of
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record of the Bank at their respective addresses as shown upon the books of the
Bank, mailed not less than ten days prior to the date fixed for such meeting.
Any special meeting of shareholders shall be conducted and its proceedings
recorded in the manner prescribed in these By-Laws for annual meetings of
shareholders.
SECTION 1.03. SECRETARY OF SHAREHOLDERS' MEETING. The Board of Directors may
designate a person to be the Secretary of the meetings of shareholders. In the
absence of a presiding officer, as designated in these By-Laws, the Board of
Directors may designate a person to act as the presiding officer. In the event
the Board of Directors fails to designate a person to preside at a meeting of
shareholders and a Secretary of such meeting, the shareholders present or
represented shall elect a person to preside and a person to serve as Secretary
of the meeting.
The Secretary of the meetings of shareholders shall cause the returns made
by the judges and election and other proceedings to be recorded in the minute
book of the Bank. The presiding officer shall notify the directors-elect of
their election and to meet forthwith for the organization of the new board.
The minutes of the meeting shall be signed by the presiding officer and the
Secretary designated for the meeting.
SECTION 1.04. JUDGES OF ELECTION. The Board of Directors may appoint as many
as three shareholders to be judges of the election, who shall hold and conduct
the same, and who shall, after the election has been held, notify, in writing
over their signatures, the secretary of the shareholders' meeting of the result
thereof and the names of the Directors elected; provided, however, that upon
failure for any reason of any judge or judges of election, so appointed by the
directors, to serve, the presiding officer of the meeting shall appoint other
shareholders or their proxies to fill the vacancies. The judges of election at
the request of the chairman of the
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meeting, shall act as tellers of any other vote by ballot taken at such meeting,
and shall notify, in writing over their signatures, the secretary of the Board
of Directors of the result thereof.
SECTION 1.05. PROXIES. In all elections of Directors, each shareholder of
record, who is qualified to vote under the provisions of Federal Law, shall have
the right to vote the number of shares of record in his name for as many persons
as there are Directors to be elected, or to cumulate such shares as provided by
Federal Law. In deciding all other questions at meetings of shareholders, each
shareholder shall be entitled to one vote on each share of stock of record in
his name. Shareholders may vote by proxy duly authorized in writing. All
proxies used at the annual meeting shall be secured for that meeting only, or
any adjournment thereof, and shall be dated, and if not dated by the
shareholder, shall be dated as of the date of receipt thereof. No officer or
employee of this Bank may act as proxy.
SECTION 1.06. QUORUM. Holders of record of a majority of the shares of the
capital stock of the Bank, eligible to be voted, present either in person or by
proxy, shall constitute a quorum for the transaction of business at any meeting
of shareholders, but shareholders present at any meeting and constituting less
than a quorum may, without further notice, adjourn the meeting from time to time
until a quorum is obtained. A majority of the votes cast shall decide every
question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
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ARTICLE II
DIRECTORS
SECTION 2.01. MANAGEMENT OF THE BANK. The business of the Bank shall be
managed by the Board of Directors. Each director of the Bank shall be the
beneficial owner of a substantial number of shares of BANC ONE CORPORATION and
shall be employed either in the position of Chief Executive Officer or active
leadership within his or her business, professional or community interest which
shall be located within the geographic area in which the Bank operates, or as an
executive officer of the Bank. A director shall not be eligible for nomination
and re-election as a director of the Bank if such person's executive or
leadership position within his or her business, professional or community
interests which qualifies such person as a director of Bank terminates. The age
of 70 is the mandatory retirement age as a director of the Bank. When a
person's eligibility as director of the Bank terminates, whether because of
change in share ownership, position, residency or age, within 30 days after such
termination, such person shall submit his resignation as a director to be
effective at the pleasure of the Board provided, however, that in no event shall
such person be nominated or elected as a director. Provided, however, following
a person's retirement or resignation as a director because of the age
limitations herein set forth with respect to election or re-election as a
director, such person may, in special or unusual circumstances, and at the
discretion of the Board, be elected by the directors as a Director Emeritus of
the Bank for a limited period of time. A Director Emeritus shall have the right
to participate in board meetings but shall be without the power to vote and
shall be subject to re-election by the Board at its organizational meeting
following the Bank's annual meeting of shareholders.
SECTION 2.02. QUALIFICATIONS. Each director shall have the qualification
prescribed by law. No person elected a director may exercise any of the powers
of his office until he has taken the oath of such office.
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SECTION 2.03. TERM OF OFFICE/VACANCIES. A director shall hold office until the
annual meeting for the year in which his term expires and until his successor
shall be elected and shall qualify, subject, however, to his prior death,
resignation, or removal from office. Whenever any vacancy shall occur among the
directors, the remaining directors shall constitute the directors of the Bank
until such vacancy is filled by the remaining directors, and any director so
appointed shall hold office for the unexpired term of his or her successor.
Notwithstanding the foregoing, each director shall hold office and serve at the
pleasure of the Board.
SECTION 2.04. ORGANIZATION MEETING. The directors elected by the share-
holders shall meet for organization of the new board at the time fixed by the
presiding officer of the annual meeting. If at the time fixed for such meeting
there is no quorum present, the Directors in attendance may adjourn from time to
time until a quorum is obtained. A majority of the number of Directors elected
by the shareholders shall constitute a quorum for the transaction of business.
SECTION 2.05. REGULAR MEETINGS. The regular meetings of the Board of Directors
shall be held on the third Monday of each calendar month excluding March and
July, which meeting will be held at 4:00 p.m. When any regular meeting of the
Board falls on a holiday, the meeting shall be held on such other day as the
Board may previously designate or should the Board fail to so designate, on such
day as the Chairman of the Board of President may fix. Whenever a quorum is not
present, the directors in attendance shall adjourn the meeting to a time not
later than the date fixed by the Bylaws for the next succeeding regular meeting
of the Board.
SECTION 2.06. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held at the call of the Chairman of the Board or President, or at the
request of two or more Directors. Any special meeting may be held at such place
in Franklin County, Ohio, and at such time as may be fixed in the call. Written
or oral notice shall be given to each Director not later than the day next
preceding the day on which special meeting is to be held, which notice may be
waived in writing.
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The presence of a Director at any meeting of the Board shall be deemed a waiver
of notice thereof by him. Whenever a quorum is not present the Directors in
attendance shall adjourn the special meeting from day to day until a quorum is
obtained.
SECTION 2.07. QUORUM. A majority of the Directors shall constitute a quorum at
any meeting, except when otherwise provided by law; but a lesser number may
adjourn any meeting, from time-to-time, and the meeting may be held, as
adjourned, without further notice. When, however, less than a quorum as herein
defined, but at least one-third and not less than two of the authorized number
of Directors are present at a meeting of the Directors, business of the Bank may
be transacted and matters before the Board approved or disapproved by the
unanimous vote of the Directors present.
SECTION 2.08. COMPENSATION. Each member of the Board of Directors shall
receive such fees for, and transportation expenses incident to, attendance at
Board and Board Committee Meetings and such fees for service as a Director
irrespective of meeting attendance as from time to time are fixed by resolution
of the Board; provided, however, that payment hereunder shall not be made to a
Director for meetings attended and/or Board service which are not for the Bank's
sole benefit and which are concurrent and duplicative with meetings attended or
board service for an affiliate of the Bank for which the Director receives
payment; and provided further, that payment hereunder shall not be made in the
case of any Director in the regular employment of the Bank or of one of its
affiliates.
SECTION 2.09. EXECUTIVE COMMITTEE. There shall be a standing committee of the
Board of Directors known as the Executive Committee which shall possess and
exercise, when the Board is not in session, all powers of the Board that may
lawfully be delegated. The Executive Committee shall also exercise the powers
of the Board of Directors in accordance with the Provisions of the "Employees
Retirement Plan" and the "Agreement and Declaration of Trust" as the same now
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exist or may be amended hereafter. The Executive Committee shall consist of
not fewer than four board members, including the Chairman of the Board and
President of the Bank, one of whom, as hereinafter required by these By-laws,
shall be the Chief Executive Officer. The other members of the Committee
shall be appointed by the Chairman of the Board or by the President, with the
approval of the Board and shall continue as members of the Executive
Committee until their successors are appointed, provided, however, that any
member of the Executive Committee may be removed by the Board upon a majority
vote thereof at any regular or special meeting of the Board. The Chairman or
President shall fill any vacancy in the Committee by the appointment of
another Director, subject to the approval of the Board of Directors. The
regular meetings of the Executive Committee shall be held on a regular basis
as scheduled by the Board of Directors. Special meetings of the Executive
Committee shall be held at the call of the Chairman or President or any two
members thereof at such time or times as may be designated. In the event of
the absence of any member or members of the Committee, the presiding member
may appoint a member or members of the Board to fill the place or places of
such absent member or members to serve during such absence. Not fewer than
three members of the Committee must be present at any meeting of the
Executive Committee to constitute a quorum, provided, however that with
regard to any matters on which the Executive Committee shall vote, a majority
of the Committee members present at the meeting at which a vote is to be
taken shall not be officers of the Bank and, provided further, that if, at
any meeting at which the Chairman of the Board and President are both
present, Committee members who are not officers are not in the majority, then
the Chairman of the Board or President, which ever of such officers is not
also the Chief Executive Officer, shall not be eligible to vote at such
meeting and shall not be recognized for purposes of determining if a quorum
is present at such meeting. When neither the Chairman of the Board nor
President are present, the Committee shall appoint a presiding officer. The
Executive Committee shal keep a record of its proceedings and report its
proceedings and the action taken by it to the Board of Directors.
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SECTION 2.10 COMMUNITY REINVESTMENT ACT AND COMPLIANCE POLICY COMMITTEE. There
shall be a standing committee of the Board of Directors known as the Community
Reinvestment Act and Compliance Policy Committee the duties of which shall be,
at least once in each calendar year, to review, develop and recommend policies
and programs related to the Bank's Community Reinvestment Act Compliance and
regulatory compliance with all existing statutes, rules and regulations
affecting the Bank under state and federal law. Such Committee shall provide
and promptly make a full report of such review of current Bank policies with
regard to Community Reinvestment Act and regulatory compliance in writing to the
Board, with recommendations, if any, which may be necessary to correct any
unsatisfactory conditions. Such Committee may, in its discretion, in fulfilling
its duties, utilize the Community Reinvestment Act officers of the Bank, Banc
One Ohio Corporation and Banc One Corporation and may engage outside Community
Reinvestment Act experts, as approved by the Board, to review, develop and
recommend policies and programs as herein required. The Community Reinvestment
Act and regulatory compliance policies and procedures established and the
recommendations made shall be consistent with, and shall supplement, the
Community Reinvestment Act and regulatory compliance programs, policies and
procedures of Banc One Corporation and Banc One Ohio Corporation. The Community
Reinvestment Act and Compliance Policy Committee shall consist of not fewer than
four board members, one of whom shall be the Chief Executive Officer and a
majority of whom are not officers of the Bank. Not fewer than three members of
the Committee, a majority of whom are not officers of the Bank, must be present
to constitute a quorum. The Chairman of the Board or President of the Bank,
whichever is not the Chief Executive Officer, shall be an ex officio member of
the Community Reinvestment Act and Compliance Policy Committee. The Community
Reinvestment Act and Compliance Policy Committee, whose chairman shall be
appointed by the Boad, shall keep a record of its proceedings and report its
proceedings and the action taken by it to the Board of Directors.
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SECTION 2.11. TRUST COMMITTEES. There shall be two standing Committees known
as the Trust Management Committee and the Trust Examination Committee appointed
as hereinafter provided.
SECTION 2.12. OTHER COMMITTEES. The Board of Directors may appoint such
special committees from time to time as are in its judgment necessary in the
interest of the Bank.
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ARTICLE III
OFFICERS, MANAGEMENT STAFF AND EMPLOYEES
SECTION 3.01. OFFICERS AND MANAGEMENT STAFF.
(a) The officers of the Bank shall include a President, Secretary and
Security Officer and may include a Chairman of the Board, one or more
Vice Chairmen, one or more Vice Presidents (which may include one or
more Executive Vice Presidents and/or Senior Vice Presidents) and one
or more Assistant Secretaries, all of whom shall be elected by the
Board. All other officers may be elected by the Board or appointed in
writing by the Chief Executive Officer. The salaries of all officers
elected by the Board shall be fixed by the Board. The Board from
time-to-time shall designate the President or Chairman of the Board to
serve as the Bank's Chief Executive Officer.
(b) The Chairman of the Board, if any, and the President shall be elected
by the Board from their own number. The President and Chairman of the
Board shall be re-elected by the Board annually at the organizational
meeting of the Board of Directors following the Annual Meeting of
Shareholders. Such officers as the Board shall elect from their own
number shall hold office from the date of their election as officers
until the organization meeting of the Board of Directors following the
next Annual Meeting of Shareholders, provided, however, that such
officers may be relieved of their duties at any time by action of the
Board in which event all the powers incident to their office shall
immediately terminate.
(c) Except as provided in the case of the elected officers who are members
of the Board, all officers, whether elected or appointed, shall hold
office at the pleasure of the Board. Except as otherwise limited by
law or these By-laws, the Board assigns to Chief Executive Officer
and/or his
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designees the authority to appoint and dismiss any elected or
appointed officer or other member of the Bank's management staff and
other employees of the Bank, as the person in charge of and
responsible for any branch office, department, section, operation,
function, assignment or duty in the Bank.
(d) The management staff of the Bank shall include officers elected by the
Board, officers appointed by the Chief Executive Officer, and such
other persons in the employment of the Bank who, pursuant to written
appointment and authorization by a duly authorized officer of the
Bank, perform management functions and have management
responsibilities. Any two or more offices may be held by the same
person except that no person shall hold the office of Chairman of the
Board and/or President and at the same time also hold the office of
Secretary.
(e) The Chief Executive Officer of the Bank and any other officer of the
Bank, to the extent that such officer is authorized in writing by the
Chief Executive Officer, may appoint persons other than officers who
are in the employment of the Bank to serve in management positions and
in connection therewith, the appointing officer may assign such title,
salary, responsibilities and functions as are deemed appropriate by
him, provided, however, that nothing contained herein shall be
construed as placing any limitation on the authority of the Chief
Executive Officer as provided in this and other sections of these
By-Laws.
SECTION 3.02. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the Bank
shall have general and active management of the business of the Bank and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. Except as otherwise prescribed or limited by these By-Laws, the Chief
Executive Officer shall have full right, authority and power to control all
personnel, including elected and appointed officers, of the Bank, to employ or
direct the
-20-
<PAGE>
employment of such personnel and officers as he may deem necessary, including
the fixing of salaries and the dismissal of them at pleasure, and to define
and prescribe the duties and responsibility of all Officers of the Bank,
subject to such further limitations and directions as he may from
time-to-time deem proper. The Chief Executive Officer shall perform all
duties incident to his office and such other and further duties, as may, from
time-to-time, be required of him by the Board of Directors or the
shareholders. The specification of authority in these By-Laws wherever and
to whomever granted shall not be construed to limit in any manner the general
powers of delegation granted to the Chief Executive Officer in conducting the
business of the Bank. The Chief Executive Officer or, in his absence, the
Chairman of the Board or President of the Bank, as designated by the Chief
Executive Officer, shall preside at all meetings of shareholders and meetings
of the Board. In the absence of the Chief Executive Officer, such officer as
is designated by the Chief Executive Officer shall be vested with all the
powers and perform all the duties of the Chief Executive Officer as defined
by these By-Laws. When designating an officer to serve in his absence, the
Chief Executive Officer shall select an officer who is a member of the Board
of Directors whenever such officer is available.
SECTION 3.03. POWERS OF OFFICERS AND MANAGEMENT STAFF. The Chief Executive
Officer, the Chairman of the Board, the President, and those officers so
designated and authorized by the Chief Executive Officer are authorized for an
on behalf of the Bank, and to the extent permitted by law, to make loans and
discounts; to purchase or acquire drafts, notes, stock, bonds, and other
securities for investment of funds held by the Bank; to execute and purchase
acceptances; to appoint, empower and direct all necessary agents and attorneys;
to sign and give any notice required to be given; to demand payment and/or to
declare due for any default any debt or obligation due or payable to the Bank
upon demand or authorized to be declared due; to foreclose any mortgages, to
exercise any option, privilege or election to forfeit, terminate, extend or
renew any lease; to authorize and direct any proceedings for the collection of
any money or for the enforcement
-21-
<PAGE>
of any right or obligation; to adjust, settle and compromise all claims of every
kind and description in favor of or against the Bank, and to give receipts,
releases and discharges therefor; to borrow money and in connection therewith to
make, execute and deliver notes, bonds or other evidences of indebtedness; to
pledge or hypothe- cate any securities or any stocks, bonds, notes or any
property real or personal held or owned by the Bank, or to rediscount any notes
or other obligations held or owned by the Bank, to employ or direct the
employment of all personnel, including elected and appointed officers, and the
dismissal of them at pleasure, and in furtherance of and in addition to the
powers hereinabove set forth to do all such acts and to take all such
proceedings as in his judgment are necessary and incidental to the operation of
the Bank.
Other persons in the employment of the Bank, including but not limited to
officers and other members of the management staff, may be authorized by the
Chief Executive Officer, or by an officer so designated and authorized by the
chief Executive Officer, to perform the powers set forth above, subject,
however, to such limitations and conditions as are set forth in the
authorization given to such persons.
SECTION 3.04. SECRETARY. The Secretary or such other officers as may be
designated by the Chief Executive Officer shall have supervision and control of
the records of the Bank and, subject to the direction of the Chief Executive
Officer, shall undertake other duties and functions usually performed by a
corporate secretary. Other officers may be designated by the Chief Executive
Officer or the Board of Directors as Assistant Secretary to perform the duties
of the Secretary.
SECTION 3.05. EXECUTION OF DOCUMENTS. The Chief Executive Officer, Chairman
of the Board, President, any officer being a member of the Bank's management
staff who is also a person in charge of and responsible for any department
within the Bank and any other officer to the extent such officer is so
designated and authorized by the Chief Executive Officer, the Chairman of the
Board, the President, or any other officer who is a member of the Bank's
management staff who is in charge of and responsible for any department
within the
-22-
<PAGE>
Bank, are hereby authorized on behalf of the Bank to sell, assign, lease,
mortgage, transfer, deliver and convey any real or personal property now or
hereafter owned by or standing in the name of the Bank or its nominee, or held
by this Bank as collateral security, and to execute and deliver such deeds,
contracts, leases, assignments, bills of sale, transfers or other papers or
documents as may be appropriate in the circumstances; to execute any loan
agreement, security agreement, commitment letters and financing statements and
other documents on behalf of the Bank as a lender; to execute purchase orders,
documents and agreements entered into by the Bank in the ordinary course of
business, relating to purchase, sale, exchange or lease of services, tangible
personal property, materials and equipment for the use of the Bank; to execute
powers of attorney to perform specific or general functions in the name of or on
behalf of the Bank; to execute promissory notes or other instruments evidencing
debt of the Bank; to execute instruments pledging or releasing securities for
public funds, documents submitting public fund bids on behalf of the Bank and
public fund contracts; to purchase and acquire any real or personal property
including loan portfolios and to execute and deliver such agreements, contracts
or other papers or documents as may be appropriate in the circumstances; to
execute any indemnity and fidelity bonds, proxies or other papers or documents
of like or different character necessary, desirable or incidental to the conduct
of its banking business; to execute and deliver settlement agreements or other
papers or documents as may be appropriate in connection with a dismissal
authorized by Section 3.01(c) of these By-laws; to execute agreements,
instruments, documents, contracts or other papers of like or difference
character necessary, desirable or incidental to the conduct of its banking
business; and to execute and deliver partial releases from and discharges or
assignments of mortgages, financing statements and assignments or surrender of
insurance policies, now or hereafter held by this Bank.
The Chief Executive Officer, Chairman of the Board, President, any officer
being a member of the Bank's management staff who is also a person in charge of
and responsible for any department within the Bank, and any other officer of the
Bank so designated and authorized by the Chief Executive Officer, Chairman of
the Board, President or any officer who is a member of the Bank's management
staff who is in charge of and responsible for any department within the Bank are
authorized for and
-23-
<PAGE>
on behalf of the Bank to sign and issue checks, drafts, and certificates of
deposit; to sign and endorse bills of exchange, to sign and countersign foreign
and domestic letters of credit, to receive and receipt for payments of
principal, interest, dividends, rents, fees and payments of every kind and
description paid to the Bank, to sign receipts for property acquired by or
entrusted to the Bank, to guarantee the genuineness of signatures on assignments
of stocks, bonds or other securities, to sign certifications of checks, to
endorse and deliver checks, drafts, warrants, bills, notes, certificates of
deposit and acceptances in all business transactions of the Bank.
Other persons in the employment of the Bank and of its subsidiaries,
including but not limited to officers and other members of the management staff,
may be authorized by the Chief Executive Officer, Chairman of the Board,
President or by an officer so designated by the Chief Executive Officer,
Chairman of the Board, or President to perform the acts and to execute the
documents set forth above, subject, however, to such limitations and conditions
as are contained in the authorization given to such person.
SECTION 3.06. PERFORMANCE BOND. All officers and employees of the Bank shall
be bonded for the honest and faithful performance of their duties for such
amount as may be prescribed by the Board of Directors.
-24-
<PAGE>
ARTICLE IV
TRUST DEPARTMENT
SECTION 4.01. TRUST DEPARTMENT. Pursuant to the fiduciary powers granted to
this Bank under the provisions of Federal Law and Regulations of the Comptroller
of the Currency, there shall be maintained a separate Trust Department of the
Bank, which shall be operated in the manner specified herein.
SECTION 4.02. TRUST MANAGEMENT COMMITTEE. There shall be a standing Committee
known as the Trust Management Committee, consisting of at least five members, a
majority of whom shall not be officers of the Bank. The Committee shall consist
of the Chairman of the Board who shall be Chairman of the Com- mittee, the
President, and at least three other Directors appointed by the Board of
Directors and who shall continue as members of the Committee until their
successors are appointed. Any vacancy in the Trust Management Committee may be
filled by the Board at any regular or special meeting. In the event of the
absence of any member or members, such Committee may, in its discretion, appoint
members of the Board to fill the place of such absent members to serve during
such absence. Three members of the Committee shall constitute a quorum. Any
member of the Committee may be removed by the Board by a majority vote at any
regular or special meeting of the Board. The Committee shall meet at such times
as it may determine or at the call of the Chairman, or President or any two
members thereof.
The Trust Management Committee, under the general direction of the Board of
Directors, shall supervise the policy of the Trust Department which shall be
formulated and executed in accordance with Law, Regulations of the Comptroller
of the Currency, and sound fiduciary principles.
-25-
<PAGE>
SECTION 4.03. TRUST EXAMINATION COMMITTEE. There shall be a standing Commit-
tee known as the Trust Examination Committee, consisting of three directors
appointed by the Board of Directors and who shall continue as members of the
committee until their successors are appointed. Such members shall not be
active officers of the Bank. Two members of the Committee shall constitute a
quorum. Any member of the Committee may be removed by the Board by a majority
vote at any regular or special meeting of the Board. The Committee shall meet
at such times as it may determine or at the call of two members thereof.
This Committee shall, at least once during each calendar year and within
fifteen months of the last such audit, or at such other time(s) as may be
required by Regulations of the Comptroller of the Currency, make suitable audits
of the Trust Department or cause suitable audits to be made by auditors
responsible only to the Board of Directors, and at such time shall ascertain
whether the Department has been administered in accordance with Law, Regulations
of the Comptroller of the Currency and sound fiduciary principles.
The Committee shall promptly make a full report of such audits in writing
to the Board of Directors of the Bank, together with a recommendation as to what
action, if any, may be necessary to correct any unsatisfactory condition. A
report of the audits together with the action taken thereon shall be noted in
the Minutes of the Board of Directors and such report shall be a part of the
records of this Bank.
SECTION 4.04. MANAGEMENT. The Trust Department shall be under the management
and supervision of an officer of the Bank or of the trust affiliate of the Bank
designated by and subject to the advice and direction of the Chief Executive
Officer. Such officer having supervisory responsibility over the Trust
Department shall do or cause to be done all things necessary or proper in
carrying on the business of the Trust Department in accordance with provisions
of law and applicable regulations.
-26-
<PAGE>
SECTION 4.05. HOLDING OF PROPERTY. Property held by the Trust Department may
be carried in the name of the Bank in its fiduciary capacity, in the name of
Bank, or in the name of a nominee or nominees.
SECTION 4.06. TRUST INVESTMENTS. Funds held by the Bank in a fiduciary
capacity awaiting investment or distribution shall not be held uninvested or
undistributed any longer than is reasonable for the proper management of the
account and shall be invested in accordance with the instrument establishing a
fiduciary relationship and local law. Where such instrument does not specify
the character or class of investments to be made and does not vest in the Bank
any discretion in the matter, funds held pursuant to such instrument shall be
invested in any investment which corporate fiduciaries may invest under local
law.
The investments of each account in the Trust Department shall be kept
separate from the assets of the Bank, and shall be placed in the joint custody
or control of not less than two of the officers or employees of the Bank or of
the trust affiliate of the Bank designated for the purpose by the Trust
Management Committee.
SECTION 4.07. EXECUTION OF DOCUMENTS. The Chief Executive Officer, Chairman of
the Board, President, any officer of the Trust Department, and such other
officers of the trust affiliate of the Bank as are specifically designated and
authorized by the Chief Executive Officer, the President, or the officer in
charge of the Trust Department, are hereby authorized, on behalf of this Bank,
to sell, assign, lease, mortgage, transfer, deliver and convey any real property
or personal property and to purchase and acquire any real or personal property
and to execute and deliver such agreements, contracts, or other papers and
documents as may be appropriate in the circumstances for property now or
hereafter owned by or standing in the name of this Bank, or its nominee, in any
fiduciary capacity, or in the name of any principal for whom this Bank may now
or hereafter be acting under a power of attorney, or as agent and to execute and
deliver partial releases from
-27-
<PAGE>
any discharges or assignments or mortgages and assignments or surrender of
insurance policies, to execute and deliver deeds, contracts, leases,
assignments, bills of sale, transfers or such other papers or documents as may
be appropriate in the circumstances for property now or hereafter held by this
Bank in any fiduciary capacity or owned by any principal for whom this Bank may
now or hereafter be acting under a power of attorney or as agent; to execute and
deliver settlement agreements or other papers or documents as may be appropriate
in connection with a dismissal authorized by Section 3.01(c) of these By-laws;
provided that the signature of any such person shall be attested in each case by
any officer of the Trust Department or by any other person who is specifically
authorized by the Chief Executive Officer, the President or the officer in
charge of the Trust Department.
The Chief Executive Officer, Chairman of the Board, President, any officer
of the Trust Department and such other officers of the trust affiliate of the
Bank as are specifically designated and authorized by the Chief Executive
Officer, the President, or the officer in charge of the Trust Department, or any
other person or corporation as is specifically authorized by the Chief Executive
Officer, the President or the officer in charge of the Trust Department, are
hereby authorized on behalf of this Bank, to sign any and all pleadings and
papers in probate and other court proceedings, to execute any indemnity and
fidelity bonds, trust agreements, proxies or other papers or documents of like
or different character necessary, desirable or incidental to the appointment of
the Bank in any fiduciary capacity and the conduct of its business in any
fiduciary capacity; also to foreclose any mortgage, to execute and deliver
receipts for payments of principal, interest, dividends, rents, fees and
payments of every kind and description paid to the Bank; to sign receipts for
property acquired or entrusted to the Bank; also to sign stock or bond
certificates on behalf of this Bank in any fiduciary capacity and on behalf of
this Bank as transfer agent or registrar; to guarantee the genuineness of
signatures on assignments of stocks, bonds or other securities, and to
authenticate bonds, debentures, land or lease trust certificates or other forms
of security issued pursuant to any indenture under which this Bank now or
hereafter is acting as
-28-
<PAGE>
Trustee. Any such person, as well as such other persons as are specifically
authorized by the Chief Executive Officer or the officer in charge of the Trust
Department, may sign checks, drafts and orders for the payment of money executed
by the Trust Department in the course of its business.
SECTION 4.08. VOTING OF STOCK. The Chairman of the Board, President, any
officer of the Trust Department, any officer of the trust affiliate of the Bank
and such other persons as may be specifically authorized by Resolution of the
Trust Management Committee or the Board of Directors, may vote shares of stock
of a corporation of record on the books of the issuing company in the name of
the Bank or in the name of the Bank as fiduciary, or may grant proxies for the
voting of such stock of the granting if same is permitted by the instrument
under which the Bank is acting in a fiduciary capacity, or by the law applicable
to such fiduciary account. In the case of shares of stock which are held by a
nominee of the Bank, such shares may be voted by such person(s) authorized by
such nominee.
-29-
<PAGE>
ARTICLE V
STOCKS AND STOCK CERTIFICATES
SECTION 5.01. STOCK CERTIFICATES. The shares of stock of the Bank shall be
evidenced by certificates which shall bear the signature of the Chairman of the
Board, the President, or a Vice President (which signature may be engraved,
printed or impressed), and shall be signed manually by the Secretary, or any
other officer appointed by the Chief Executive Officer for that purpose.
In case any such officer who has signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such before such
certificate is issued, it may be issued by the Bank with the same effect as if
such officer had not ceased to be such at the time of its issue. Each such
certificate shall bear the corporate seal of the Bank, shall recite on its fact
that the stock represented thereby is transferable only upon the books of the
Bank properly endorsed and shall recite such other information as is required by
law and deemed appropriate by the Board. The corporate seal may be facsimile
engraved or printed.
SECTION 5.02. STOCK ISSUE AND TRANSFER. The shares of stock of the Bank shall
be transferable only upon the stock transfer books of the Bank and except as
hereinafter provided, no transfer shall be made or new certificates issued
except upon the surrender for cancellation of the certificate or certificates
previously issued therefor. In the case of the loss, theft, or destruction of
any certificate, a new certificate may be issued in place of such certificate
upon the furnishing of any affidavit setting forth the circumstances of such
loss, theft, or destruction and indemnity satisfactory to the Chairman of the
Board, the President, or a Vice President. The Board of Directors, or the Chief
Executive Officer, may authorize the issuance of a new certificate therefor
without the furnishing of indemnity. Stock Transfer Books, in which all
transfers of stock shall be recorded, shall be provided.
-30-
<PAGE>
The stock transfer books may be closed for a reasonable period and under
such conditions as the Board of Directors may at any time determine for any
meeting of shareholders, the payment of dividends or any other lawful purpose.
In lieu of closing the transfer books, the Board may, in its discretion, fix a
record date and hour constituting a reasonable period prior to the day
designated for the holding of any meeting of the shareholders or the day
appointed for the payment of any dividend or for any other purpose at the time
as of which shareholders entitled to notice of and to vote at any such meeting
or to receive such dividend or to be treated as shareholders for such other
purpose shall be determined, and only shareholders of record at such time shall
be entitled to notice of or to vote at such meeting or to receive such dividends
or to be treated as shareholders for such other purpose.
-31-
<PAGE>
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. SEAL. The impression made below is an impression of the seal
adopted by the Board of Directors of BANK ONE, NA f/k/a Bank One, Columbus, NA.
The Seal may be affixed by any officer of the Bank to any document executed by
an authorized officer on behalf of the Bank, and any officer may certify any
act, proceedings, record, instrument or authority of the Bank.
SECTION 6.02. BANKING HOURS. Subject to ratification by the Executive
Committee, the Bank and each of its Branches shall be open for business on such
days and during such hours as the Chief Executive Officer of the Bank shall,
from time to time, prescribe.
SECTION 6.03. MINUTE BOOK. The organization papers of this Bank, the Articles
of Association, the returns of the judges of elections, the By-Laws and any
amendments thereto, the proceedings of all regular and special meetings of the
shareholders and of the Board of Directors, and reports of the committees of the
Board of Directors shall be recorded in the minute book of the Bank. The
minutes of each such meeting shall be signed by the presiding Officer and
attested by the secretary of the meetings.
SECTION 6.04. AMENDMENT OF BY-LAWS. These By-Laws may be amended by vote of a
majority of the Directors.
-32-
<PAGE>
EXHIBIT 6
Securities and Exchange Commission
Washington, D.C. 20549
CONSENT
The undersigned, designated to act as Trustee under the Indenture for Madison
Gas and Electric Company described in the attached Statement of Eligibility and
Qualification, does hereby consent that reports of examinations by Federal,
State, Territorial, or District Authorities may be furnished by such authorities
to the Commission upon the request of the Commission.
This Consent is given pursuant to the provision of Section 321(b) of the Trust
Indenture Act of 1939, as amended.
Bank One, NA
Dated: July 22, 1998 By: /s/ David Knox
----------------------------
Authorized Signer
-33-
<PAGE>
[LETTERHEAD]
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
- --------------------------------------------------------------------------------
Please refer to page 1, 1
[LOGO] Table of Contents, for ---
the required disclosure
of estimated burden.
- --------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND
FOREIGN OFFICES -- FFIEC 031
REPORT AT THE CLOSE OF BUSINESS MARCH 31, 1998
(980331)
- ----------
(RCRI 9999)
This report is required by law: 12. U.S.C. Section 324 (State member banks); 12
U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161 (National
banks).
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I, C. William Willen, Vice-President
----------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that the Reports of Condition and Income
(including the supporting schedules) for this report date have been prepared in
conformance with the instructions issued by the appropriate Federal regulatory
authority and are true to the best of my knowledge and belief.
/s/ C. William Willen
- ------------------------------------------------------
Signature of Officer Authorized to Sign Report
April 30, 1998
- ------------------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.
We, the undersigned directors (trustees), attest to the correctness of the
Report of Condition (including the supporting schedules) for this report date
and declare that it has been examined by us and to the best of our knowledge and
belief has been prepared in conformance with the instructions issued by the
appropriate Federal regulatory authority and is true and correct.
/s/ Frederick L. Cullen
- ------------------------------------------------------
Director (Trustee)
/s/ David P. Lauer
- ------------------------------------------------------
Director (Trustee)
/s/ William M. Bennett
- ------------------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
SUBMISSION OF REPORTS
Each bank must prepare its Reports of Condition and Income either:
(a) in electronic form and then file the computer data file directly with
the banking agencies' collection agent, Electronic Data Systems Corporation
(EDS), by modem or on computer diskette; or
(b) in hard-copy (paper) form and arrange for another party to convert the
paper report to electronic form. That party (if other than EDS) must
transmit the bank's computer data file to EDS.
To fulfill the signature and attestation requirement for the Reports of
Condition and Income for this report date, attach this signature page to the
hard-copy record of the completed report that the bank places in its files.
- --------------------------------------------------------------------------------
FDIC Certificate Number
---------
(RCRI 9999)
CALL NO. 203 01 03 31 98
STEK: 39-1580 00099 STCERT: 39-06559
BANK ONE, NATIONAL ASSOCIATION
100 EAST BROAD STREET, OH1-0121
COLUMBUS, OH 43271
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
[LETTERHEAD] 12
SCHEDULE RC - CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
<S> <C> <C> <C> <C> <C>
13. DEPOSITS:
a. In domestic offices (sum of totals of columns A and C from schedule RCON
------------------
RC-E, part I) RCON 2200 15,013,853 13.a
-------------------------------------------- ---------------- -------------
(1) Noninterest-bearing(1) 6631 3,550,812 13.a.1
-------------------------------------------- -----------
(2) Interest-bearing 6638 11,463,041 13.a.2
----------------------------------------------------- -----------
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from RCFN
------------------
Schedule RC-E, part II) RCFN 2200 1,251,180 13.b
-------------------------------------------------- ---------------- -------------
(1) Noninterest-bearing 6831 0 13.b1
-------------------------------------------------- -----------
(2) Interest-bearing 6836 1,251,180 RCFD 13.b2
----------------------------------------------------- ----------- ------------------
14. Federal funds purchased and securities sold under agreements to repurchase 2800 1,932,651 14
------------------- -------------
RCON
------------------
15. a. Demand notes issued to the U.S. Treasury 2840 48,512 15.a
--------------------------------------------------- -------------
------------------
b. Trading liabilities (from Schedule RC-D) 3548 0 15.b
--------------------------------------------------- -------------
16. Other borrowed money (includes mortgage indebtedness an
obligations under capitalized leases):
-------------
a. With a remaining maturity of one year or less 2332 1,416,753 16.a
---------------------------------------------- -------------
b. With a remaining maturity of more than one year through three years A547 470,997 16.b
------------------------ -------------
c. With a remaining maturity of more than three years A548 839,840 16.c
----------------------------------------- -------------
17. Not applicable
-------------
18. Bank's liability on acceptances executed and outstanding 2920 3,827 18
------------------------------------- -------------
19. Subordinated notes and debentures(2) 3200 729,193 19
-------------------------------------------------------- -------------
20. Other liabilities (from Schedule RC-G) 2930 1,038,774 20
------------------------------------------------------- -------------
21. Total liablities (sum of items 13 through 20) 2948 22,544,580 21
------------------------------------------------ -------------
22. Not applicable
EQUITY CAPITAL
-------------
23. Perpetual stock and related surplus 3838 0 23
---------------------------------------------------------- -------------
24. Common stock 3230 127,043 24
--------------------------------------------------------------------------------- -------------
25. Surplus (exlcude all surplus related to preferred stock) 3839 738,352 25
------------------------------------- -------------
26. a. Undivided profits and capital reserves 3832 1,082,183 26.a
---------------------------------------------------- -------------
b. Net unrealized holding gains (losses) on available-for-sale securities 3434 16,872 26.b
-------------------- -------------
27. Cumulative foreign currency translation adjustments 3284 0 27
------------------------------------------ -------------
28. Total equity capital (sum of lines 23 through 27) 3210 1,964,450 28
-------------------------------------------- -------------
29. Total liabilities and equity captial (sum of items 21 and 28) 3300 24,509,030 29
---------------------------------- -------------
MEMORANDUM
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
1. Indicate in the box at the right the number of the statement below that best describes the RCFD NUMBER
most comprehensive level of auditing work performed for the bank by independent external ------------------
auditors as of any date during 1997 6724 N/A M.1
----------------------------------------------------------- -------------
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statments by external auditors
7 = Other audit procedures (excluding tax preperation work)
8 = No external audit work
- -------------
1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
2) Includes limited-life preferred stock and related surplus.
<PAGE>
[LETTERHEAD]
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1998 11
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC - BALANCE SHEET
<TABLE>
<CAPTION>
C400
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C>
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
------------------
a. Noninterest-bearing balances and currency and coin (1) 0081 1,108,408 1.a
------------------------------------ -------------
b. Interest-bearing balances (2) 0071 1,100 1.b
------------------------------------------------------------- -------------
2. Securities
-------------
a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 153,124 2.a
--------------------------------- -------------
b. Available-for-sale securities (from Schedule RC-B, column D) 1773 2,285,146 2.b
------------------------------- -------------
3. Federal funds sold and securities purchased under agreements to resell 1350 0 3
------------------------ -------------
4. Loans and lease financing receivables: RCFD
-----------------
a. Loans and leases, net of unearned income (from Schedule RC-C) 2122 18,887,996 4.a
------------ ------------
b. LESS: Allowance for loan and lease losses 3123 422,079 4.b
-------------------------------- ------------
c. LESS: Allocated transfer risk reserve 3128 0 4.c
------------------------------------ ------------
d. Loans and leases, net of unearned income, RCFD
------------------
allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 18,465,917 4.d
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5. Trading assets (from Schedule RC-D) 3545 0 5.
----------------------------------------------------------- -------------
6. Premises and fixed assets (including capitalized leases) 2145 194,830 6.
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7. Other real estate owned (from Schedule RC-M) 2150 9,427 7.
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8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 39,238 8.
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9. Customers' liability to this bank on acceptances outstanding 2155 3,827 9.
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10. Intangible assets (from Schedule RC-M) 2143 140,696 10.
--------------------------------------------------------- -------------
11. Other assets (from Schedule RC-F) 2160 2,107,317 11.
------------------------------------------------------------- -------------
12. Total assets (sum of items 1 through 11) 2170 24,509,030 12.
---------------------------------------------------- -------------
</TABLE>
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(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
