<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MOUNTAIN FUEL SUPPLY COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
UTAH 4924 87-0155877
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
180 EAST FIRST SOUTH STREET
P.O. BOX 45360
SALT LAKE CITY, UTAH 84145
(801) 324-5555
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
GARY G. SACKETT, ESQ.
MOUNTAIN FUEL SUPPLY COMPANY
180 EAST FIRST SOUTH STREET
SALT LAKE CITY, UTAH 84145
(801) 324-5563
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C>
EDMUND C. DUFFY, ESQ. PAUL C. PRINGLE, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP BROWN & WOOD LLP
919 THIRD AVENUE 555 CALIFORNIA STREET
NEW YORK, NEW YORK 10022 SUITE 5000
SAN FRANCISCO, CALIFORNIA 94104
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable from time to time after the effective date of this Registration
Statement as determined in light of market conditions.
------------------------
If the only securities being registered on this form are to be 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
reinvestment plans, check the following box. /x/
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER NOTE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Medium-Term Notes.................... $75,000,000 100%* $75,000,000* $22,728
</TABLE>
* Estimated solely for purposes of calculating the Registration fee.
------------------------
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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.
SUBJECT TO COMPLETION, DATED MAY 28, 1997
PROSPECTUS
$75,000,000
MOUNTAIN FUEL SUPPLY COMPANY
(a subsidiary of Questar Corporation)
MEDIUM-TERM NOTES, SERIES C
DUE FROM NINE MONTHS TO 30 YEARS FROM DATE OF ISSUE
------------------------
Mountain Fuel Supply Company (the 'Company') may offer from time to time up
to $75,000,000 aggregate initial offering amount of its Medium-Term Notes,
Series C (the 'Notes'). Each Note will mature on a Business Day (as hereinafter
defined) from nine months to 30 years from the date of issue, as selected by the
purchaser and agreed to by the Company. Redemption provisions, if any, for each
Note will be established by the Company at the date of issue and will be
specified therein and in the applicable Pricing Supplement hereto (the 'Pricing
Supplement'). Unless otherwise specified in the applicable Pricing Supplement,
the Notes will be issued only in denominations of $1,000 or any amount in excess
thereof which is an integral multiple of $1,000. See 'Description of Medium-Term
Notes.'
The interest rate or interest rate formula applicable to each Note and other
variable terms of the Notes will be established by the Company at the date of
issuance of such Note and will be set forth therein and specified in the
applicable Pricing Supplement. Interest rates, interest rate formulae and such
other variable terms are subject to change by the Company but no change will
affect any Notes already issued or as to which offers to purchase have been
accepted by the Company. Unless otherwise specified in the applicable Pricing
Supplement, each Note will be issued in registered book-entry form (a
'Book-Entry Note') or in fully definitive form (a 'Definitive Note'), as set
forth in the applicable Pricing Supplement. Each Book-Entry Note will be
represented by a global security deposited with or on behalf of The Depository
Trust Company (or such other depositary as is identified in an applicable
Pricing Supplement) (the 'Depositary') and registered in the name of the
Depositary's nominee. Interests in Book-Entry Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depositary (with respect to its participants) and the Depositary's participants
(with respect to beneficial owners).
Unless otherwise indicated in the applicable Pricing Supplement, the Notes
will bear interest at a fixed rate or rates (the 'Fixed Rate Notes'), or at a
rate or rates determined by reference to the Commercial Paper Rate (the
'Commercial Paper Rate Notes'), the Federal Funds Rate (the 'Federal Funds Rate
Notes'), LIBOR (the 'LIBOR Notes'), the Prime Rate (the 'Prime Rate Notes') or
the Treasury Rate (the 'Treasury Rate Notes') as adjusted by the Spread and/or
Spread Multiplier (each as hereinafter defined), if any, applicable to such
Notes. Commercial Paper Rate Notes, LIBOR Notes and Treasury Rate Notes are
collectively referred to herein as 'Floating Rate Notes.' The Company may also
issue Discount Notes. See 'Description of Medium-Term Notes.'
Interest on Fixed Rate Notes will accrue from their date of issue and,
unless otherwise specified in the applicable Pricing Supplement, will be payable
semiannually in arrears on each April 1 and October 1 of each year and at
Maturity. Unless otherwise specified in the applicable Pricing Supplement, the
rate of interest on each Floating Rate Note will be reset monthly, quarterly,
semi-annually or annually, as set forth therein and specified in the applicable
Pricing Supplement, and interest on each Floating Rate Note will accrue from its
date of issue and will be payable in arrears monthly, quarterly, semi-annually
or annually, as set forth therein and specified in the applicable Pricing
Supplement, and at Maturity.
------------------------
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 PRICING SUPPLEMENT HERETO. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[CAPTION]
<TABLE>
PRICE TO AGENTS' DISCOUNTS PROCEEDS TO
PUBLIC (1) AND COMMISSIONS (2)(3) COMPANY (2)(4)
<S> <C> <C> <C>
Per Note.............................. 100% .125%-.750% 99.875%-99.250%
Total................................. $75,000,000 $93,750-$562,500 $74,906,250-$74,437,500
</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes will
be issued at 100% of their principal amount.
(2) The Company will pay a commission to Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Smith Barney Inc. (the 'Agents') in
the form of a discount, ranging from .125% to .750% of the principal amount
of any Note, depending upon its Stated Maturity, sold through such Agent,
and may sell Notes to either Agent, as principal, at a discount for resale
to investors or other purchasers at varying prices related to prevailing
market prices at the time of resale to be determined by such Agent. No
commission will be payable on any sales made directly by the Company.
(3) The Company has agreed to indemnify the Agents against certain liabilities,
including liabilities under the Securities Act of 1933, as amended. See
'Plan of Distribution.'
(4) Before deducting expenses payable by the Company estimated at $225,000.
------------------------
The Notes are being offered on a continuing basis by the Company to or
through the Agents, who have agreed to use their reasonable efforts to solicit
offers to purchase the Notes. The Notes may also be sold by the Company to
either Agent at a discount for resale to one or more investors or other
purchasers at varying prices related to prevailing market prices at the time of
resale, as determined by such Agent. The Company may also sell the Notes
directly to investors on its own behalf in those jurisdictions where it is
authorized to do so or to or through other agents. Unless otherwise specified in
the applicable Pricing Supplement, the Notes will not be listed on any
securities exchange, and there can be no assurance that all of the Notes offered
will be sold or that there will be a secondary market for the Notes. The Company
reserves the right to withdraw, cancel or modify the offer made hereby without
notice. The Company or an Agent, if it solicits the offer, may reject any offer
to purchase Notes in whole or in part. See 'Plan of Distribution.'
------------------------
MERRILL LYNCH & CO. SMITH BARNEY INC.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
'Commission') a Registration Statement on Form S-3 (which term shall encompass
all amendments, exhibits and schedules thereto (the 'Registration Statement'))
under the Securities Act of 1933, as amended (the 'Securities Act'), with
respect to the Notes being offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the Company and the Notes being offered
hereby, reference is hereby made to such Registration Statement, including the
exhibits filed as part thereof.
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 periodic reports and other information with the Commission. The
Registration Statement and the exhibits thereto filed by the Company with the
Commission, as well as the periodic reports and other information so filed under
the Exchange Act, may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as at the following regional offices:
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661;
and 7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048.
Copies of such information may also be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. In addition, such information may be accessed
electronically by means of the Commission's home page on the Internet
(http://www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated into this Prospectus by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1996;
and
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1997.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Notes shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON TO WHOM A COPY OF
THIS PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A
COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE, OTHER THAN
EXHIBITS TO SUCH DOCUMENTS. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO:
CORPORATE SECRETARY, MOUNTAIN FUEL SUPPLY COMPANY, 180 EAST FIRST SOUTH STREET,
SALT LAKE CITY, UTAH 84145; TELEPHONE (801) 324-5202.
In connection with an offering of Notes purchased by one or more Agents as
principal on a fixed offering price basis, such Agent(s) may engage in
transactions that stabilize, maintain or otherwise affect the market price of
such Notes. For a description of these activities, see 'Plan of Distribution.'
THE COMPANY
The Company, a subsidiary of Questar Corporation ('Questar'), is a retail
natural gas distribution utility serving approximately 623,000 sales and
transportation customers in Utah, southwestern Wyoming and southeastern Idaho.
Between 1929 and the present, the Company gradually expanded the boundaries of
its distribution system to include over 90% of Utah's population. The principal
communities served by the Company include the Salt Lake City metropolitan area,
Ogden, Provo, Price, Logan, Richfield, Fillmore, Cedar City and St.
2
<PAGE>
George in Utah, Rock Springs, Green River and Evanston in southwestern Wyoming
and Preston in southeastern Idaho.
The natural gas distribution activities and facilities of the Company are
regulated by the Public Service Commission of Utah ('PSCU') and the Public
Service Commission of Wyoming ('PSCW') in their respective states. The PSCU also
regulates the Company's activities in southeastern Idaho pursuant to a contract
with the Public Utilities Commission of Idaho. The Company has significant
business relationships with certain affiliated companies, particularly Questar
Pipeline Company ('Questar Pipeline'), Wexpro Company ('Wexpro'), Questar Gas
Management Company and Questar InfoComm Inc.
The Company has been directly responsible for its gas acquisition
activities since September 1993. The Company has a balanced and diversified
portfolio of approximately 58 gas supply contracts with more than 28 suppliers
located in the Rocky Mountain states. The Company transports both its own
production and purchased gas on Questar Pipeline's transmission system and
purchases gas storage capacity at the Clay Basin storage facility and three
other storage facilities owned by Questar Pipeline. In 1996, the Company
satisfied approximately 54% of its total gas supply with volumes produced from
reserves owned by the Company on properties operated by Wexpro.
The population of the Company's service area is generally growing faster
than the national average, and the Company expects to add 22,000 customers in
1997 and 15,000-20,000 customers per year for the remainder of the century. The
Company's sales, particularly to general service customers, are seasonal with a
substantial portion of such sales made during the heating season. The Company's
natural gas sales and transportation services are made under rate schedules
approved by the PSCU and the PSCW for their respective states. The Company is
currently authorized to earn a rate of return on rate base of 10.22-10.34% in
Utah and 10.4% in Wyoming.
The Company and all other local distribution companies are faced with the
challenges and opportunities posed by the unbundling and restructuring of
traditional utility services. As a local distribution company, the Company owns
and controls the lines through which gas is delivered, is the only supplier of
natural gas to residential customers, measures the consumption of gas used by
its customers, and bills for consumption and related services. The services
provided by the Company are packaged and priced as a 'bundle.' Most unbundling
discussions focus on extending to residential and commercial customers the same
choices provided industrial customers, i.e., allowing them to separate the
commodity supply from the transportation service. (Industrial customers have
enjoyed the benefit of supplier choice for over 10 years.)
The State of Wyoming and the Wyoming Public Service Commission have asked
utilities in the state to consider filing proposals that will give residential
and commercial customers in the state more choice in their energy service. While
the Company will continue to offer full bundled service to residential and
commercial customers in the State of Wyoming, it intends to file, during 1997,
for regulatory approval to provide such customers the additional choice of
transportation service. The Company currently has approximately 21,350
residential and commercial customers in southwestern Wyoming. The State of Utah
and the PSCU are actively involved in reviewing the restructuring and unbundling
of telephone and electric utility services. Given its attractive rates and high
customer service ratings, the Company does not believe that Utah regulators or
residential customers will push for rapid unbundling in Utah.
The Company's principal executive and business office is located at 180
East First South Street, P.O. Box 45360, Salt Lake City, Utah 84145 and its
telephone number is (801) 324-5555.
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used to finance a
portion of the Company's capital expenditures and for general corporate
purposes.
3
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1997.
<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------
AMOUNT PERCENTAGE
-------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt............................................................................ $175,000 42.5%
Redeemable cumulative preferred stock (1)................................................. 4,808 1.1%
Common shareholder's equity............................................................... 232,205 56.4%
-------- ----------
Total capitalization.................................................................... $412,013 100.0%
-------- ----------
-------- ----------
Short-term debt........................................................................... $ 58,700
--------
--------
</TABLE>
- ------------------
(1) The Company will redeem the cumulative preferred stock on July 1, 1997.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
12 MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------------ ---------
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges............................... 2.98 3.08 2.90 2.80 3.48 3.84
</TABLE>
DESCRIPTION OF MEDIUM-TERM NOTES
The Notes will be issued as a series of debt securities under an Indenture
(the 'Indenture'), dated as of May 1, 1992, between the Company and First
Security Bank, N.A. (as successor trustee to Citibank, N.A.), as trustee (the
'Trustee'). The following summary of certain provisions of the Notes and of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, a form of which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. Capitalized terms
used but not defined herein have the meanings given to them in the Indenture or
the Notes, as the case may be. The term 'Securities,' as used under this
caption, refers to all debt securities issued and issuable from time to time
under the Indenture and includes the Notes. The terms and conditions set forth
below will apply to each Note unless otherwise specified in an applicable
Pricing Supplement.
GENERAL
The Indenture provides that, in addition to the Notes, additional
Securities in one or more series (including both interest bearing and original
issue discount securities) may be issued thereunder, without limitation as to
aggregate principal amount of all Securities issuable thereunder. The Indenture
does not limit the amount of other debt which may be issued by the Company. The
Notes will be unsecured obligations of the Company and will rank in parity with
all other unsecured and unsubordinated indebtedness of the Company.
The Notes being offered hereby are limited to $75,000,000 aggregate initial
offering amount, and $175,000,000 aggregate principal amount of Securities have
previously been issued under the Indenture and are outstanding as of the date of
this Prospectus. The aggregate principal amount of the Notes may be increased
from time to time. The Notes will be offered on a continuing basis, and each
Note will mature on a Business Day (as defined below), not less than nine months
nor more than 30 years from its date of issue, as selected by the initial
purchaser and agreed to by the Company. The Notes will be denominated and be
payable in United States dollars.
The Pricing Supplement relating to any Note will set forth the principal
amount, interest rate, issue price and Agent's commission, original issue and
maturity dates, redemption and repayment provisions, if any, and other material
terms of such Note.
Unless otherwise specified in the applicable Pricing Supplement, each Note
will be issued in registered book-entry form (a 'Book-Entry Note') or in fully
definitive form (a 'Definitive Note'), in the denomination of $1,000 or any
amount in excess thereof which is an integral multiple of $1,000. Book-Entry
Notes may be transferred or exchanged only through a participating member of The
Depository Trust Company (or such other depositary as is identified in an
applicable Pricing Supplement) (the 'Depositary'). See 'Book-Entry Notes; Global
Securities' below. Registration of transfers of Definitive Notes will be made at
the Corporate Trust
4
<PAGE>
Office of the Trustee. No service fee will be charged by the Company, the
Trustee or the Security Registrar for any such registration of 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
(other than exchanges pursuant to Sections 304, 906 or 1107 of the Indenture,
not involving any transfer).
As used herein, 'Business Day,' means any day that is not a Saturday or
Sunday, and that in The City of New York is not a day on which banking
institutions are generally authorized or obligated by law or executive order to
close, and, with respect to any LIBOR Note, is a London Business Day. Unless
otherwise specified in the applicable Pricing Supplement, 'London Business Day'
means any day on which dealings in deposits in United States dollars are
transacted in the London interbank market.
As used herein, 'Maturity', when used with respect to any Note, means the
date on which the principal of such Note or an installment of principal becomes
due and payable as provided in the Note or the Indenture, whether at the Stated
Maturity or by declaration of acceleration, call for redemption, repayment at
the option of the Holder or otherwise.
As used herein, 'Stated Maturity', when used with respect to any Note or
any installment of principal thereof or interest thereon, means the date
specified in such Note as the fixed date on which the principal of such Note or
such installment of principal or interest is due and payable.
Under the Indenture, Notes may be issued at a discount from the stated
principal amount thereof or with such terms (such as contingent interest,
interest holidays, irregular accrual periods, interest payable in additional
Notes, stepped rates, rates based on multiple or non-conventional interest
indices or Notes on which payments are tied to the value of a single stock, a
basket of stocks, a commodity or a stock or commodities index) so as to cause
the Notes to be subject to the original issue discount rules of federal, state,
local or foreign tax laws. In the event Notes are issued at such a discount or
with such terms so as to cause original issue discount rules to apply, the terms
of such Notes and additional disclosure regarding the federal income tax
treatment of such Notes as well as certain other considerations will be provided
in the applicable Pricing Supplement relating thereto.
Unless otherwise indicated in a Pricing Supplement, the covenants contained
in the Indenture and the Notes would not necessarily afford Holders of the Notes
protection in the event of a highly leveraged or other transaction involving the
Company that may adversely affect Holders.
Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other factors, the aggregate principal amount of Notes
purchased in any single transaction. Notes with similar variable terms other
than interest rates, as well as Notes with different other variable terms, may
be offered concurrently to different investors. Interest rates or formulas and
other terms of Notes are subject to change by the Company from time to time, but
no such change will affect any Note previously issued or as to which an offer to
purchase has been accepted by the Company.
PAYMENTS
For Definitive Notes, payments of principal, premium, if any, and interest
payable at Maturity will be made in immediately available funds at the Corporate
Trust Office of the Trustee in Salt Lake City, Utah or at such other place as
the Company may designate, provided that the Definitive Note is presented to the
Trustee in time for the Trustee to make such payments in such funds in
accordance with its normal procedures. Interest (other than interest payable at
Maturity) will be paid by check mailed to the address of the Person entitled
thereto as it appears in the Security Register as of the Regular Record Dates
or, at the option of the Company, by wire transfer to an account maintained by
such Person with a bank located in the United States. Notwithstanding the
foregoing, a Holder of $10,000,000 or more in aggregate principal amount of
Notes having the same Interest Payment Dates (as defined below) shall be
entitled, upon written request received by the Trustee prior to the Regular
Record Date in respect of an interest payment, or the date which is fifteen days
before the Stated Maturity or date of redemption or repayment of the principal
of the Notes, as the case may be, to receive payments of principal, premium, if
any, and interest by wire transfer to an account maintained by such Holder with
a bank located in the United States; provided, however, that no payment of
principal and premium, if any, will be made without prior presentment and
surrender of the Notes. If any Stated Maturity or date of redemption or
repayment would otherwise be a day that is not a Business Day, payments due on
any such day need not be made on such day, but may be made on the next
succeeding Business Day (or, in the case of a LIBOR Note, if such day falls in
the next succeeding calendar month, the immediately preceding Business Day),
with the same force and effect as if made on the due date, and no interest shall
accrue for the period from such due date to such succeeding Business Day.
5
<PAGE>
The total amount of any principal, premium, if any, or interest due on any
Global Security (as defined below) representing one or more Book-Entry Notes on
any Interest Payment Date or at Maturity will be made available to the Trustee
on such date. As soon as practicable thereafter, the Trustee will make such
payments to the Depositary in accordance with existing arrangements between the
Trustee and the Depositary. The Depositary will allocate such payments to each
Book-Entry Note represented by such Global Security and make payments to the
registered owners or Holders thereof in accordance with its existing operating
procedures. Neither the Company nor the Trustee shall have any responsibility or
liability for such payments by the Depositary. So long as the Depositary or its
nominee is the registered owner of any Global Security, the Depositary or its
nominee, as the case may be, will be considered the sole owner or Holder of the
Book-Entry Note or Book-Entry Notes represented by such Global Security for all
purposes under the Indenture.
REDEMPTION
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will not be subject to any optional or mandatory sinking fund. If provided in an
applicable Pricing Supplement, the Notes may be subject to redemption, in whole
or in part, prior to their Stated Maturity at the option of the Company or
through operation of a mandatory or optional sinking fund or analogous
provisions. Such Pricing Supplement will set forth the detailed terms of such
redemption, including, but not limited to, the dates after or on which and the
price or prices (including premium, if any) at which such Notes may be redeemed.
REPAYMENT AT THE OPTION OF THE HOLDER
If provided in an applicable Pricing Supplement, Notes will be subject to
repayment at the option of the Holder thereof in accordance with the terms of
such Notes on their respective optional repayment dates, if any, as agreed upon
by the Company and the purchasers thereof at the time of sale (each, an
'Optional Repayment Date'). If no Optional Repayment Date is indicated with
respect to a Note, such Note will not be repayable at the option of the Holder
thereof prior to its Stated Maturity.
If applicable, the Company will comply with the requirements of Section
14(e) of the Exchange Act, and the rules promulgated thereunder, and any other
securities laws or regulations in connection with any such repayment.
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, at the
discretion of the Company, be held, resold or surrendered to the Trustee for
cancellation.
INTEREST AND INTEREST RATES
General
Unless otherwise specified in an applicable Pricing Supplement, each Note
will bear interest from the date of original issue at the rate per annum or, in
the case of a Floating Rate Note, pursuant to the interest rate formula, stated
therein and in the applicable Pricing Supplement until the principal thereof is
paid or made available for payment. Interest will be payable in arrears on each
date specified in the applicable Pricing Supplement and in a Note on which an
installment of interest is due and payable (an 'Interest Payment Date') and at
Maturity. Interest will be payable generally to the person in whose name a Note
(or any Predecessor Note) is registered at the close of business on the Regular
Record Date next preceding the related Interest Payment Date; provided, however,
that interest payable at Maturity will be payable to the person to whom
principal shall be payable. Each interest payment shall be the amount of
interest accrued from and including the later of the date of original issue or
the most recent Interest Payment Date (in respect of which interest has been
paid or duly provided for with respect to such Note) to but excluding the next
succeeding Interest Payment Date (an 'Interest Accrual Period'). Unless
otherwise specified in the applicable Pricing Supplement, the first payment of
interest on any Note originally issued between a Regular Record Date and the
related Interest Payment Date will be made on the Interest Payment Date
immediately following the next succeeding Regular Record Date to the Holder on
such next succeeding Regular Record Date. Interest rates, interest rate formulae
and other terms of the Notes are subject to change by the Company from time to
time but no such change will affect any Notes already issued or as to which
offers to purchase have been accepted by the Company.
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Fixed Rate Notes
Unless otherwise specified in an applicable Pricing Supplement, the
Interest Payment Dates with respect to any Fixed Rate Note will be April 1 and
October 1 of each year, and the Regular Record Dates in respect of such Interest
Payment Dates will be the immediately preceding March 15 and September 15
(whether or not a Business Day), respectively. If any Interest Payment Date or
Maturity of a Fixed Rate Note falls on a day that is not a Business Day with
respect to such Fixed Rate Note, the payment due on such Interest Payment Date
or at Maturity will be made on the following day that is a Business Day with
respect to such Fixed Rate Note as if it were made on the date such payment was
due and no interest shall accrue on the amount so payable for the period from
and after such Interest Payment Date or Maturity, as the case may be. Unless
otherwise specified in the applicable Pricing Supplement, interest on each Fixed
Rate Note will be computed on the basis of a 360-day year of twelve 30-day
months.
Floating Rate Notes
Unless otherwise specified in an applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. Interest on Floating Rate Notes
will be determined by reference to a 'Base Rate,' which may be one or more of
(a) the Commercial Paper Rate (as defined below), in which case such Note will
be a 'Commercial Paper Rate Note;' (b) the Federal Funds Rate (as defined
below), in which case such Note will be a 'Federal Funds Rate Note;' (c) LIBOR
(as defined below), in which case such Note will be a 'LIBOR Note;' (d) the
Prime Rate (as defined below) in which case such Note will be a 'Prime Rate
Note;' (e) the Treasury Rate (as defined below), in which case such Note will be
a 'Treasury Rate Note;' or (f) such other interest rate formula as may be set
forth in the applicable Pricing Supplement and Floating Rate Note. In addition,
a Floating Rate Note may bear interest at the lowest of two or more Base Rates
determined in the same manner as the Base Rates are determined for the types of
Floating Rate Notes described above (except the interest rate for such Floating
Rate Notes will not be determined with reference to the Treasury Rate). Each
Floating Rate Note will specify the Base Rate or Rates applicable thereto.
The interest rate on each Floating Rate Note will be calculated by
reference to the specified Base Rate or the lowest of two or more specified Base
Rates, in either case plus or minus the applicable Spread, if any, or multiplied
by the applicable Spread Multiplier, if any. The 'Spread' is the number of basis
points to be added to or subtracted from the related Base Rate or Rates
applicable to such Floating Rate Note. The 'Spread Multiplier' is the percentage
of the related Base Rate or Rates applicable to such Floating Rate Note by which
said Base Rate or Rates are to be multiplied to determine the applicable
interest rate on such Floating Rate Note. The 'Index Maturity' is the period to
maturity of the instrument or obligation with respect to which the related Base
Rate or Rates are calculated. Each Floating Rate Note will specify the Index
Maturity and the Spread, if any, and/or Spread Multiplier, if any, applicable
thereto.
Each Floating Rate Note and the applicable Pricing Supplement will specify
whether the rate of interest on such Floating Rate Note will be reset monthly,
quarterly, semiannually, annually or otherwise (each, an 'Interest Reset
Period') and the date on which such interest rate will be reset (each, an
'Interest Reset Date'). Unless otherwise specified in a Floating Rate Note and
the applicable Pricing Supplement, the Interest Reset Date will be, in the case
of a Floating Rate Note which resets (a) monthly, the third Wednesday of each
month; (b) quarterly, the third Wednesday of each March, June, September and
December of each year; (c) semiannually, the third Wednesday of each of the two
months specified in such Pricing Supplement; and (d) annually, the third
Wednesday of the month specified in such Pricing Supplement. If any Interest
Reset Date for any Floating Rate Note would otherwise be a day that is not a
Business Day, such Interest Reset Date will be postponed to the next succeeding
day that is a Business Day, except that in the case of a LIBOR Note (or a
Floating Rate Note for which LIBOR is an applicable Base Rate), if such Business
Day is in the next succeeding calendar month, such Interest Reset Date shall be
the last Business Day in the preceding month.
The interest rate applicable to each Interest Reset Period commencing on
the Interest Reset Date or Dates with respect to such Interest Reset Period will
be the rate determined with respect to the applicable 'Interest Determination
Date.' Unless otherwise specified in an applicable Pricing Supplement, the
Interest Determination Date with respect to the Commercial Paper Rate, the
Federal Funds Rate and the Prime Rate will be the second Business Day preceding
each Interest Reset Date for the related Note. Unless otherwise specified in an
applicable Pricing Supplement, the Interest Determination Date with respect to
LIBOR will be the second London Business Day preceding each Interest Reset Date.
With respect to the Treasury Rate, unless otherwise specified in an
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applicable Pricing Supplement, the Interest Determination Date will be the day
in the week in which the Interest Reset Date falls on which day Treasury Bills
are normally auctioned (Treasury Bills are normally sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, except that such auction may be held on
the preceding Friday); provided, however, that if, as a result of a legal
holiday, an auction is held on the Friday of the week preceding the Interest
Reset Date, the related Interest Determination Date shall be such preceding
Friday; and provided, further, that if an auction shall fall on any Interest
Reset Date, then the related Interest Reset Date shall instead be the first
Business Day immediately following such auction. Unless otherwise specified in
the applicable Pricing Supplement, the Interest Determination Date pertaining to
a Floating Rate Note the interest rate of which is determined with reference to
two or more Base Rates will be the first Business Day which is at least two
Business Days prior to such Interest Reset Date for such a Floating Rate Note on
which each Base Rate shall be determinable. Each Base Rate shall be determined
and compared on such date, and the applicable interest rate shall take effect on
the related Interest Reset Date.
Any Floating Rate Note may also specify either or both a maximum limit and
a minimum limit on the rate at which interest may accrue during any Interest
Accrual Period. In addition to any maximum interest rate that may be applicable
to any Floating Rate Note pursuant to the preceding sentence, the interest rate
on Floating Rate Notes will in no event be higher than the maximum rate
permitted by New York law, as the same may be modified by United States law of
general application.
Except as provided below or in the applicable Pricing Supplement, the
Interest Payment Date, in the case of a Floating Rate Note which resets (a)
monthly, on the third Wednesday of each month; (b) quarterly, on the third
Wednesday of March, June, September and December of each year; (c) semiannually,
on the third Wednesday of the two months of each year specified in the
applicable Pricing Supplement; and (d) annually, on the third Wednesday of the
month specified in the applicable Pricing Supplement (each, an 'Interest Payment
Date'); and, in each case, at Maturity. If any Interest Payment Date for a
Floating Rate Note falls 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 (or a Floating Rate Note for which LIBOR is an
applicable Base Rate), if such Business Day is in the next succeeding calendar
month, such Interest Payment Date shall be the immediately preceding day that is
a Business Day with respect to such Floating Rate Note. If the Maturity of a
Floating Rate Note falls on a day that is not a Business Day with respect to
such Floating Rate Note, the payment of principal, premium, if any, and interest
will be made on the next succeeding Business Day with respect to such Floating
Rate Note, and no interest on such payment shall accrue for the period from and
after Maturity. Unless otherwise specified in a Floating Rate Note and the
applicable Pricing Supplement, the Regular Record Date or Dates for interest
payable on such Floating Rate Note will be the fifteenth day (whether or not a
Business Day) immediately preceding the related Interest Payment Date or Dates.
The interest rate in effect with respect to a Floating Rate Note on each
day that is not an Interest Reset Date will be the interest rate determined as
of the Interest Determination Date pertaining to the immediately preceding
interest Reset Date and the interest rate in effect on any day that is an
Interest Reset Date will be the interest rate determined as of the Interest
Determination Date pertaining to such Interest Reset Date, subject in either
case to applicable provisions of law and any maximum or minimum interest rate
limitation referred to in such Floating Rate Note; provided, however, that the
interest rate in effect with respect to a Floating Rate Note for the period from
the date of original issue to the first Interest Reset Date will be the rate
specified as such in the applicable Pricing Supplement and the related Floating
Rate Note (the 'Initial Interest Rate') and unless otherwise specified in the
applicable Pricing Supplement the interest rate in effect for the ten calendar
days immediately prior to a Maturity will be the interest rate in effect on the
tenth calendar day preceding such Maturity.
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Unless otherwise specified in the applicable Pricing Supplement, with
respect to each Floating Rate Note, accrued interest is calculated by
multiplying its face amount by an accrued interest factor. Such accrued interest
factor is computed by adding the interest factor calculated for each day from
the later of the date of issue, or from the last date to which interest has been
paid or duly provided for, to the date for which accrued interest is being
calculated. Unless otherwise specified in the applicable Pricing Supplement, the
interest factor for each such day is computed by dividing the interest rate
applicable to such day by 360, in the case of Commercial Paper Rate Notes,
Federal Funds Rate Notes, LIBOR Notes, or Prime Rate Notes or by the actual
number of days in the year, in the case of Treasury Rate Notes. Unless otherwise
specified in an applicable Pricing Supplement, the interest factor for Notes for
which the interest rate is calculated with reference to two or more Base Rates
will be calculated in each period in the same manner as if only the lowest of
the applicable Base Rates applied.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or .09876545) will be rounded upward to 9.87655% (or. 0987655)), and
all dollar amounts used in or resulting from such calculation on Floating Rate
Notes will be rounded to the nearest cent (with one-half cent being rounded
upward).
Unless otherwise specified in an applicable Pricing Supplement, the Trustee
will be the 'Calculation Agent'. Upon the request of the holder of any Floating
Rate Note, the Calculation Agent will provide the interest rate then in effect
and, if determined, the interest rate that will become effective as a result of
a determination made for the next succeeding Interest Reset Date with respect to
such Floating Rate Note. Unless otherwise specified in an applicable Pricing
Supplement, the 'Calculation Date,' if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
Interest Determination Date or, if any such day is not a Business Day, the next
succeeding Business Day or (ii) the Business Day immediately preceding the
applicable Interest Payment Date or the Maturity Date, as the case may be.
The interest rate in effect with respect to a Floating Rate Note from the
date of original issue to the first Interest Reset Date will be the Initial
Interest Rate. The interest rate for each subsequent Interest Reset Date will be
determined by the Calculation Agent as follows:
Commercial Paper Rate. Commercial Paper Rate Notes will bear interest
at the interest rates (calculated with reference to the Commercial Paper
Rate and the Spread or Spread Multiplier, if any) specified in such
Commercial Paper Rate Notes and in an applicable Pricing Supplement.
Unless otherwise specified in an applicable Pricing Supplement,
'Commercial Paper Rate' means, with respect to any Interest Determination
Date relating to a Commercial Paper Rate Note or any Interest Determination
Date for a Note for which the Commercial Paper Rate is one of the Base
Rates (a 'Commercial Paper Rate Interest Determination Date'), the Money
Market Yield (as defined below) on such date of the rate for commercial
paper having the Index Maturity specified in the applicable Pricing
Supplement as published by the Board of Governors of the Federal Reserve
System in 'Statistical release H.15(519), Selected Interest Rates' or any
successor publication ('H.15(519)') under the heading 'Commercial Paper.'
In the event that such rate is not published by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such Commercial Paper Rate
Interest Determination Date, then the Commercial Paper Rate will be the
Money Market Yield on such Commercial Paper Rate Interest Determination
Date for commercial paper having the Index Maturity specified in the
applicable Pricing Supplement as published by the Federal Reserve Bank of
New York in its daily statistical release 'Composite 3:30 P.M. Quotations
for U.S. Governmental Securities' or any successor publication ('Composite
Quotations') under the heading 'Commercial Paper' (with an Index Maturity
of one month or three months being deemed to be equivalent to an Index
Maturity of thirty days or ninety days, respectively). If such rate is not
published in either H.15(519) or Composite Quotations by 3:00 P.M., New
York City time, on such Calculation Date, then the Commercial Paper Rate
will be calculated by the Calculation Agent and will be the Money Market
Yield of the arithmetic mean of the offered rates, as of approximately
11:00 A.M., New York City time, on such Commercial Paper Rate Interest
Determination Date, of three leading dealers of commercial paper in The
City of New York (which may include one or more of the Agents) selected by
the Calculation Agent (after consultation with the Company) for commercial
paper having the specified Index Maturity placed for an industrial issuer
whose bond rating is
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'AA,' or the equivalent, from a nationally recognized statistical 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 in effect for the applicable period will be the
Commercial Paper Rate in effect on such Commercial Paper Rate Interest
Determination Date.
'Money Market Yield' shall be a yield (expressed as a percentage
rounded upwards, if necessary, to the nearest one hundred-thousandth of a
percentage point) calculated in accordance with the following formula:
Money Market Yield = [ D x 360 ]
[-------------] 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 period for which interest is
being calculated.
Federal Funds Rate. Unless otherwise specified in the applicable
Pricing Supplement, 'Federal Funds Rate' means, with respect to any
Interest Determination Date relating to a Federal Funds Rate Note or a
Floating Rate Note for which the interest rate is determined with reference
to the Federal Funds Rate (a 'Federal Funds Rate Interest Determination
Date'), the rate on such date for United States dollar federal funds as
published in H.15(519) under the heading 'Federal Funds (Effective') or, if
not published by 3:00 P.M., New York City time, on the related Calculation
Date, the rate on such Federal Funds Rate Interest Determination Date as
published in Composite Quotations under the heading 'Federal
Funds/Effective Rate.' If such rate is not published in either H.15(519) or
Composite Quotations by 3:00 P.M., New York City time, on the related
Calculation Date, then the Federal Funds Rate on such Federal Funds Rate
Interest Determination Date will be calculated by the Calculation Agent and
will be arithmetic mean of the rates for the last transaction in overnight
United States dollar federal funds arranged by three leading brokers of
federal funds transactions in The City of New York (which may include the
Agents or their affiliates) selected by the Calculation Agent prior to 9:00
A.M., New York City time, on such Federal Funds Rate Interest Determination
Date; provided, however, that if the brokers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds Rate
determined as of such Federal Funds Rate Interests Determination Date will
be the Federal Funds Rate in effect on such Federal Funds Rate Interest
Determination Date.
LIBOR. LIBOR Notes will bear interest at the interest rates
(calculated with reference to LIBOR and the Spread or Spread Multiplier, if
any) specified in such LIBOR Notes and in an applicable Pricing Supplement
Unless otherwise specified in an applicable Pricing Supplement,
'LIBOR' means the rate determined by the Calculation Agent in accordance
with the following provisions:
(i) With respect to an Interest Determination Date relating to a
LIBOR Note or any Floating Rate Note for which LIBOR is an applicable
Base Rate (a 'LIBOR Interest Determination Date'), either, as specified
in the applicable Pricing Supplement: (a) the arithmetic mean of the
offered rates for deposits in U.S. dollars for the period of the Index
Maturity specified in the applicable Pricing Supplement, commencing on
the second London Business Day immediately following such LIBOR Interest
Determination Date, which appear on the Reuters Screen LIBO Page as of
11:00 A.M., London time, on the LIBOR Interest Determination Date, if at
least two such offered rates appear on the Reuters Screen LIBO Page
('LIBOR Reuters'), or (b) the rate for deposits in U.S. dollars having
the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Business Day immediately following that
LIBOR Interest Determination Date, that appears on the Telerate Page
3750 as of 11:00 A.M., London time, on that LIBOR Interest Determination
Date ('LIBOR Telerate'). Unless otherwise indicated in the applicable
Pricing Supplement, 'Reuters Screen LIBO Page' means the display
designated as Page 'LIBO' on the Reuters Monitor Money Rate Service (or
such other page as may replace the LIBO page on that service for the
purpose of displaying London interbank offered rates of major banks).
'Telerate Page 3750' means the display designated as page '3750' on the
Telerate Service (or such other page as may replace the 3750 page
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on that service or such other service or services as may be nominated by
the British Bankers' Association for the purpose of displaying London
interbank offered rates for U.S. dollar deposits). If neither LIBOR
Reuters nor LIBOR Telerate is specified in the applicable Pricing
Supplement, LIBOR will be determined as if LIBOR Telerate had been
specified. If fewer than two offered rates appear on the Reuters Screen
LIBO Page, or if no rate appears on the Telerate Page 3750, as
applicable, LIBOR in respect of that LIBOR Interest Determination Date
will be determined as if the parties had specified the rate described in
(ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear on the Reuters Screen LIBO Page, as
described in (i)(a) above, or on which no rate appears on the Telerate
Page 3750, as specified in (i)(b) above, as applicable, LIBOR will be
determined on the basis of the rates at which deposits in U.S. dollars
having the Index Maturity designated in the applicable Pricing
Supplement are offered at approximately 11:00 A.M., London time, on such
LIBOR Interest Determination Date by four major banks ('Reference
Banks') in the London interbank market selected by the Calculation Agent
(after consultation with the Company) to prime banks in the London
interbank market commencing on the second London Business Day
immediately following such LIBOR Interest Determination Date and in a
principal amount of not less than U.S. $1,000,000 that is representative
for a single transaction in such market at such time. The Calculation
Agent will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR for such LIBOR Interest Determination
Date will be the arithmetic mean of such quotations. If fewer than two
quotations are provided, LIBOR for such LIBOR Interest Determination
Date will be the arithmetic mean of the rates quoted at approximately
11:00 A.M., New York City time, on such LIBOR Interest Determination
Date by three major banks (which may include the Agents) in The City of
New York selected by the Calculation Agent (after consultation with the
Company) for loans in U.S. dollars to leading European banks having the
specified Index Maturity designated in the applicable Pricing Supplement
commencing on the second London Business Day immediately following such
LIBOR Interest Determination Date and in a principal amount equal to an
amount of not less than U.S. $1,000,000 that is representative for a
single transaction in such market at such time; provided, however, that
if the banks selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, LIBOR will be LIBOR then in
effect on such LIBOR Interest Determination Date.
Prime Rate. Unless otherwise specified in the applicable Pricing
Statement, 'Prime Rate' means, with respect to any Interest Determination
Date relating to a Prime Rate Note or a Floating Rate Note for which the
interest rate is determined with reference to the Prime Rate (a 'Prime Rate
Interest Determination Date'), the rate on such date as such rate is
published in H.15(519) under the heading 'Bank Prime Loan.' If such rate is
not published prior to 3:00 P.M., New York City time, on the related
Calculation Date, then the Prime Rate shall be the arithmetic mean of the
rates of interest publicly announced by each bank that appears on the
Reuters Screen USPRIME1 Page (as hereinafter defined) as such bank's prime
rate or base lending rate as in effect for such Prime Rate Interest
Determination Date. If fewer than four such rates appear on the Reuters
Screen USPRIME1 Page for such Prime Rate Interest Determination Date, then
the Prime Rate shall be the arithmetic mean of the prime rates or base
lending rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on such Prime Rate
Interest Determination Date by four major money center banks (which may
include affiliates of the Agents) in The City of New York selected by the
Calculation Agent. If fewer than four such quotations are so provided, then
the Prime Rate shall be the arithmetic mean of four prime rates quoted on
the basis of the actual number of days in the year divided by a 360-day
year as of the close of business on such Prime Rate Interest Determination
Date as furnished in The City of New York by the major money center banks,
if any, that have provided such quotations and by a reasonable number of
substitute banks or trust companies (which may include affiliates of the
Agents) to obtain four such prime rate quotations, provided such substitute
banks or trust companies are organized and doing business under the laws of
the United States, or any State thereof, each having total equity capital
of at least $500 million and being subject to supervision or examination by
Federal or State authority.
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'Reuters Screen USPRIME1 Page' means the display on the Reuter Monitor
Money Rates Service (or any successor service) on the 'USPRIME1' page (or
such other page as may replace the USPRIME1 page on such service) for the
purpose of displaying prime rates or base lending rates of major United
States banks.
Treasury Rate. Treasury Rate Notes will bear interest at the interest
rates (calculated with reference to the Treasury Rate and the Spread or
Spread Multiplier, if any) specified in such Treasury Rate Notes and in an
applicable Pricing Supplement.
Unless otherwise specified in an applicable Pricing Supplement,
'Treasury Rate' means, with respect to any Interest Determination Date
relating to a Treasury Rate Note or any Floating Rate Note for which the
interest rate is determined by reference to the Treasury Rate (a 'Treasury
Rate Interest Determination Date'), the rate applicable to the most recent
auction of direct obligations of the United States ('Treasury Bills')
having the Index Maturity specified in the applicable Pricing Supplement,
as such rate is published in H.15(519) under the heading 'Treasury
Bills--auction average (investment)' or, if not published by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Treasury Rate
Interest Determination Date, the auction average rate (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 specified Index Maturity are not reported as
provided by 3:00 P.M., New York City time, on such Calculation Date, or if
no such auction is held in a particular week, then the Treasury Rate 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 days or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean
of the secondary market bid rates, as of approximately 3:30 P.M., New York
City time on such Treasury Rate Interest Determination Date, of three
leading primary United States government securities dealers (which may
include one or more of the Agents) selected by the Calculation Agent (after
consultation with the Company), for the issue of Treasury Bills with a
remaining maturity closest to the specified Index Maturity; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent
are not quoting as mentioned in this sentence, the Treasury Rate in effect
for the applicable period will be the Treasury Rate in effect on such
Treasury Rate Interest Determination Date.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to the determination of a Base Rate, the
specification of a Base Rate, calculation of the interest rate applicable to a
Floating Rate Note, its Interest Payment Dates or any other matter relating
thereto may be modified by the terms as specified under 'Other Provisions' on
the face thereof or in an Addendum relating thereto, if so specified on the face
thereof and described in the applicable Pricing Supplement.
DISCOUNT NOTES
The Company may offer Notes ('Discount Notes') from time to time that have
an Issue Price (as specified in the applicable Pricing Supplement) that is less
than 100% of the principal amount thereof (i.e. par) by more than a percentage
equal to the product of 0.25% and the number of full years to the Stated
Maturity. Discount Notes may not bear any interest currently or may bear
interest at a rate that is below market rates at the time of issuance. The
difference between the Issue Price of a Discount Note and par is referred to
herein as the 'Discount.' In the event of redemption, repayment or acceleration
of maturity of a Discount Note, the amount payable to the Holder of such
Discount Note will be equal to the sum of (i) the Issue Price (increased by any
accruals of Discount) and, in the event of any redemption of such Discount Note
(if applicable), multiplied by the Redemption Percentage (as defined in the
Pricing Supplement) (as adjusted by the Annual Redemption Percentage Reduction
(as defined in the Pricing Supplement, if applicable) and (ii) any unpaid
interest accrued thereon to the date of such redemption, repayment or
acceleration of maturity, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, for
purposes of determining the amount of Discount that has accrued as of any date
on which a redemption, repayment or acceleration of maturity occurs for a
Discount Note, such Discount will be accrued using a constant yield method. The
constant yield will be
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calculated using a 30-day month, 360-day year convention, a compounding period
that, except for the Initial Period (as hereinafter defined), corresponds to the
shortest period between Interest Payment Dates for the applicable Discount Note
(with ratable accruals within a compounding period), a coupon rate equal to the
initial coupon rate applicable to such Discount Note and an assumption that the
maturity of such Discount Note will not be accelerated. If the period from the
date of issue to the initial Interest Payment Date for a Discount Note (the
'Initial Period') is shorter than the compounding period for such Discount Note,
a proportionate amount of the yield for an entire compounding period will be
accrued. If the Initial Period is longer than the compounding period, then such
period will be divided into a regular compounding period and a short period with
the short period being treated as provided in the preceding sentence. The
accrual of the applicable Discount may differ from the accrual of original issue
discount for purposes of the Internal Revenue Code of 1986, as amended (the
'Code'), certain Discount Notes may not be treated as having original issue
discount within the meaning of the Code, and Notes other than Discount Notes may
be treated as issued with original issue discount for federal income tax
purposes.
BOOK-ENTRY NOTES; GLOBAL SECURITIES
Upon issuance, all Book-Entry Notes having the same original issue date,
Stated Maturity and otherwise having identical terms and provisions will be
represented by a single global security (each, a 'Global Security'). Each Global
Security representing Book-Entry Notes will be deposited with, or on behalf of,
the Depositary. Except as set forth below, a Global Security 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 nominee to a successor of the Depositary
or a nominee of such successor.
Upon the issuance by the Company of Book-Entry Notes represented by a
Global Security, the Depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Book-Entry Notes
represented by such Global Security to the accounts of participants. The
accounts to be credited shall be designated by the applicable Agent or the
underwriter of such Book-Entry Notes, as the case may be. Ownership of
beneficial interests in a Global Security will be limited to participants or
persons that hold interests through participants. Ownership of beneficial
interests in Book-Entry Notes represented by a Global Security will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by the Depositary (with respect to interest of participants in the
Depositary), or by participants in the Depositary or persons that may hold
interests through such participants (with respect to persons other than
participants in the Depositary). The laws of some states require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such limits and such laws may impair the ability to transfer beneficial
interest in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of the Global Security, the Depositary or its nominee, as the
case may be, will be considered the sole owner or Holder of the Book-Entry Notes
represented by such Global Security for all purposes under the Indenture. Except
as provided below, owners of beneficial interests in Book-Entry Notes
represented by a Global Security will not be entitled to have Book-Entry Notes
represented by such Global Security registered in their names, will not receive
or be entitled to receive or be entitled to receive physical delivery of
Book-Entry Notes in definitive form ('Certificated Notes') and will not be
considered the owners or Holders thereof under the Indenture.
Unless otherwise specified in the applicable Pricing Supplement, each
Global Security representing Book-Entry Notes will be exchangeable for
Certificated Notes of like tenor and terms and of differing authorized
denominations in a like aggregate principal amount, only if (i) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for the Global Securities or the Company becomes aware that the Depositary has
ceased to be a clearing agency registered under the Exchange Act and, in any
such case, the Company shall not have appointed a successor to the Depositary
within 60 days thereafter, (ii) the Company, in its sole discretion, determines
that the Global Securities shall be exchangeable for Certificated Notes or (iii)
an Event of Default shall have occurred and be continuing with respect to the
Notes under the Indenture. Upon any such exchange, the Certificated Notes shall
be registered in the names of the Beneficial Owners (as defined below) of the
Global Security or Securities representing Book-Entry Notes, which names shall
be provided by the Depositary's relevant Participants (as identified by the
Depositary) to the Trustee.
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The Depository Trust Company, New York, New York ('DTC') will be the
initial Depositary with respect to the Book-Entry Notes. The following is based
on information furnished by DTC:
DTC will act as securities depository 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 Security will be issued for each issue of
Book-Entry 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 $200,000,000, one Global Security will be
issued with respect to each $200,000,000 of principal amount and an
additional Global Security 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 the provisions of Section
17A of the Exchange Act. DTC holds securities that is 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 of physical movement of securities certificates. Direct
Participants of DTC ('Direct Participants') include securities brokers
and dealers (including the Agents), 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
Securities and Exchange Commission.
Purchases of Book-Entry Notes under DTC's system must be made by or
through Direct Participants, which will receive a credit for such
Book-Entry Notes on DTC's records. The ownership interest of each actual
purchaser of each Book-Entry Note represented by a Global Security
('Beneficial Owner') is in turn to be recorded on the records of Direct
Participants and Indirect Participants. Beneficial Owners will not
receive written confirmation from DTC of their purchase, but Beneficial
Owners are expected to receive written confirmations providing details
of the transaction, as well as periodic statements of their holdings,
from the Direct Participants or Indirect Participants through which such
Beneficial Owner entered into the transaction. Transfer of ownership
interests in a Global Security representing Book-Entry Notes are to be
accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners of a Global Security
representing Book-Entry Notes will not receive Certificated Notes
representing their ownership interests therein, except in the event that
use of the book-entry system for such Book-Entry Notes is discontinued.
To facilitate subsequent transfers, all Global Securities
representing Book-Entry Notes which are deposited with, or on behalf of,
DTC are registered in the name of DTC's nominee, Cede & Co. The deposit
of Global Securities with, or on behalf of, 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 Global
Securities representing 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.
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Neither DTC nor Cede & Co. will consent or vote with respect to the
Global Securities representing the Book-Entry Notes. Under its usual
procedures, DTC mails an Omnibus Proxy to the Company as soon as
possible after the applicable record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to
whose account the Book-Entry Notes are credited on the applicable record
date (identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and/or interest, if any, payments on
the Global Securities representing the Book-Entry Notes will be made by
the Company through the Trustee in immediately available funds to DTC as
the registered owner of the Global Securities. DTC's practice is to
credit Direct Participants' accounts on the applicable payment 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 such date.
Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or
registered in 'street name', and will be the responsibility of such
Participant and not of DTC, the Trustee or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to
time. Payment of principal, premium, if any, and/or interest, if any, to
DTC is the responsibility of the Company and the Trustee, disbursement
of such payments to Direct Participants shall be the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners shall be
the responsibility of Direct Participants and Indirect Participants.
None of the Company, the Trustee, the Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial
ownership interests of a Global Security or for maintaining, supervising
or reviewing any records relating to such beneficial ownership
interests.
If applicable, redemption notices shall be sent to Cede & Co. if
less than all of the Book-Entry Notes of the tenor and terms are being
redeemed, DTC's practice is to determine by lot the amount of the
interest of each Direct Participant in such issue to be redeemed.
A Beneficial Owner shall give notice of any option to elect to have
its Book-Entry Notes repaid by the Company, through its Participant, to
the Trustee, and shall effect delivery of such Book-Entry Notes by
causing the Direct Participant to transfer the Participant's interest in
the Global Security or Securities representing such Book-Entry Notes, on
DTC's records, to the Trustee. The requirement for physical delivery of
Book-Entry Notes in connection with a demand for repayment will be
deemed satisfied when the ownership rights in the Global Security or
Securities representing such Book-Entry Notes are transferred by Direct
Participants on DTC's records.
The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes at any time upon reasonable
notice to the Company or the Trustee. Under such circumstances, in the
event that a successor Depository is not obtained, Certificated Notes are
required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through a Depositary. In that event, Certificated Notes will be
printed and delivered.
The information in this section concerning DTC and DTC's system has been
obtained from sources that the Company believes to be reliable, but the Company
takes no responsibility for the accuracy thereof.
LIMITATIONS ON LIENS
Subject to certain exceptions, the Company will not, and will not permit
any Subsidiary to, create, assume or suffer to exist, otherwise than in favor of
the Company or a Subsidiary, any mortgage, pledge, lien, encumbrance, or
security interest (collectively, 'Liens') upon any of its properties or assets
or upon any income or profits therefrom unless the Notes shall be equally and
ratably secured. This prohibition will not apply to: (a) Liens existing as of
the date of the Indenture; (b) any purchase money mortgage or Lien created to
secure all or part of the purchase price of any property (or to secure a loan
made to the Company or any Subsidiary to enable it to acquire such property),
provided that such Lien shall extend only to the property so acquired,
improvements thereon, replacements thereof and the income or profits therefrom;
(c) Liens on any property at the time of the acquisition thereof, whether or not
assumed by the Company or a Subsidiary; provided that such Lien shall
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extend only to the property so acquired, improvements thereon, replacements
thereof and income or profits therefrom; (d) Liens on property or any contract
for the sale of any product or service or any rights thereunder or any proceeds
therefrom, acquired or constructed by the Company or a Subsidiary and created
within one year after the later of the completion of such acquisition or
construction or the commencement of operation of the project, provided that such
Lien shall extend only to the property so acquired or constructed, improvements
thereon, replacements thereof and income or profits therefrom; (e) Liens of
Subsidiaries outstanding at the time they become Subsidiaries; (f) Liens created
or assumed by the Company or a Subsidiary on coal, geothermal, oil, natural gas,
inert gas, other hydrocarbon or mineral properties owned or leased by the
Company or a Subsidiary to secure loans to the Company or a Subsidiary, for the
purpose of developing such properties; (g) Liens on any investment (as defined
in the Indenture) of the Company or a Subsidiary in any Person other than a
Subsidiary or on any security representing any investment of the Company or a
Subsidiary; (h) any Lien not otherwise permitted by the Indenture, provided that
after citing effect to such Liens the sum of (1) all indebtedness of the Company
and its Subsidiaries secured by Liens not otherwise permitted by the Indenture
and (2) all Attributable Debt of the Company and its Subsidiaries (to the extent
not included in (1) above) does not exceed 10% of Consolidated Capitalization;
(i) any refunding or extension of maturity, in whole or in part, of any
obligation or indebtedness secured by certain permitted Liens, provided that the
principal amount of the obligation or indebtedness secured by such refunding or
extension shall not exceed the principal amount of the obligation or
indebtedness then outstanding and shall be limited in lien to the same or
substituted property and after-acquired property that secured the refunded or
extended obligation or indebtedness; (j) Liens upon any office equipment, data
processing equipment or any motor vehicles, tractors or trailers; (k) Liens of
or upon or in current assets of the Company or a Subsidiary created or assumed
to secure indebtedness incurred in the ordinary course of business; (l) any Lien
which is payable, both with respect to principal and interest, solely out of the
proceeds of natural gas, oil, coal, geothermal resources, inert gas,
hydrocarbons or minerals to be produced from the property subject thereto and to
be sold or delivered by the Company or a Subsidiary; (m) Liens to secure
indebtedness incurred to finance advances made by the Company or any Subsidiary
to any third party for the purpose of financing oil, natural gas, hydrocarbon,
inert gas or other mineral exploration or development, provided that such Liens
shall extend only to the receivables of the Company or such Subsidiary in
respect of such advances; and (n) any rights reserved in others to take or
reserve any part of the natural gas, oil, coal, geothermal resources, inert gas,
hydrocarbons or minerals produced at any time on any property of the Company or
a Subsidiary. Also excepted from the general prohibition are various other liens
including, but not limited to: mechanics' or materialmen's liens, certain
governmental liens, certain leases, certain judgment liens, and certain liens
arising in connection with leases, easements and rights-of-way for pipeline or
distribution plant purposes.
CERTAIN DEFINITIONS
Certain terms used in the Indenture are defined and are used in this
Prospectus as follows:
'Attributable Debt' means, as of the date of determination, the
present value of net rent for the remaining term of a capital lease,
determined in accordance with generally accepted accounting principles
('GAAP'), which is part of a Sale and Leaseback Transaction (as defined),
including any periods for which the lessee has the right to renew or extend
the lease. For purposes of the foregoing, 'net rent' means the sum of
capitalized rental payments required to be paid by the lessee, other than
amounts required to be paid by the lessee for maintenance, repairs,
insurance, taxes, assessments, energy, fuel, utilities and similar charges.
In the case of a capital lease which is terminable by the lessee upon the
payment of a penalty, such net amount shall also include the amount of such
penalty, but no rent shall be considered to be required to be paid under
such lease subsequent to the first date upon which it may be so terminated.
'Consolidated Capitalization' means, without duplication, the sum of
(a) the principal amount of Consolidated Funded Debt of the Company and its
Subsidiaries at the time outstanding, (b) the total capital represented by
the capital stock of the Company and its Subsidiaries at the time
outstanding based, in the case of stock having par value, upon its par
value, and in the case of stock having no par value, upon the value stated
on the books of the Company, (c) the total amount of (or less than the
amount of any deficit in) retained earnings and paid-in capital of the
Company and its Subsidiaries, (d) reserves for deferred federal and state
income taxes arising from timing differences and (e) Attributable Debt, all
as shown on a consolidated balance sheet of the Company and its
Subsidiaries prepared in accordance with GAAP;
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provided that in determining the consolidated retained earnings and paid-in
capital of the Company and its Subsidiaries no effect shall be given to any
unrealized write-up or write-down in the value of assets or any
amortization thereof, except for accumulated provisions for depreciation,
depletion, amortization and property retirement which shall have been
created by charges made by the Company or any of its Subsidiaries on its
books.
'Consolidated Funded Debt' means the Funded Debt of the Company and
its Subsidiaries, consolidated in accordance with GAAP.
'Funded Debt' means all Indebtedness that will mature, pursuant to a
mandatory sinking fund or prepayment provision or otherwise, and all
installments of Indebtedness that will fall due, more than one year from
the date of determination. In calculating the maturity of any Indebtedness,
there shall be included the term of any unexercised right of the debtor to
renew or extend such Indebtedness existing at the time of determination.
'Indebtedness' means all items of indebtedness for borrowed money
(other than unamortized debt discount and premium) which would be included
in determining total liabilities as shown on the liability side of a
balance sheet prepared in accordance with GAAP as of the date as of which
Indebtedness is to be determined, and shall include indebtedness for
borrowed money (other than unamortized debt discount and premium) with
respect to which the Company or any Subsidiary customarily pays interest
secured by any mortgage, pledge or other lien or encumbrance of or upon, or
any security interest in, any properties or assets owned by the Company or
any Subsidiary, whether or not the Indebtedness secured thereby shall have
been assumed, and shall also include guarantees of Indebtedness of others;
provided that in determining Indebtedness of the Company or any Subsidiary
there shall be included the aggregate liquidation preference of all
outstanding securities of any Subsidiary senior to its Common Stock that
are not owned by the company or a Subsidiary; and provided, further, that
Indebtedness of any Person shall not include the following:
(a) any indebtedness evidence of which is held in treasury (but the
subsequent resale of such indebtedness shall be deemed to constitute the
creation thereof); or
(b) any particular indebtedness if, upon or prior to the maturity
thereof, there shall have been deposited with a depository (or set aside
and segregated, if permitted by the instrument creating such
indebtedness), in trust, money (or evidence of such indebtedness as
permitted by the instrument creating such indebtedness) in the necessary
amount to pay, redeem or satisfy such indebtedness; or
(c) any indebtedness incurred to finance oil, natural gas,
hydrocarbon, inert gas or other mineral exploration or development to
the extent that the issuer thereof has outstanding advances to finance
oil, natural gas, hydrocarbon, inert gas or other mineral exploration or
development, but only to the extent such advances are not in default; or
(d) any indebtedness incurred without recourse to the Company or
any Subsidiary; or
(e) any indebtedness incurred to finance advance payments for gas
(pursuant to take-or-pay provisions or otherwise), but only to the
extent that such advance payments are pursuant to gas purchase contracts
entered into in the normal course of business; or
(f) any amount (whether or not included in determining total
liabilities as shown on the liability side of a balance sheet prepared
in accordance with GAAP) representing capitalized rent under any lease;
or
(g) any indirect guarantees or other contingent obligations in
respect of indebtedness of other Persons, including agreements,
contingent or otherwise, with such other Persons or with third parties
with respect to, or to permit or assure the payment of, obligations of
such other Persons, including, without limitation, agreements to
purchase or repurchase obligations of such other Persons, to advance or
supply funds to, or to invest in, such other Persons, or to pay for
property, products or services of such other Persons (whether or not
conveyed, delivered or rendered); demand charge contracts, through-put,
take-or-pay, keep-well, make-whole or maintenance of working capital or
similar
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agreements; or guarantees with respect to rental or similar periodic
payments to be made by such other Persons.
'Sale and Leaseback Transaction' means an arrangement in which the
Company or a Subsidiary sells any of its property which was placed into
service more than 120 days prior to such sale to a Person and leases it
back from that Person within 180 days of the sale.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Nothing contained in the Indenture or in any of the Notes shall prevent any
consolidation or merger of the Company with or into any other Person (whether or
not affiliated with the Company), or successive consolidations or mergers in
which the Company or its successor shall be a party, or shall prevent any
transfer or lease of the property of the Company as an entirety or substantially
as an entirety, to any other Person (whether or not affiliated with the
Company); provided, however, that:
(a) in case of such a transaction, the entity formed by such
consolidation or into which the Company is merged or the Person which
acquires or leases the properties and assets of the Company substantially
as an entirety shall be a Corporation organized under the laws of the
United States of America, any state thereof or the District of Columbia and
shall expressly assume the due and punctual payment of the principal of,
premium, if any, and interest on all the Notes and the performance of every
other covenant of the Indenture;
(b) immediately after giving effect to such transaction, no event
which, after notice or lapse of time, would become an Event of Default,
shall have occurred and be continuing; and
(c) each of the Company and the successor Person shall have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that such transaction complies with the above paragraphs (a) and
(b) and that all conditions precedent relating to such transaction have
been complied with.
EVENTS OF DEFAULT
The following are Events of Defaults under the Indenture with respect to
any Notes: (a) failure to pay the principal of (or premium, if any, on) any Note
when due; (b) failure to make any mandatory sinking fund payment on any Note
when due or failure to pay any interest installment on any Note when due, in
each case, continued for 30 days; (c) failure to perform any other covenant of
the Company, continued for 90 days after written notice as provided in the
Indenture; (d) the occurrence of an event of default in other indebtedness of
the Company (including Securities other than the Notes) resulting in
indebtedness in excess of $10,000,000 principal amount being due and payable
prior to maturity and such acceleration shall not have been rescinded or
annulled or such indebtedness shall not have been discharged after written
notice as provided in the Indenture; and (e) certain events of bankruptcy,
insolvency or reorganization.
If an Event of Default with respect to Notes at the time outstanding shall
occur and be continuing, then and in every such case (unless the principal of
all the Notes shall have already become due and payable) the Trustee or the
Holders of at least 33 1/3% in principal amount of the outstanding Notes may
declare to be due and payable immediately, by a notice in writing to the Company
(and to the Trustee if given by Holders), the entire principal amount of all the
outstanding Notes. At any time after such declaration of acceleration has been
made, but before a judgment or decree for payment of the money due has been
obtained by the Trustee, the Holders of a majority in principal amount of the
outstanding Notes, by written notice to the Company and the Trustee, may, in
certain circumstances, rescind and annul such declaration.
No Holder of any Notes shall have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless such Holder
previously shall have given to the Trustee written notice of a default and
unless also the Holders of at least 25% of the principal amount of outstanding
Notes shall have made written request upon the Trustee, and have offered
reasonable indemnity, to institute such proceeding as the Trustee may request,
and the Trustee shall not have received direction inconsistent with such request
in writing by the Holders of a majority in principal amount of outstanding Notes
and shall have neglected or refused to institute such proceeding within 60 days.
However, the rights of any Holder of any Notes to enforce the payment of
principal,
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premium, if any, and interest due on such Notes on or after the dates expressed
in such Notes may not be impaired or affected.
WAIVER, MODIFICATION AND AMENDMENT
The Holders of a majority in principal amount of the outstanding Notes may
waive certain past defaults, except a default in the payment of the principal of
(or premium, if any) or interest on any Note or in respect of any covenant or
provision in the Indenture which under the terms of the Indenture cannot be
modified or consent of all Holders of outstanding Notes. The Holders of a
majority in aggregate principal amount of outstanding Notes may waive the
Company's compliance with certain restrictive provisions.
Modification and amendment of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of majority in aggregate principal
amount of the outstanding Notes provided that no such modification or amendment
may, without the consent of the Holder of each Note affected thereby, (a) change
the Stated Maturity of the principal of, or any installment of principal of, or
interest on, any Note; (b) reduce the principal amount of, or the rate of
interest, if any, on, or any premium payable upon the redemption of any Note;
(c) change the Place of Payment or change the currency of payment of principal,
premium, if any, or interest on any Note; (d) impair the right to institute suit
for the enforcement of any payment on or with respect to any Note; (e) reduce
the percentages of Holders of outstanding Notes specified in this or the
preceding paragraph; or (f) effect certain other modifications or amendments
described in the Indenture.
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Company may elect either (A) to defease and
be discharged from any and all obligations with respect to the Notes
('defeasance') or (B) to be released from its obligations with respect to such
Notes described above under 'Limitations on Liens' and 'Consolidation, Merger
and Sale of Assets' ('covenant defeasance'), upon the irrevocable deposit with
the Trustee, in trust for such purpose, of money, and/or U.S. Government
Obligations (as defined in the Indenture) which through the payment of principal
and interest in accordance with their terms will provide money, in an amount
sufficient to pay the principal of, and premium, if any, and interest on such
Notes, and any mandatory sinking fund or analogous payments thereon, on the
scheduled due date therefor. Unless otherwise specified in the applicable
Pricing Supplement, defeasance and covenant defeasance are each conditioned upon
the Company's delivery to the Trustee of an Opinion of Counsel to the effect
that the Holders of the Notes will have no federal income tax consequences as a
result of such deposit. The applicable Pricing Supplement may further describe
the provisions, if any, permitting such defeasance or covenant defeasance with
respect to the related Notes (including any modifications to the provisions
described above) and the effect of such defeasance or covenant defeasance under
federal tax law.
CONCERNING THE TRUSTEE
First Security Bank, N.A. is the Trustee under the Indenture. The Indenture
contains certain limitations on the rights of the Trustee, should it become a
creditor of the Company, to obtain payment of claims in certain cases or to
realize on certain property received in respect of any such claim as security or
otherwise. The Trustee will be permitted to engage in other transactions with
the Company; however, if it acquires a conflicting interest it must eliminate
such conflict or resign or otherwise comply with the Trust Indenture Act of
1939, as amended. The Indenture also provides that the Company will indemnify
the Trustee against loss, liability or expense incurred without negligence or
bad faith on the part of the Trustee arising out of or in connection with the
trust under the Indenture.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by the Company
through the Agents, who have agreed to use their reasonable efforts to solicit
offers to purchase the Notes, and the Company may also sell the Notes to an
Agent, as principal, for resale to investors and other purchasers at varying
prices related to prevailing market prices at the time of resale to be
determined by such Agent. The Company also reserves the right to sell Notes
directly on its own behalf or through additional agents, acting either as agent
or principal, on substantially identical terms as those applicable to the
Agents. The Company reserves the right to withdraw, cancel or modify
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the offer made hereby without notice and may reject orders, in whole or in part,
whether placed directly with the Company or through one of the Agents. The
Agents will have the right, in their discretion reasonably exercised, to reject
in whole or in part any offer to purchase Notes received by them.
The Company will pay the Agents, in the form of a discount or otherwise, a
commission which, depending on the Stated Maturity of the Note, will range from
.125% to .750% of the principal amount of any Note sold through the Agents.
In addition, the Agents may offer the Notes they have purchased as
principal to other dealers. The Agents may sell Notes to any dealer at a
discount and, unless otherwise specified in the applicable Pricing Supplement,
such discount allowed to any dealer will not be in excess of the discount to be
received by such Agent from the Company. Unless otherwise indicated in the
applicable Pricing Supplement, any Note sold to an Agent as principal will be
purchased by such Agent at a price equal to 100% of the principal amount thereof
less a percentage equal to the commission applicable to any agency sale of a
Note of identical maturity, and may be resold by the Agent to investors and
other purchasers from time to time in one or more transactions, including
negotiated transactions, at varying prices determined at the time of sale or, if
so agreed, at a fixed public offering price. After the initial public offering
of Notes to be resold to investors and other purchasers, the public offering
price (if resold on a fixed public offering price basis), concession and
discount may be changed.
Unless otherwise specified in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in New York City on the date of settlement.
In connection with the offering of the Notes purchased by one or more
Agents as principal on a fixed price basis, the Agents are permitted to engage
in certain transactions that stabilize the price of the Notes. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Notes. If the Agents create a short position in the Notes in
connection with the offering i.e., if they sell Notes in an aggregate principal
amount exceeding that set forth in the applicable Pricing Supplement, the Agents
may reduce that short position by purchasing Notes in the open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
Neither the Company nor any of the Agents makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Notes. In addition, neither the
Company nor any of the Agents makes any representation that the Agents will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
The Notes are a new issue of securities with no established trading market.
Unless otherwise specified in the applicable Pricing Supplement, the Notes will
not be listed on any securities exchange. Each of the Agents may from time to
time purchase and sell Notes in the secondary market, but no Agent is obligated
to do so, and there can be no assurance that there will be a secondary market
for the Notes or liquidity in the secondary market if one develops. From time to
time, each of the Agents may make a market in the Notes.
Each Agent may be deemed to be an 'underwriter' within the meaning of the
Securities Act. The Company has agreed to indemnify each of the Agents against,
or to make contributions relating to, certain civil liabilities, including civil
liabilities under the Securities Act. The Company has agreed to reimburse each
of the Agents for certain expenses.
Each of the Agents has provided and will provide from time to time certain
financial advisory services to the Company and Questar. No Agent has the right
to designate or nominate a member of the Board of Directors of the Company or
Questar.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for the
Company by Gary G. Sackett, Esq., Vice President and General Counsel of Questar,
180 East First South Street, Salt Lake City, Utah 84145, and by Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022. Brown &
Wood LLP, 555 California Street, San Francisco, California 94104, will act as
counsel for the underwriters or
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Agents. In rendering their opinions, Skadden, Arps, Slate, Meagher & Flom LLP
and Brown & Wood LLP may rely upon the opinion of Mr. Sackett as to all matters
governed by Utah law and as to the approval or consent of governmental
authorities of other jurisdictions in which the Company operates. As of March
31, 1997, Mr. Sackett beneficially owned 31,888 shares of Common Stock of
Questar (inclusive of currently exercisable options to purchase 8,500 shares of
Common Stock of Questar).
EXPERTS
The financial statements of Mountain Fuel Supply Company appearing in the
Company's Annual Report (Form 10-K) for the year ended December 31, 1996 have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
21
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL 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 PROSPECTUS SUPPLEMENT
(INCLUDING THE APPLICABLE PRICING SUPPLEMENT) IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND SUCH 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 AGENT. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT (INCLUDING THE APPLICABLE PRICING SUPPLEMENT) NOR ANY SALE
MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF.
THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT (INCLUDING THE APPLICABLE PRICING
SUPPLEMENT) SHALL NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE
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 ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------------------
TABLE OF CONTENTS
PAGE
----
Available Information............................. 2
Incorporation of Certain Documents by
Reference....................................... 2
The Company....................................... 2
Use of Proceeds................................... 3
Capitalization.................................... 4
Ratio of Earnings to Fixed Charges................ 4
Description of Medium-Term Notes.................. 4
Plan of Distribution.............................. 19
Legal Opinions.................................... 20
Experts........................................... 21
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$75,000,000
MOUNTAIN FUEL
SUPPLY COMPANY
(as subsidiary of Questar Corporation)
[MOUNTAIN FUEL LOGO]
------------------------
PROSPECTUS
------------------------
MERRILL LYNCH & CO.
SMITH BARNEY INC.
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses payable by the Company
in connection with the offering of the Notes registered hereunder. All such fees
and expenses other than the Securities and Exchange Commission Registration Fee
are estimated.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee..................... $ 22,728
Printing Expenses....................................................... 25,000
Legal Fees and Expenses................................................. 110,000
Accounting Fees and Expenses............................................ 15,000
Blue Sky Fees and Expenses.............................................. 5,000
Trustee's Fees and Expenses............................................. 5,000
Rating Agency Fees...................................................... 35,000
Miscellaneous........................................................... 7,272
--------
Total.............................................................. $225,000
--------
--------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Section 16-10a-901 through 16-10a-909 of the Utah
Revised Business Corporation Act, which provides for indemnification of
directors and officers in certain circumstances.
The Company's Bylaws provide that the Company may voluntarily indemnify any
individual made a party to a proceeding because he is or was a director,
officer, employee or agent of the Company against liability incurred in the
proceeding, but only if the Company has authorized the payment in accordance
with the applicable statutory provisions of the Utah Revised Business
Corporation Act (Sections 16-10a-902 and 16-10a-904) and a determination has
been made in accordance with the procedures set forth in such provision that
such individual conducted himself in good faith, that he reasonably believed his
conduct, in his official capacity with the Company, was in its best interests
and that his conduct, in all other cases, was at least not opposed to the
Company's best interests, and that he had no reasonable cause to believe his
conduct was unlawful in the case of any criminal proceeding. The foregoing
indemnification in connection with a proceeding by or in the right of the
Company is limited to reasonable expenses incurred in connection with the
proceeding, which expenses may be advanced by the Company. The Company's Bylaws
provide that the Company may not voluntarily indemnify a director, officer,
employee or agent of the Company in connection with a proceeding by or in the
right of the Company in which such individual was adjudged liable to the Company
or in connection with any other proceeding charging improper personal benefit to
him, whether or not involving action in his official capacity, in which he was
adjudged liable on the basis that personal benefit was improperly received by
him.
The Company's Bylaws provide further that the Company shall indemnify a
director, officer, employee or agent of the Company who was wholly successful,
on the merits or otherwise, in defense of any proceeding to which he was a party
because he is or was such a director, officer, employee or agent, against
reasonable expenses incurred by him in connection with the proceeding.
The Company's Bylaws further provide that no director of the Company shall
be personally liable to the Company or its stockholders for monetary damages for
any action taken or any failure to take any action, as a director, except
liability for (a) the amount of a financial benefit received by a director to
which he is not entitled; (b) an intentional infliction of harm on the Company
or the shareholders; (c) for any action that would result in liability of the
director under the applicable statutory provision concerning unlawful
distributions; or (d) an intentional violation of criminal law.
Questar Corporation, the Company's parent, maintains an insurance policy on
behalf of the officers and directors of the Company pursuant to which (subject
to the limits and limitations of such policy) the officers and directors are
insured against certain expenses in connection with the defense of actions or
proceedings, and
II-1
<PAGE>
certain liabilities which might be imposed as a result of such actions or
proceedings, to which any of them is made a party by reason of being or having
been a director or officer.
Reference is made to Sections 8 and 9 of the Distribution Agreement, the
term of which is filed as Exhibit 1.01 hereto for the description of the
indemnification and contribution arrangements for this offering.
ITEM 16. EXHIBITS.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.01 -- Form of Distribution Agreement (including the forms of Terms Agreement and Administrative
Procedures).
4.01 -- Indenture, dated as of May 1, 1992, between the Company and Citibank, N.A., as trustee, relating to
the Company's Debt Securities (incorporated herein by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1992).
4.02 -- Instrument of Appointment and Acceptance of Successor Trustee, dated as of May 21, 1997, between the
Company, First Security Bank, N.A. and Citibank, N.A. relating to First Security Bank, N.A.'s
appointment as successor trustee under the Indenture.
4.03 -- Form of Fixed Rate Note (incorporated herein by reference to Exhibit 4.02 to the Company's
Registration Statement on Form S-3 (No. 33-46910) filed with the Commission on April 2, 1992).
4.04 -- Form of Floating Rate Note (incorporated herein by reference to Exhibit 4.03 to the Company's
Registration Statement on Form S-3 (No. 33-46910) filed with the Commission on April 2, 1992).
5.01 -- Opinion of Gary G. Sackett, Esq.
5.02 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
12.01 -- Statement of Computation of Ratio of Earnings to Fixed Charges.
23.01 -- Consent of Ernst & Young LLP.
23.02 -- Consent of Gary G. Sackett, Esq. (included in Exhibit 5.01).
23.03 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.02).
24.01 -- Form of Appointment of Power of Attorney (contained in, and incorporated herein by reference to, Page
II-4 of this Registration Statement).
25.01 -- Statement of Eligibility of Trustee on Form T-1.
</TABLE>
ITEM 17. UNDERTAKINGS.
A. 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 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to 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.
B. 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 provisions of Utah law and the registrant's
bylaws, a summary of which is set forth in Item 15 hereof, 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
II-2
<PAGE>
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.
C. The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Company pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus 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.
D. 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 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;
(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; and
(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.
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 SALT LAKE, STATE OF UTAH, ON THE 28TH DAY OF MAY,
1997.
MOUNTAIN FUEL SUPPLY COMPANY
By: /s/ D. N. ROSE
-------------------------------------
D. N. Rose
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of D. N. Rose and S. E. Parks his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this registration statement (or any other registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act), and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, 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 and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
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 DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ R. D. CASH Chairman of the Board; Director May 28, 1997
- ------------------------------------------
R. D. Cash
/s/ D. N. ROSE President and Chief Executive Officer; Director May 28, 1997
- ------------------------------------------ (Principal Executive Officer)
D. N. Rose
/s/ S. E. PARKS Vice President, Treasurer and Chief Financial May 28, 1997
- ------------------------------------------ Officer (Principal Financial Officer)
S. E. Parks
/s/ G. H. ROBINSON Vice President and Controller May 28, 1997
- ------------------------------------------- (Principal Accounting Officer)
G. H. Robinson
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ W. WHITLEY HAWKINS Director May 28, 1997
- -------------------------------------------
W. Whitley Hawkins
/s/ R. E. KADLEC Director May 28, 1997
- -------------------------------------------
R. E. Kadlec
/s/ DIXIE L. LEAVITT Director May 28, 1997
- -------------------------------------------
Dixie L. Leavitt
/s/ GARY G. MICHAEL Director May 28, 1997
- -------------------------------------------
Gary G. Michael
/s/ GARY L. NORDLOH Director May 28, 1997
- -------------------------------------------
Gary L. Nordloh
/s/ HARRIS H. SIMMONS Director May 28, 1997
- -------------------------------------------
Harris H. Simmons
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
LOCATION IN
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGES
- ------ --------------------------------------------------------------------------------------------- -------------
<S> <C> <C> <C>
1.01 -- Form of Distribution Agreement (including the forms of Terms Agreement and
Administrative Procedures).
4.02 -- Instrument of Appointment and Acceptance of Successor Trustee, dated as of May 21,
1997, between the Company, First Security Bank, N.A. and Citibank, N.A. relating to
First Security Bank, N.A.'s appointment as successor trustee under the Indenture.
5.01 -- Opinion of Gary G. Sackett, Esq.
5.02 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
12.01 -- Statement of Computation Ratio of Earnings to Fixed Charges.
23.01 -- Consent of Ernst & Young LLP.
23.02 -- Consent of Gary G. Sackett, Esq. (included in Exhibit 5.01).
23.03 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.02).
24.01 -- Form of Appointment of Power of Attorney (contained in, and incorporated herein by
reference to, Page II-4 of this Registration Statement).
25.01 -- Statement of Eligibility of Trustee on Form T-1.
</TABLE>
<PAGE>
EXHIBIT 1.01
MOUNTAIN FUEL SUPPLY COMPANY
Medium-Term Notes, Series C, Due from
Nine Months to 30 Years from Date of Issue
DISTRIBUTION AGREEMENT
June , 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Mountain Fuel Supply Company, a Utah corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and Smith Barney Inc. ("Smith Barney" and
together with Merrill Lynch, the "Agents") with respect to the issue and sale by
the Company of its Medium-Term Notes, Series C, due from nine months to 30 years
from date of issue, described herein (the "Notes"). The Notes are to be issued
pursuant to an indenture dated as of May 1, 1992, as amended, supplemented or
modified from time to time (the "Indenture"), between the Company and First
Security Bank, N.A. (as successor trustee to Citibank, N.A.), as trustee (the
"Trustee").
As of the date hereof, the Company has authorized the issuance and sale
of up to $75,000,000 aggregate principal amount of Notes directly or through the
Agents pursuant to the terms of this Agreement. It is understood, however, that
the Company may from time to time authorize the issuance of additional Notes and
that such additional Notes may be distributed by the Company or 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 related
<PAGE>
Agent or the Agents) to one or more Agents as principal for resale to
purchasers.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333- ) for the
registration of the Notes under the Securities Act of 1933, as amended (the
"1933 Act"), and the offering thereof from time to time in accordance with Rule
415 of the rules and regulations of the Commission under the 1933 Act (the "1933
Act Regulations"). Such registration statement has been declared effective by
the Commission 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 constituting a part thereof, and any prospectus supplements 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, as amended (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 shall be
provided to the Agents by the Company for use in connection with the offering of
the Notes whether or not such revised prospectus is 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 the Agents 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 the Agents, except as
otherwise provided in this Section 1(a), as the exclusive agents for the purpose
of soliciting purchases of the Notes from the Company by others and agrees that,
except as otherwise contemplated herein, whenever the Company determines to sell
Notes directly to one or more of the Agents as principal for resale to others,
it will enter into a Terms Agreement (as hereafter defined) relating to such
sale in accordance with the provisions of Section 3(b) hereof if requested by
such Agent. The Company agrees that, except as otherwise provided in this
Section 1(a), during the period the Agents are acting as the Company's agents
hereunder, the Company will not engage any other party to assist in the
placement of the Notes (other than any person or entity which, by executing a
counterpart of this Agreement, becomes an Agent hereunder). Notwithstanding the
foregoing, the Company reserves the right to (i) appoint additional agents for
the purpose of placing Notes in one or more discrete transactions during the
term of this Agreement under the terms of an agreement substantially identical
to this Agreement (provided that the
2
<PAGE>
commission to be paid to such additional agents in connection with the sale of
any Note shall be the applicable commission determined pursuant to Section 3(a)
hereof), and (ii) sell Notes to one or more underwriters in one or more
underwritten transactions so long as such underwriter or underwriters shall
execute an agreement substantially identical to this Agreement relating to such
underwritten transaction or transactions, provided that in each such case no
such agreement will appoint any such agent or underwriter as an agent under this
Agreement except as relates to the related transaction or transactions. The
Company shall give prompt written notice to the Agents of the occurrence of any
event described in clause (i) or (ii) above. As used herein, the term "Agent",
in addition to Merrill Lynch and Smith Barney, refers to each person or entity
which, at any particular time, is an agent or underwriter, as the case may be,
for the Company hereunder as evidenced by its execution of a counterpart of this
Agreement.
(b) Reasonable Efforts Solicitations; Right to Reject Offers. Upon
receipt of instructions from the Company, the Agents will use their reasonable
efforts to solicit offers to purchase such principal amount of the 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 offers to purchase 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. Each Agent will communicate to
the Company, orally or in writing, each reasonable offer to purchase Notes,
other than those offers rejected by such 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 the Agent's agreement contained herein. The Company shall have the
sole right to accept or reject any proposed purchase of the Notes, in whole or
in part and any such rejection shall not be deemed a breach of the Company's
agreement contained herein.
(c) Solicitations as Agents; Purchases as Principals. In
soliciting offers to purchase the Notes on behalf of the Company and in
performing its other obligations hereunder (other than with respect to any
purchase by the Agents as principal, pursuant to a Terms Agreement or
otherwise), 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. No Agent shall have
any liability to the Company in the event any such purchase is not consummated
for any reason. If the Company shall default on its obligation to deliver Notes
to a purchaser whose offer it has accepted, the Company shall (i) hold the
Agent
3
<PAGE>
harmless against any loss, claim or damage arising from or as a result of such
default by the Company and (ii) notwithstanding such default, pay to the Agent
any commission to which it would be entitled in connection with such sale. No
Agent shall 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 in accordance with
Section 3(b) hereof if requested by such Agent.
(d) Reliance. The Company and the Agents agree that any Notes the
placement of which the Agents arrange shall be placed by the Agents, and any
Notes purchased by the Agents 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 an Agent as agent or from an Agent as
principal), as of the date of each delivery of Notes (whether through an Agent
as agent or to an Agent as principal) (the date of each such delivery to an
Agent as principal being hereafter referred to as a "Settlement Date"), and as
of any time that the Registration Statement or the Prospectus shall be amended
or supplemented or there is filed with the Commission any document incorporated
by reference into the Prospectus (each of the times referenced above being
referred to herein as a "Representation Date") as follows:
(i) Registration Statement and Prospectus. At the time the
Registration Statement became effective, the Registration Statement
complied, and as of each Representation Date will comply, in all
material respects with the requirements of the 1933 Act, the 1933 Act
Regulations, the 1939 Act and the rules and regulations of the
Commission promulgated under the 1939 Act. 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
Commission 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 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 the Registration
Statement
4
<PAGE>
or Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by or on behalf of the Agents
expressly for use in the Registration Statement or Prospectus.
(ii) Incorporated Documents. The documents incorporated by
reference in the Prospectus pursuant to Item 12 of Form S-3 under the
1933 Act, at the time they were or hereafter are filed with the
Commission, 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 (the "1934 Act
Regulations"), and, when read together with the other information in
the Prospectus, did not and will 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.
(iii) Accountants. The accountants who certified the financial
statements and supporting schedules included or incorporated by
reference in the Prospectus are, to the best knowledge of the Company,
independent public accountants as required by the 1933 Act and the 1933
Act Regulations.
(iv) Financial Statements. The financial statements included in the
Registration Statement and the Prospectus present fairly the financial
position of the Company and its consolidated subsidiaries as at the
dates indicated and the results of their operations for the periods
specified; except as otherwise stated in the Registration Statement,
said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis;
and the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein.
(v) Material Changes or Material Transactions. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated herein, (a)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business,
(b) there have been no transactions entered into by the Company or any
of its subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Company and its
subsidiaries considered as one enterprise, and (c) except for the
regular dividends, there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
5
<PAGE>
(vi) 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 Utah 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 duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or be in good standing
would not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise (a
"Material Adverse Effect").
(vii) Subsidiaries. Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership of property or the conduct of
business, except where the failure to so qualify or be in good standing
would not have a Material Adverse Effect; and all of the issued and
outstanding capital stock of each subsidiary has been duly authorized
and validly issued, is fully paid and nonassessable and is owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(viii) Capital Stock. The shares of issued and outstanding common
stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable.
(ix) Authorization and Validity of the Indenture and the Notes. The
Notes have been duly authorized for issuance and sale pursuant to this
Agreement and, when issued and delivered pursuant to this Agreement
against payment of the consideration therefor specified in the
Prospectus or pursuant to any Terms Agreement, the Notes will have been
duly executed, authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Company entitled to the
benefits provided by the Indenture, which will be substantially in the
form filed as an exhibit to the Registration Statement; the Indenture
has been duly authorized and the Indenture will be duly qualified under
the 1939 Act and will constitute a valid and legally binding instrument
of the Company, enforceable in accordance with
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its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and general equitable
principles; and the Notes and the Indenture conform to the descriptions
thereof in the Prospectus.
(x) No Defaults; Regulatory Approvals. Neither the Company nor
any of its subsidiaries is in violation of its charter or in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or any
of its subsidiaries is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company or any
of its subsidiaries is subject, which violations or defaults in the
aggregate would have a Material Adverse Effect; and the execution and
delivery of this Agreement and the consummation of the transactions
contemplated herein and 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 a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries, except as expressly contemplated in the Indenture,
pursuant to any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or
to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or any
applicable law, administrative regulation or administrative or court
decree.
(xi) Legal Proceedings; Contracts. There is no action, suit or
proceeding before or by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the Company,
threatened against, the Company or any of its subsidiaries, which is
required to be disclosed in the Registration Statement (other than as
disclosed therein) or which would result in any material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, or which would materially and adversely
affect the properties or assets thereof or which would materially and
adversely affect the consummation of this Agreement or any Terms
Agreement; all pending legal or governmental proceedings to which the
Company of any subsidiary is a party or which any of their property is
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, are,
considered in the aggregate, not material; and there are no
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contracts or documents of the Company or any of its subsidiaries which
are required to be filed as exhibits to the Registration Statement by
the 1933 Act or by the 1933 Act Regulations which have not been so
filed.
(xii) No Governmental Authorization. No authorization, approval or
consent of any court or governmental authority or agency is necessary
in connection with the sale of the Notes hereunder, except such as may
be required under the 1933 Act, the 1933 Act Regulations and state
securities laws and except as have been obtained.
(xiii) Possession of Permits. The Company and its subsidiaries
possess such valid franchises, certificates of convenience and
necessity, easements, rights-of-way, operating rights, licenses,
permits, consents, authorizations and orders of governmental political
subdivisions or regulatory authorities as are necessary to conduct the
business now operated by them, except those the failure of which to
possess would not have a Material Adverse Effect, and neither the
Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification thereof which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding would have a Material Adverse Effect.
(xiv) Investment Company Act. Neither the Company nor any of its
subsidiaries is regulated or required to be registered as an
"investment company" under the Investment Company Act of 1940, as
amended (the "1940 Act").
(xv) Doing Business with Cuba. The Company has complied and will
comply with the provisions of Florida H.B. 1771, codified as Section
517.075 of the Florida Statutes, 1987, as amended, and all regulations
promulgated thereunder relating to issuers doing business in Cuba.
(xvi) Ratings. The Medium-Term Note Program under which the Notes are
issued (the "Program"), as well as the Notes, are rated at least Baa by
Moody's Investors Service, Inc. and at least BBB by Standard & Poor's
Ratings Services, or such other rating as to which the Company shall
have most recently notified the Agents pursuant to Section 4(a) hereof.
(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 one or
more 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.
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SECTION 3. Solicitations as Agents; Purchases as Principals.
(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, when acting as an 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. In connection with the
solicitation of offers to purchase Notes, the Agents are not authorized to
provide any written information relating to the Company to any prospective
purchaser other than the Prospectus and documents incorporated by reference in
the Prospectus.
The Company reserves the right, in its sole discretion, to suspend
solicitation of offers to purchase the Notes through the Agents, as agents,
commencing at any time for any period of time or permanently. Upon receipt of
instructions from the Company, the Agents will forthwith suspend solicitation of
offers to purchase from the Company until such time as the Company has advised
the Agents that such solicitation may be resumed.
The Company agrees to pay each Agent a commission, in the form of a
discount or otherwise as agreed to by the Company and the Agents, 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; provided, however, that the Company shall only be obligated to pay one
such fee with respect to any particular Note so sold.
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 the Agents as agents will be sold at 100% of
their principal amount unless otherwise agreed to by the Company and the Agents.
Each Agent acknowledges and agrees that any funds which such Agent receives in
respect of a purchase of Notes, which purchase has been solicited by such Agent,
as agent of the Company, will be received, held and disposed of by such Agent,
as agent of the Company.
(b) Purchases as Principals. Each sale of Notes to one or more Agents
as principal shall be made in accordance with the terms contained herein and, if
requested by such Agent, pursuant to a separate agreement which will provide for
the sale of such Notes to, and the purchase and reoffering thereof by, such
Agent or Agents. Each such separate agreement (which may be an oral agreement)
between one or more Agents and the Company is herein referred to as a "Terms
Agreement". Unless the context otherwise requires, each reference contained
herein to "this Agreement"
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shall be deemed to include any Terms Agreement between the Company and one or
more Agents. 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. An 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 each 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 the Agents in the reoffering of
the Notes, and such other provisions (including further terms of the Notes) as
may be mutually agreed upon. The Agents may utilize a selling or dealer group in
connection with the resale of the Notes purchased by the Agents. Such Terms
Agreement shall also specify whether or not any officer's certificate, opinions
of counsel or comfort letter specified in Sections 7(b), 7(c) and 7(d) hereof
shall be required to be delivered by the Company on the related Settlement Date.
(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 initial Procedures, which are set forth in
Exhibit B hereto, shall remain in effect until changed by agreement between the
Company and the Agents or, with respect to the sale of the Notes to one or more
Agents as principal, unless modified by the applicable Terms Agreement. The
Agents and the Company agree to perform the respective duties and obligations
specifically provided to be performed by them in the Procedures.
(d) Delivery of Closing Documents. The documents required to be
delivered by Section 5 hereof shall be delivered at the office of Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022 on the
date hereof, or at such other time or place as the Agents and the Company may
agree.
SECTION 4. Covenants of the Company.
The Company covenants with the Agents as follows:
(a) Notice of Certain Events. The Company will notify the Agents
immediately (i) of the effectiveness of any amendment to the Registration
Statement, (ii) of the transmittal to the Commission for filing of any
supplement to the Prospectus or any document to be filed pursuant to the 1934
Act which will be incorporated by reference in the Prospectus, (iii) of the
receipt of any comments from the Commission with respect to the Registration
Statement or the Prospectus, (iv) of any request by the Commission for any
amendment to the Registration Statement or
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any amendment or supplement to the Prospectus or for additional information, (v)
of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose and (vi) any change in the rating assigned by any nationally recognized
statistical rating organization to any the Program or debt securities (including
the Notes) of the Company or the public announcement by any nationally
recognized statistical rating organization that it has under surveillance or
review, with possible negative implications, its rating of the Program or any
such debt securities, or the withdrawal by any nationally recognized statistical
rating organization of its rating of the Program or any such debt securities.
The Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof at
the earliest possible moment.
(b) Notice of Certain Proposed Filings. The Company will give the
Agents notice of its intention to file or prepare any additional registration
statement with respect to the registration of additional Notes, any amendment to
the Registration Statement or any amendment or supplement to the Prospectus
(other than an amendment or supplement providing solely for a change in the
interest rates, maturity or price of Notes or relating solely to an offering of
debt securities other than the Notes), whether by the filing of documents
pursuant to the 1934 Act, the 1933 Act or otherwise, and will furnish the Agents
with copies of any such amendment or supplement or other documents proposed to
be filed or prepared a reasonable time in advance of such proposed filing or
preparation, as the case may be, and will not file any such amendment or
supplement or other documents in a form to which the Agents or counsel to the
Agents shall reasonably object.
(c) Copies of the Registration Statement and the Prospectus. The
Company will deliver to the Agents as many signed and conformed copies of the
Registration Statement (as originally filed) and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated by reference in the Prospectus) as the Agents may
reasonably request. The Company will furnish to the Agents as many copies of the
Prospectus (as amended or supplemented) as the Agents shall reasonably request
so long as each such Agent is required to deliver a Prospectus in connection
with sales or solicitations of offers to purchase the Notes.
(d) Preparation of Pricing Supplements. The Company will prepare, with
respect to any Notes to be sold through or to 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 such Pricing Supplement pursuant to Rule
424(b)(3) under the 1933 Act not later than the close of business of the
Commission on the fifth business day after the date on which such Pricing
Supplement is first used.
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(e) Revisions of Prospectus -- Material Changes. Except as otherwise
provided in subsection (l) 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 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 the Agents' capacity as agents and to cease sales of any Notes the
Agents may then own as principal pursuant to a Terms Agreement, and the Company
will promptly prepare and file with the Commission 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 purchasing
prior to the date on which such financial information is released to the general
public.
(f) Prospectus Revisions -- Periodic Financial Information. Except as
otherwise provided in subsection (1) 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, prior to the delivery of the Prospectus
to any purchaser of the Notes purchasing after the date on which such financial
information is released to the general public, by the filing of documents
pursuant to the 1934 Act in the ordinary course, the 1933 Act or otherwise 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 included in
such release (but not any narrative information included in each such release),
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.
(g) Prospectus Revisions -- Audited Financial Information. Except as
otherwise provided in subsection (1) 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 furnish such information to the
Agents, confirmed in writing, and shall, prior to the delivery of
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the Prospectus to any purchaser of the Notes purchasing after the date on which
such financial information is released to the general public, cause the
Registration Statement and the Prospectus to be amended, by the filing of
documents pursuant to the 1934 Act in the ordinary course, the 1933 Act or
otherwise, to include or 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.
(h) Earnings Statements. The Company, by applying the provisions of
Rule 158 under the 1933 Act, will make generally available to its security
holders as soon as practicable, but not later than 90 days after the close of
the period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 1933 Act) covering each twelve month period
beginning, in each case, not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in such Rule 158) of the
Registration Statement. Nothing in this Section 4(h) shall require the Company
to make such earnings statement available more frequently than once in any
period of twelve months.
(i) 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.
(j) 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 Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the 1934 Act. Such documents will comply in all
material respects with the requirements of the 1934 Act and the 1934 Act
Regulations and to the extent such documents are incorporated by reference in
the Prospectus, when read together with the other information in or incorporated
by reference into the Prospectus, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
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necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(k) 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 written
consent of each Agent party to such Terms Agreement, directly or indirectly,
sell, offer to sell, contract to sell, grant any option for the sale of or
otherwise dispose of, or announce the offering of, any debt securities of the
Company (other than the Notes that are to be sold pursuant to such Terms
Agreement and commercial paper or borrowings from commercial banks or affiliates
of the Company in the ordinary course of business), except as may otherwise be
provided in any such Terms Agreement.
(l) Suspension of Certain Obligations. The Company shall not be
required to comply with the provisions of subsections (e), (f) or (g) of this
Section or the provisions of Section 7 hereof during any period from the time
(i) the Agents shall have been notified by the Company to suspend solicitation
of offers to purchase the Notes in their capacity as agents and (ii) the earlier
of the date on which no Agent shall then hold any Notes as principal purchased
pursuant to a Terms Agreement and the date which is 30 days (nine months with
respect to subsection (e) of this Section) from the date on which the Agents
shall have received written notice from the Company to suspend solicitation of
purchases of the Notes, to the time the Company shall determine that
solicitation of offers to purchase the Notes should be resumed or shall
subsequently enter into a new Terms Agreement with any Agent.
SECTION 5. Conditions of Obligations.
The obligations of the Agents to solicit offers to purchase the Notes
as agents of the Company, the obligations of any purchasers of the Notes sold
through the Agents as agents, and any obligation of the Agents to purchase Notes
as principals 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 its covenants and agreements herein contained
and to the following additional conditions precedent:
(a) Legal Opinions. On the date hereof, the Agents shall
have received the following legal opinions, dated as of the date
hereof and in form and substance reasonably satisfactory to the
Agents and their counsel:
(1) Opinion of Gary G. Sackett. The opinion of
Gary G. Sackett, Esq., counsel for the Company, who may rely
as to all matters governed by Federal and New York law upon
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the opinion of Skadden, Arps, Slate, Meagher & Flom LLP referred to
below, to the effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Utah.
(ii) The Company has corporate power and authority to
own its properties and conduct its business as described in
the Prospectus; and the Company is duly qualified to do
business as a foreign corporation and is in good standing in
all other jurisdictions in which it owns or leases substantial
properties or in which the conduct of its business requires
such qualification, except where the failure to be so
qualified would not have a material adverse effect on the
Company.
(iii) The sale and issuance of the Notes have been duly
authorized by the requisite corporate action on the part of
the Company and the Notes, when executed and authenticated in
accordance with the terms of the Indenture, will be valid and
binding obligations of the Company, enforceable against the
Company in accordance with their terms, except to the extent
that enforcement thereof may be limited by (a) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or
other similar laws now or hereinafter in effect relating to or
affecting creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); in expressing
the opinion set forth in this paragraph (iii), such counsel
may assume that the Trustee's certificates of authentication
of the Notes have been manually signed by one of the Trustee's
authorized officers and that the Notes, in the form delivered
to the Agents, conform to the specimens thereof examined by
such counsel, which facts need not be verified by an
inspection of the individual Notes.
(iv) The execution, delivery and performance of the
Indenture and of this Agreement and any applicable Terms
Agreement and the issuance and sale of the Notes and
compliance with the terms and provisions hereof and thereof
will not result in a breach or violation of any of the terms
or provisions of, or constitute a default under, (a) any order
known to such counsel of any governmental agency having
jurisdiction over the Company or any of its properties or any
agreement or instrument known to such counsel to which the
Company is a party or by which the Company is bound or to
which any of the properties of the Company is subject, which
would cause a material adverse change in the financial
position, shareholders' equity or results of operations of the
Company or affect the validity of the Notes or
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the legal authority of the Company to comply with the terms of
the Notes, the Indenture, this Agreement or any applicable
Terms Agreement or (b) the charter or by-laws of the Company,
and the Company has full power and authority to authorize,
issue and sell the Notes as contemplated by this Agreement and
any Terms Agreement.
(v) The Indenture has been duly authorized, executed
and delivered by the Company and (assuming the due
authorization, execution and delivery by the Trustee) is a
valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to
the extent enforcement thereof may be limited by (a)
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws now or hereinafter in effect
relating to or affecting creditors' rights generally, and (b)
general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity).
(vi) This Agreement and any applicable Terms Agreement
have each been duly authorized, executed and delivered by the
Company.
(vii) No authorization, approval or consent of any
governmental authority or agency is necessary in connection
with the transactions contemplated by this Agreement and any
Terms Agreement, except such as may be required under the 1933
Act, state securities or Blue Sky laws and except as have been
obtained.
(2) Opinion of Company Counsel. The opinion of Skadden, Arps,
Slate, Meagher & Flom LLP, special counsel for the Company, who may
rely as to all matters governed by Utah law and as to the approval or
consent of governmental authorities of jurisdictions in which the
Company operates, upon the opinion of Gary G. Sackett, Esq., referred
to above, to the effect that:
(i) The sale and issuance of the Notes have been
authorized by the requisite corporate action on the part of
the Company, and the Notes, when executed and authenticated in
accordance with the terms of the Indenture, will be valid and
binding obligations of the Company, enforceable against the
Company in accordance with their terms, except to the extent
that enforcement thereof may be limited by (a) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or
other similar laws now or hereinafter in effect relating to or
affecting creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); in expressing
the opinion set forth in this paragraph (i), such counsel may
assume that the
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Trustee's certificates of authentication of the Notes have
been manually signed by one of the Trustee's authorized
officers and that the Notes, in the form delivered to the
Agents, conform to the specimens thereof, examined by such
counsel, which facts need not be verified by an inspection of
the individual Notes.
(ii) The Notes and the Indenture conform in all
material respects to the descriptions thereof contained in the
Prospectus.
(iii) The Indenture has been qualified under the
1939 Act.
(iv) The Indenture has been duly authorized, executed
and delivered by the Company and, assuming the due
authorization, execution and delivery by the Trustee, is a
valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to
the extent enforcement thereof may be limited by (a)
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws now or hereinafter in effect
relating to or affecting creditors' rights generally and (b)
general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity).
(v) This Agreement and any applicable Terms Agreement
have each been duly authorized, executed and delivered by the
Company.
(vi) The Registration Statement and the Prospectus and
each amendment or supplement thereto, as of their respective
effective or issue dates (but excluding the Form T-1 and the
financial statements, schedules and other financial data
included in or excluded from the Registration Statement or the
exhibits thereto, as to which such counsel need express no
opinion), and the Indenture appeared on their face to be
appropriately responsive in all material respects to the
requirements of the 1933 Act, the 1933 Act Regulations and the
1939 Act, as applicable.
(vii) Such counsel does not know of any legal or
governmental proceedings required to be described in the
Registration Statement or Prospectus which are not described
as required, nor of any contracts or documents of a character
which are required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as
required.
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(viii) No authorization, approval or consent of any
governmental authority or agency is necessary in connection
with the transactions contemplated by this Agreement and any
applicable Terms Agreement, except such as may be required by
the 1933 Act or state securities or Blue Sky laws and except
as have been obtained.
(3) Opinion of Counsel to the Agents. The opinion of Brown &
Wood LLP, counsel to the Agents, who may rely as to all matters
governed by Utah law and as to the approval or consent of governmental
authorities of jurisdictions in which the Company operates, upon the
opinion of Gary G. Sackett, Esq., referred to above, covering the
matters referred to in subparagraph (1) under the subheading (i) and
subparagraph (2) under the subheadings (i) through (vi), inclusive,
above.
(4) In giving their opinions as of the date hereof required by
subsection (a)(2) and (a)(3) of this Section, Skadden, Arps, Slate,
Meagher & Flom LLP and Brown & Wood LLP shall each additionally state
the time and date on which Registration Statement was declared
effective under the 1933 Act, or if such counsel have not received an
effectiveness order from the Commission, that such counsel have been
advised by the Commission of the time and date on which the
Registration Statement was declared effective and, to the best of such
counsel's knowledge, that no stop order suspending the Registration
Statement's effectiveness has been issued and no proceedings for that
purpose have been instituted or are pending or threatened by the
Commission. In addition, each such counsel shall state that they have
participated in conferences with officers and representatives of the
Company, representatives of the independent accountants of the Company,
and the Agents, at which the contents of the Registration Statement and
the Prospectus and related matters were discussed and, although such
counsel are not passing upon, and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in
the Registration Statement or the Prospectus and have made no
independent check or verification thereof, on the basis of the
foregoing, no facts have come to such counsel's attention that lead
them to believe that the Registration Statement, 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
Commission subsequent to the effectiveness of the Registration
Statement and prior to the date of such statement, then at the time
such amendment became effective or at the time of the most recent such
filing (to the extent deemed to be incorporated by reference in the
Registration Statement and Prospectus), or (if such opinion is being
delivered in connection with a Terms Agreement pursuant to Section 7(c)
hereof) at the date of any Terms Agreement and at the Settlement Date
with respect
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thereto, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading or that the Prospectus, as amended or supplemented at the
date hereof, or (if such opinion is being delivered in connection with
a Terms Agreement pursuant to Section 7(c) 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 omits or omitted 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. Such counsel may state that they
express no opinion or belief with respect to the Form T-1 or to the
financial statements, schedules and other financial data included in or
excluded from the Registration Statement or the exhibits thereto or
incorporated by reference in such Registration Statement or Prospectus.
(5) In giving his opinion required by Section 7(c), Gary G.
Sackett, Esq. shall additionally state the time and date on which
Registration Statement was declared effective under the 1933 Act, or if
such counsel has not received an effectiveness order from the
Commission, that such counsel has been advised by the Commission of the
time and date on which the Registration Statement was declared
effective and, to the best of such counsel's knowledge, that no stop
order suspending the Registration Statement's effectiveness has been
issued and no proceedings for that purpose have been instituted or are
pending or threatened by the Commission. In addition, such counsel
shall state that he has participated in conferences with officers and
representatives of the Company, representatives of the independent
accountants of the Company, and the Agents, at which the contents of
the Registration Statement, the Prospectus and any amendments or
supplements thereto, and related matters were discussed and, although
such counsel is not passing upon, and does not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement, the Prospectus or
any amendments or supplements thereto and has made no independent check
or verification thereof, on the basis of the foregoing, no facts have
come to such counsel's attention that lead him to believe that the
Registration Statement, at the date thereof, and if an amendment to the
Registration Statement or an Annual Report on Form 10-K has been filed
by the Company with the Commission subsequent to the effectiveness of
the Registration Statement and prior to the date of such statement,
then at the time such amendment became effective or at the time of the
most recent such filing (to the extent deemed to be incorporated by
reference in the Registration Statement and Prospectus), or (if such
opinion is being delivered in connection with a Terms Agreement) at the
date of any Terms Agreement and at the
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Settlement Date with respect thereto, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading or that the Prospectus, as amended or
supplemented at the date thereof, or (if such opinion is being
delivered in connection with a Terms Agreement) 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 omits or omitted 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. Such counsel may state that he
expresses no opinion or belief with respect to the Form T-1 or to the
financial statements, schedules and other financial data included in or
excluded from the Registration Statement or the exhibits thereto or
incorporated by reference in such Registration Statement or Prospectus.
(b) Officer's Certificate. At the date hereof the Agents shall have
received a certificate of the President or any Vice President and a principal
financial or accounting officer of the Company, dated as of the date hereof, to
the effect that (i) since the respective dates as of which information is given
in the Registration Statement and the Prospectus or since the date of any
applicable Terms Agreement, there has not been any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, (ii) the
other representations and warranties of the Company contained in Section 2
hereof are true and correct with the same force and effect as though expressly
made at and as of the date of such certificate, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the date of such certificate, and (iv) no stop order
suspending the effectiveness of the Registration Statement under the 1933 Act
has been issued and no proceedings for that purpose have been initiated or
threatened by the Commission. As used in this Section 5(b), the term
"Prospectus" means the Prospectus in the form first provided to the applicable
Agent or Agents for use in confirming sales of the Notes.
(c) Comfort Letter. On the date hereof, the Agents shall have received
a letter from Ernst & Young LLP, dated as of the date hereof and in form and
substance reasonably satisfactory to the Agents, to the effect that:
(i) They are independent public accountants with respect to
the Company and its subsidiaries within the meaning of the 1933 Act and
the 1933 Act Regulations and no information concerning their
relationship with or interest
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in the Company is required by Item 10 of the Registration
Statement.
(ii) It is their opinion that the consolidated financial
statements and supporting schedules included or incorporated by
reference in the Registration Statement and covered by their opinions
incorporated therein comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations.
(iii) They have read any unaudited financial statements included
in the Registration Statement and Prospectus.
(iv) On the basis of the reading referred to in clause (iii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other specified
procedures, nothing came to their attention that caused them to
believe that: (A) the unaudited financial statements, if any, included
or incorporated by reference in the Registration Statement and
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the regulations promulgated under the
1934 Act or are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
audited financial statements included or incorporated by reference
therein; (B) at the date of the latest available balance sheet read by
such accountants, or at a subsequent 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 the short-term indebtedness or
long-term debt of the Company or, at the date of the latest available
balance sheet read by such accountants, or at a subsequent specified
date not more than five days prior to the date of such letter, there
was any decrease in the net current assets or net assets, in each case
as compared with amounts shown in the latest balance sheet included or
incorporated by reference in the Prospectus; or (C) for the
twelve-month period ending on the closing date of the latest available
income statement read by such accountants, or from such latest
available income statement read by such accountants 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 of the
previous year, in total revenues, operating income or income (in each
case, from continuing operations), or (with respect only to quarterly
accounting periods) in the ratio of earnings to fixed charges; except
in all cases set forth in clauses (B) and (C) above for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur.
(v) They have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
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financial information included or incorporated by reference in the
Registration Statement and the Prospectus (in each case to the extent
that such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by analysis
or computation) with the results obtained from inquiries, a reading of
such general accounting records and other procedures specified in such
letter and have found such dollar amounts, percentages and other
financial information to be in agreement with such results.
(d) 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.
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 Agent party thereto, any applicable Terms Agreement) may be
terminated by any of the Agents (as to itself only) by 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(h) hereof, the provisions concerning payment of
expenses under Section 10 hereof, the indemnity and contribution agreements set
forth in Sections 8 and 9 hereof, the provisions concerning the representations,
warranties and agreements to survive delivery set forth in Section 11 hereof,
the provisions relating to governing law and forum set forth in Section 14 and
the provisions set forth under "Parties" of Section 15 hereof shall remain in
effect.
SECTION 6. Delivery of and Payment for Notes Sold through the Agents.
Delivery of Notes sold through an 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, the Agent shall promptly notify the Company and deliver
the Note to the Company, and, if the Agent has theretofore paid the Company for
such Note, the Company will promptly return such funds to the Agent. If such
failure occurred for any reason other than default by the Agent in the
performance of its obligations hereunder, the Company will reimburse such Agent
on an equitable basis for its reasonable
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loss of the use of the funds for the period such funds were
credited to the Company's account.
SECTION 7. Additional Covenants of the Company.
The Company covenants and agrees with the Agents that:
(a) Reaffirmation of Representations and Warranties. Each
acceptance by it of an offer for the purchase of Notes, and each delivery of
Notes to one or more of the Agents pursuant to a Terms Agreement, shall be
deemed to be an affirmation that the representations and warranties of the
Company contained in this Agreement and in any certificate theretofore delivered
to the Agents pursuant hereto are true and correct at the 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 his agent, or to the Agent or Agents, 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. Subject to the provisions of
Section 4(l) hereof, each time that the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or supplement
providing solely for the establishment of or a change in the interest rates,
maturity or price of Notes or similar changes or an amendment or supplement
which relates exclusively to an offering of debt securities other than the
Notes), or there is filed with the Commission any document incorporated by
reference into the Prospectus or (if required pursuant to the terms of a Terms
Agreement) the Company sells Notes to one or more Agents pursuant to a Terms
Agreement, the Company shall furnish or cause to be furnished to the Agents as
soon as practicable a certificate dated the date of filing with the Commission
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 the Agents
and to counsel to the Agents to the effect that the statements contained in the
certificate referred to in Section 5(b) hereof which was last furnished to the
Agents 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(b), 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. Subject to the provisions
of Section 4(l) hereof and unless the Agents shall otherwise specify, each time
that the Registration Statement or
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the Prospectus shall be amended or supplemented (other than by an amendment or
supplement providing solely for a change in the interest rates, maturity or
price of the Notes or similar changes or solely for the inclusion of additional
financial information or an amendment or supplement which relates exclusively to
an offering of debt securities other than the Notes), or there is filed with the
Commission any document incorporated by reference into the Prospectus, or, if
required pursuant to the terms of a Terms Agreement, the Company sells Notes to
one or more Agents pursuant to a Terms Agreement, the Company shall furnish or
cause to be furnished as soon as practicable to the Agents and to counsel to the
Agents a written opinion of each of Gary G. Sackett, Esq., counsel for the
Company and Skadden, Arps, Slate, Meagher & Flom LLP, special counsel for the
Company, or other counsel satisfactory to the Agents dated the date of filing
with the Commission 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 the Agents and to counsel to the Agents, of the same
tenor as the opinions referred to in Section 5(a)(1), 5(a)(2) and 5(a)(5)
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
opinions; or, in lieu of such opinions, counsel last furnishing such opinion to
the Agents shall furnish the Agents with a letter substantially to the effect
that the Agents 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. Subject to the provisions
of Section 4(l) hereof and unless the Agents shall otherwise specify, 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 Commission 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 one or more Agents pursuant to
a Terms Agreement, the Company shall cause Ernst & Young LLP or other
independent certified public accountants reasonably satisfactory to the Agents,
as soon as practicable to furnish the Agents a letter, dated the date of the
date of filing with the Commission 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 reasonably satisfactory to the Agents, of the same tenor as the letter
referred to in Section 5(c) hereof but modified to relate to the Registration
Statement and Prospectus, as amended and supplemented to the date of such
letter, and 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
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financial information as of and for a fiscal quarter, Ernst & Young 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 the Agents, such letter should cover such other
information.
SECTION 8. Indemnification.
(a) Indemnification of the Agents. The Company agrees to indemnify and
hold harmless each Agent and each person, if any, who controls any 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 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 in order 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 any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of 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 8(c) hereof, the reasonable fees and
disbursements of counsel chosen by each Agent) 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 does 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 or
special
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counsel for the Company by or on behalf of any Agent expressly for use in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto). The foregoing indemnity with respect to any
untrue statement contained in or omission from a preliminary prospectus shall
not inure to the benefit of any Agent (or any person controlling such Agent)
from whom the person asserting any such loss, liability, claim, damage or
expense purchased any of the Notes which are the subject thereof if such person
did not receive a copy of the Prospectus (or the Prospectus as amended or
supplemented) (in each case exclusive of the documents from which information is
incorporated by reference) at or prior to the written confirmation of the sale
of such Notes to such person and the untrue statement contained in or omission
from such preliminary prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented).
(b) Indemnification of Company. Each Agent severally 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 8, 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 the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Agent
expressly for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto) and will reimburse any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, liability, claim, damage, expense or
action as such expenses are incurred.
(c) General. Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so 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 any such action. If it so elects within a reasonable time after
receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume the defense of such
action with counsel chosen by it and approved by the indemnified parties
defendant in such action (which approval shall not be unreasonably withheld),
unless such indemnified parties reasonably object to such assumption on the
ground that there may be legal defenses available to them which are different
from or in addition to those available to such indemnifying party. If an
indemnifying party assumes the defense of such action, the indemnifying party
shall not be liable for any fees and expenses
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of counsel for the indemnified parties incurred thereafter in connection with
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)
separate from their own 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.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under Section 8 or 9 hereof (whether or not the indemnified parties are actual
or potential parties hereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse.
If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 8(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement; provided
however, this provision does not limit the indemnifying party from contesting
the reasonableness and appropriateness of the attorneys fees and expenses.
SECTION 9. Contribution.
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 8 hereof
is for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company and the Agents shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Company and
one or more of the Agents, (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the Agents on
the other from the offering of the Notes or (ii) if the allocation provided by
clause (i) above is not permitted by law, in such proportion as
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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 the
Agents on the other in connection with the statements or omissions which
resulted in such losses, liabilities, claims, damages or expenses as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Agents on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total discounts and commissions
received by the Agents. The relative fault 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 the Agents and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, liabilities, claims, damages and expenses referred to in
the first sentence of this Section 9 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
Section 9. Notwithstanding the provisions of this Section 9, no Agent shall be
required to contribute any amount in excess of the amount by which the total
price at which the Notes sold through or by it to the public exceeds the amount
of any damages which such Agent has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. 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 9,
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, 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 the 1933 Act shall have the same rights to contribution as the
Company. The Agents' obligations in this Section 9 to contribute are several in
proportion to their respective obligations and not joint.
SECTION 10. Payment of Expenses.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:
(a) The printing and filing of the Registration Statement as
originally filed and each amendment thereto and the Prospectus and any
amendments or supplements thereto;
(b) The preparation, filing and reproduction of this
Agreement;
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(c) The preparation, printing, issuance and delivery of the
Notes, including any fees and expenses relating to the use of
book-entry notes;
(d) The fees and disbursements of the Company's accountants
and counsel, of the Trustee and its counsel, and of any Calculation
Agent;
(e) The reasonable fees and disbursements of counsel to the
Agents incurred from time to time in connection with the transactions
contemplated hereby;
(f) The qualification of the Notes under state securities laws
in accordance with the provisions of Section 4(i) hereof, including
filing fees and the fees and disbursements of counsel for the Agents in
connection therewith and in connection with the preparation of any Blue
Sky Survey and any Legal Investment Survey;
(g) The printing and delivery to the Agents of copies of the
Registration Statement and any amendments thereto, and of the
Prospectus and any amendments or supplements thereto, and the delivery
by the Agents of the Prospectus and any amendments or supplements
thereto in connection with solicitations or confirmations of sales of
the Notes;
(h) The preparation, printing, reproducing and delivery to the
Agents of copies of the Indenture and all supplements and amendments
thereto;
(i) Any fees charged by rating agencies for the rating
of the Notes;
(j) The fees and expenses, if any, incurred with respect to
any filing with the National Association of Securities Dealers, Inc.;
(k) Any advertising and other out-of-pocket expenses of the
Agent incurred with the prior written approval of the Company;
(l) The cost of providing any CUSIP or other identification
numbers for the Notes; and
(m) The fees and expenses of any Depositary (as defined in the
Indenture) and any nominees thereof in connection with the Notes.
SECTION 11. 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, shall remain operative and in full force and effect, regardless of any
investigation made by or on
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behalf of any Agent or controlling person of, or by or on behalf of the Company,
and shall survive each delivery of and payment for any of the Notes.
SECTION 12. 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; provided, however, that the termination of this
Agreement by an Agent shall terminate this Agreement only between such Agent and
the Company and the Company's notice of termination as to any one Agent shall
terminate this Agreement only between itself and such Agent.
(b) Termination of a Terms Agreement. The Agent or Agents party to a
Terms Agreement 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, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there shall have occurred any material
adverse change in the financial markets in the United States or any outbreak of
hostilities or escalation thereof or other calamity or crisis, the effect of
which is such as to make it, in the reasonable judgment of the Agent or Agents
party to such Terms Agreement, impracticable to market the Notes subject to such
Terms Agreement or enforce contracts for the sale of such Notes, or (iii) if
trading in the Notes has been suspended by the Commission, or if trading
generally on either the American Stock Exchange or 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 either
of said exchanges or by order of the Commission or any other governmental
authority, or if a banking moratorium shall have been declared by either
Federal, New York or Utah authorities, or (iv) the rating assigned by any
nationally recognized statistical rating organization to any debt securities of
the Company as of the date of such agreement shall have been lowered since that
date or if any such rating 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
the Agent's or Agents' attention any facts that would cause such Agent or Agents
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. As used in this Section 12(b), the term "Prospectus"
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means the Prospectus in the form first provided to the applicable Agent or
Agents for use in confirming sales of the related Notes.
(c) General. In the event of any such termination, neither party will
have any liability to the other party hereto, except that (i) each 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) the Agents shall own
any Notes purchased pursuant to a Terms Agreement with the intention of
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(h)
hereof, the provisions of Section 10 hereof, the indemnity and contribution
agreements set forth in Sections 8 and 9 hereof, and the provisions of Sections
11 and 15 hereof shall remain in effect.
SECTION 13. 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:
Mountain Fuel Supply Company
180 East First South Street
Salt Lake City, Utah 84111
or P.O. Box 45433
Salt Lake City, Utah 84145
Attention: Vice President, Treasurer and
Chief Financial Officer
Telecopy: (801) 324-5483
If to Merrill Lynch:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower - 10th Floor
World Financial Center
New York, New York 10281-1310
Attention: MTN Product Management,
Telecopy: (212) 449-2234
31
<PAGE>
If to Smith Barney:
Smith Barney Inc.
390 Greenwich Street - 4th Floor
New York, New York 10013
Attention: MTN Product Management/Origination
Telecopy: (212) 723-8854
or at such other address as such party may designate from time to time by notice
duly given in accordance with the terms of this Section 13.
SECTION 14. 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 such State. 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 15. Parties.
This Agreement shall inure to the benefit of and be binding upon the
Agents 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
Sections 8 and 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 their 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 16. Captions.
The captions in this Agreement are for convenience of reference only
and shall not define or limit any of the terms or provisions hereof.
32
<PAGE>
If the foregoing is in accordance with the Agents' 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 Agents and the Company in accordance with its terms.
Very truly yours,
MOUNTAIN FUEL SUPPLY COMPANY
By:
---------------------------
D.N. Rose
President and Chief Executive
Officer
Accepted:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
---------------------------------
Name:
Title:
SMITH BARNEY INC.
By:
---------------------------------
Name:
Title:
33
<PAGE>
EXHIBIT A
Mountain Fuel Supply Company
180 East First South
Salt Lake City, Utah 84147
Re: Distribution Agreement among the Mountain Fuel Supply
Company, Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Smith Barney Inc. dated
June , 1997
The undersigned agrees to purchase the following principal amount of
the Medium-Term Notes, Series C, referred to in the above-mentioned
Agreement: $_______________
[The undersigned agrees to purchase the aggregate principal amount of
Medium-Term Notes, Series C, referred to in the above-mentioned Agreement set
forth below:]
[Merrill Lynch, Pierce, Fenner & Smith
Incorporated .............. $ ]
------------
[Smith Barney Inc. ......................... $ ]
------------
The terms of such Medium-Term Notes, Series C, shall be as set forth
below.
Interest Rate:
If Fixed Rate Note:
Interest Rate:
Interest Payment Dates (if other than April 1 and October 1):
Regular Record Dates (if other than March 15 and September 15):
If Floating Rate Note:
Base Rate or Rates:
Initial Interest Rate:
Initial Interest Reset Date:
Spread, if any:
Spread Multiplier, if any:
Interest Reset Date(s):
Interest Payment Date(s):
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Payment Period:
Interest Reset Period:
Calculation Agent (if other than First Security Bank,
N.A.):
A-1
<PAGE>
If Redeemable:
Redemption Commencement Date:
Redemption Percentage:
Annual Redemption Percentage:
If Repayable:
Optional Repayment Date(s):
Principal Amount: $______________
Stated Maturity:
Trade Date:
Issue Price: ________%
Agent's Discount or Commission:
Original Issue Date:
Settlement Date and Time:
Additional Terms:
The Certificate referred to in Section 7(b), the opinions of counsel
referred to in Section 7(c) and the accountants' letter referred to in Section
7(d) of the above-mentioned Agreement will [not] be required, and the stand-off
agreement set forth in Section 4(k) of the above-mentioned Agreement will [not]
be applicable.
This Agreement and all of the rights and obligations of the parties
hereto 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 such
State.
A-2
<PAGE>
If the foregoing is in accordance with our agreement, please indicate
your acceptance hereof in the space provided for that purpose below.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
----------------------------------
Authorized Signatory
SMITH BARNEY INC.
By:
----------------------------------
Authorized Signatory
CONFIRMED AND ACCEPTED,
as of the date first above written.
MOUNTAIN FUEL SUPPLY COMPANY
By:
------------------------------------
Name:
Title:
A-3
<PAGE>
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company shall pay
the related Agent, on a discount basis, a commission for the sale of each Note
by such Agent equal to the principal amount of such Note multiplied by the
appropriate percentage set forth below:
PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
- --------------- ----------------
From 9 months to less than 1 year............. .125%
From 1 year to less than 18 months............ .150
From 18 months to less than 2 years........... .200
From 2 years to less than 3 years............. .250
From 3 years to less than 4 years............. .350
From 4 years to less than 5 years............. .450
From 5 years to less than 6 years............. .500
From 6 years to less than 7 years............. .550
From 7 years to less than 10 years............. .600
From 10 years to less than 15 years............ .625
From 15 years to less than 20 years............ .700
From 20 years to 30 years...................... .750
A-1
<PAGE>
EXHIBIT B
MOUNTAIN FUEL SUPPLY COMPANY
ADMINISTRATIVE PROCEDURES
for Fixed and Floating Rate Medium-Term Notes, Series C
(Dated as of June , 1997)
Medium-Term Notes, Series C (the "Notes") are to be offered on a
continuing basis by Mountain Fuel Supply Company (the "Company") through Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Smith Barney
Inc. who, as agents (each an "Agent", and collectively, the "Agents"), have
agreed to use their reasonable efforts to solicit offers to purchase the Notes
from the Company. The Agents may also purchase Notes as principal for resale.
The Notes are being sold pursuant to a Distribution Agreement between
the Company and the Agents, dated June , 1997 (the "Distribution Agreement").
Additionally, the Company has reserved the right to sell Notes on its own behalf
directly to purchasers. The Notes will be issued as a series of securities under
an Indenture (the "Indenture"), dated as of May 1, 1992, between the Company and
First Security Bank, N.A., as successor trustee to Citibank, N.A. (the
"Trustee"). A Registration Statement (the "Registration Statement", which term
shall include any additional registration statements filed in connection with
the Notes as provided in the introductory paragraph of the Distribution
Agreement) with respect to the Notes has been filed with the Securities and
Exchange Commission (the "Commission"). The most recent basic Prospectus
included in the Registration Statement, as supplemented with respect to the
Notes, is herein referred to as the "Prospectus". The most recent supplement to
the Prospectus with respect to the specific terms of the Notes is herein
referred to as the "Pricing Supplement".
Unless otherwise specified in the applicable Pricing Supplement, each
Note will be issued (a) fully registered in book-entry form (each, a "Book-Entry
Note") delivered to the Trustee, as agent for The Depository Trust Company
("DTC"), and recorded in the book-entry system maintained by DTC, or (b) in
definitive form (each, a "Definitive Note") delivered to the purchaser thereof
or a person designated by such purchaser. Owners of beneficial interests in
Notes issued in book-entry form will be entitled to physical delivery of Notes
in definitive form equal in principal amount to their respective beneficial
interests only upon certain limited circumstances described in the Prospectus.
1
<PAGE>
General procedures relating to the issuance of all Notes are set forth
in Part I hereof. Additionally, Notes issued in book-entry form will be issued
in accordance with the procedures set forth in Part II hereof and Notes issued
in definitive form will be issued in accordance with the procedures set forth in
Part III hereof. Capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Indenture or the Notes, as the
case may be.
PART I: PROCEDURES OF GENERAL
APPLICABILITY
Date of Issuance/
Authentication: Each Note will be dated as of the date
of its authentication by the Trustee.
Each Note shall also bear an original
issue date (each, an "Original Issue
Date"). The Original Issue Date shall
remain the same for all Notes
subsequently issued upon transfer,
exchange or substitution of an original
Note regardless of their dates of
authentication.
Maturities: Each Note will mature on a date no less
than nine months or more than 30 years
from its Original Issue Date (the
"Stated Maturity Date") selected by the
investor or other purchaser and agreed
to by the Company.
Registration: Unless otherwise provided in the
applicable Pricing Supplement, Notes
will be issued only in fully registered
form.
Denominations: Unless otherwise provided in the
applicable Pricing Supplement, the Notes
will be issued in denominations of
$1,000 and integral multiples thereof.
Interest Rate Bases
applicable to
Floating Rate
Notes: Unless otherwise provided in the
applicable Pricing Supplement, Floating
Rate Notes will bear interest at a rate
or rates determined by reference to the
Commercial Paper Rate, the Federal Funds
2
<PAGE>
Rate, LIBOR, the Prime Rate, the
Treasury Rate, or such other interest
rate basis or formula as may be set
forth in applicable Pricing Supplement,
or by reference to two or more such
rates, as adjusted by the Spread and/or
Spread Multiplier, if any, applicable to
such Floating Rate Notes.
Redemption/Repayment: The Notes will be subject to redemption
by the Company in accordance with the
terms of the Notes, which will be fixed
at the time of sale and set forth in the
applicable Pricing Supplement. If no
Initial Redemption Date is indicated
with respect to a Note, such Note will
not be redeemable prior to its Stated
Maturity Date.
The Notes will be subject to repayment
at the option of the Holders thereof in
accordance with the terms of the Notes,
which will be fixed at the time of sale
and set forth in the applicable Pricing
Supplement. If no Optional Repayment
Date is indicated with respect to a
Note, such Note will not be repayable at
the option of the Holder prior to its
Stated Maturity Date.
Calculation of
Interest: In case of Fixed Rate Notes, interest
(including payments for partial periods)
will be calculated and paid on the basis
of a 360-day year of twelve 30-day
months.
The interest rate on each Floating Rate
Note will be calculated by reference to
the specified Interest Rate Basis or
Bases plus or minus the applicable
Spread, if any, and/or multiplied by the
applicable Spread Multiplier, if any.
Unless otherwise provided in the
applicable Pricing Supplement, interest
on each Floating Rate Note will be
calculated by multiplying its principal
amount by an accrued interest factor.
Such accrued interest factor is computed
by adding the interest factor calculated
for each day in the period for which
3
<PAGE>
accrued interest is being calculated.
Unless otherwise provided in the
applicable Pricing Supplement, the
interest factor for each such day is
computed by dividing the interest rate
applicable to such day by 360 if the
Commercial Paper Rate, the Federal Funds
Rate, LIBOR or Prime Rate is an
applicable Interest Rate Basis, or by
the actual number of days in the year if
the Treasury Rate is an applicable
Interest Rate Basis. As provided in the
applicable Pricing Supplement, the
interest factor for Notes for which the
interest rate is calculated with
reference to two or more Interest Rate
Bases will be calculated in each period
in the same manner as if only the
lowest, highest or average of the
applicable Interest Rate Bases applied.
Interest: General. Each Note will bear interest
in accordance with its terms. Unless
otherwise provided in the applicable
Pricing Supplement, interest on each
Note will accrue from and including the
Original Issue Date of such Note for the
first interest period or from the most
recent Interest Payment Date (as defined
below) to which interest has been paid
or duly provided for all subsequent
interest periods to but excluding the
applicable Interest Payment Date or the
Stated Maturity Date or date of earlier
redemption or repayment, as the case may
be (the Stated Maturity Date or date of
earlier redemption or repayment is
referred to herein as the "Maturity
Date" with respect to the principal
repayable on such date).
If an Interest Payment Date or the
Maturity Date with respect to any Fixed
Rate Note falls on a day that is not a
Business Day (as defined below), the
required payment to be made on such day
need not be made on such day, but may be
made on the next succeeding Business Day
with the same force and effect as if
made on such day, and no interest shall
accrue on such payment for the period
from and after such day to the next
4
<PAGE>
succeeding Business Day. If an Interest
Payment Date other than the Maturity
Date with respect to any Floating Rate
Note would otherwise fall on a day that
is not a Business Day, such Interest
Payment Date will be postponed to the
next succeeding Business Day, except
that in the case of a Note for which
LIBOR is an applicable Interest Rate
Basis, if such Business Day falls in the
next succeeding calendar month, such
Interest Payment Date will be the
immediately preceding Business Day. If
the Maturity Date with respect to any
Floating Rate Note falls on a day that
is not a Business Day, the required
payment to be made on such day need not
be made on such day, but may be made on
the next succeeding Business Day with
the same force and effect as if made on
such day, and no interest shall accrue
on such payment for the period from and
after the Maturity Date to the next
succeeding Business Day. Unless
otherwise provided in the applicable
Pricing Supplement, "Business Day" means
any day, other than a Saturday or
Sunday, that is neither a legal holiday
nor a day on which banking institutions
are authorized or required by law,
regulation or executive order to close
in The City of New York; provided,
however, that, with respect to Notes for
which LIBOR is an applicable Interest
Rate Basis, such day is also a London
Business Day (as defined below). "London
Business Day" means, unless otherwise
specified in the applicable Pricing
Supplement, any day on which dealings in
deposits in United States dollars are
transacted in the London interbank
market.
Regular Record Dates. Unless otherwise
provided in the applicable Pricing
Supplement, the "Regular Record Date"
for a Note shall be the date 15 calendar
days (whether or not a Business Day)
preceding the applicable Interest
Payment Date.
5
<PAGE>
Interest Payment Dates. Interest
payments will be made on each Interest
Payment Date commencing with the first
Interest Payment Date following the
Original Issue Date; provided, however,
the first payment of interest on any
Note originally issued between a Regular
Record Date and an Interest Payment Date
will occur on the Interest Payment Date
following the next succeeding Regular
Record Date.
Unless otherwise provided in the
applicable Pricing Supplement, interest
payments on Fixed Rate Notes will be
made semiannually in arrears on April
1st and October 1st of each year and on
the Maturity Date, while interest
payments on Floating Rate Notes will be
made as specified in the applicable
Pricing Supplement.
Acceptance and
Rejection of Offers
from Solicitation
as Agents: If agreed upon by any Agent and the
Company, then such Agent acting solely
as agent for the Company and not as
principal will solicit purchases of the
Notes. Each Agent will communicate to
the Company, orally or in writing, each
reasonable offer to purchase Notes
solicited by such Agent on an agency
basis, other than those offers rejected
by such Agent. Each Agent has 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 a breach of such Agent's agreement
contained in the Distribution Agreement.
The Company has the sole right to accept
or reject any proposed purchase of
Notes, in whole or in part, and any such
rejection shall not a breach of the
Company's agreement contained in the
Distribution Agreement. Each Agent has
agreed to make reasonable efforts to
assist the Company in obtaining
performance by each purchaser whose
offer to purchase Notes has been
6
<PAGE>
solicited by such Agent and accepted by
the Company.
Preparation of
Pricing Supplement: If any offer to purchase a Note is
accepted by the Company, the Company
will promptly prepare a Pricing
Supplement reflecting the terms of such
Note. Information to be included in the
Pricing Supplement shall include:
1. the name of the Company;
2. the title of the Notes;
3. the date of the Pricing Supplement
and the date of the Prospectus to
which the Pricing Supplement
relates;
4. the name of the Offering Agent (as
defined below);
5. whether such Notes are being sold
to the Offering Agent as principal
or to an investor or other pur-
chaser through the Offering Agent
acting as agent for the Company;
6. with respect to Notes sold to the
Offering Agent as principal,
whether such Notes will be resold
by the Offering Agent to investors
and other purchasers at (i) a fixed
public offering price of a
specified percentage of their
principal amount or (ii) at varying
prices related to prevailing market
prices at the time of resale to be
determined by the Offering Agent;
7. with respect to Notes sold to an
investor or other purchaser through
the Offering Agent acting as agent
for the Company, whether such Notes
will be sold at (i) 100% of their
principal amount or (ii) a
specified percentage of their
principal amount;
8. the Offering Agent's discount
or commission;
7
<PAGE>
9. Net proceeds to the Company;
10. the Principal Amount, Specified
Currency, Original Issue Date,
Stated Maturity Date, Interest
Payment Date(s), Authorized
Denomination, Initial Redemption
Date, if any, Initial Redemption
Percentage, if any, Annual
Redemption Percentage Reduction, if
any, Optional Repayment Date(s), if
any, Exchange Rate Agent, if any,
Default Rate, if any, and, in the
case of Fixed Rate Notes, the
Interest Rate, and whether such
Fixed Rate Note is an Original
Issue Discount Note (and, if so,
the Issue Price), and, in the case
of Floating Rate Notes, the
Interest Category, the Interest
Rate Basis or Bases, the Day Count
Convention, Index Maturity (if
applicable), Initial Interest Rate,
if any, Maximum Interest Rate, if
any, Minimum Interest Rate, if any,
Initial Interest Reset Date,
Interest Reset Dates, Spread and/or
Spread Multiplier, if any, and
Calculation Agent; and
11. any other additional provisions of
the Notes material to investors or
other purchasers of the Notes not
otherwise specified in the
Prospectus.
The Company shall use its reasonable
best efforts to send such Pricing
Supplement by telecopy or overnight
express (for delivery by the close of
business on the applicable trade date,
but in no event later than 11:00 a.m.
New York City time, on the Business Day
following the applicable trade date) to
the Agent which made or presented the
offer to purchase the applicable Note
(in such capacity, the "Offering Agent")
and the Trustee at the following
applicable address: if to Merrill Lynch
& Co., to: Tritech Services, 40 Colonial
Drive, Piscataway, New Jersey 08854,
Attention: Prospectus Operations/
8
<PAGE>
Susannah Putnam, (908) 885-2769,
telecopier: (908) 885-2774/5/6; if to
Smith Barney Inc., 390 Greenwich Street,
4th Floor, New York, New York 10013,
Attention: MTN Product Management/
Origination, (212) 723-5123, telecopier:
(212) 723-8854; and by telecopy to Smith
Barney Inc., Brooklyn Army Terminal, 140
58th Street, 8th Floor, Brooklyn, New
York 11220, Attention: Prospectus
Fulfillment - Andrea Springer, (718)
921-8460, telecopier: (718) 921-8472;
and if to the Trustee, to: First
Security Bank, N.A., Attention:
Corporate Trust Department, 79 South
Main Street, Salt Lake City, Utah 84111,
telecopier: (801) 246-5053. For record
keeping purposes, one copy of such
Pricing Supplement shall also be mailed
or telecopied to Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated, World Financial Center,
North Tower, 10th Floor, New York, New
York, 10281-1310, Attention: MTN Product
Management, (212) 449-7476, telecopier:
(212) 449-2234, with a copy to Smith
Barney Inc., 390 Greenwich Street, 4th
Floor, New York, New York 10013,
Attention: MTN Product
Management/Origination, (212) 723-5123,
telecopier: (212) 723-8854 and with a
copy to Brown & Wood LLP, 555 California
Street, San Francisco, California 94104,
Attention: Paul C. Pringle, Esq.
In each instance that a Pricing
Supplement is prepared, the Offering
Agent will provide a copy of such
Pricing Supplement to each investor or
purchaser of the relevant Notes or its
agent. Pursuant to Rule 434 ("Rule 434")
of the Securities Act of 1933, as
amended, the Pricing Supplement may be
delivered separately from the
Prospectus. Outdated Pricing Supplements
(other than those retained for files)
will be destroyed.
Settlement: The receipt of immediately available
funds by the Company in payment for a
Note and the authentication and delivery
of such Note shall, with respect to such
9
<PAGE>
Note, constitute "settlement". Offers
accepted by the Company will be settled
in three Business Days, or at such time
as the purchaser, the applicable Agent
and the Company shall agree, pursuant to
the timetable for settlement set forth
in Parts II and III hereof under
"Settlement Procedure Timetable" with
respect to Global Notes and Certificated
Notes, respectively (each such date
fixed for settlement is hereinafter
referred to as a "Settlement Date"). If
procedures A and B of the applicable
Settlement Procedures with respect to a
particular offer are not completed on or
before the time set forth under the
applicable "Settlement Procedures
Timetable", such offer shall not be
settled until the Business Day following
the completion of settlement procedures
A and B or such later date as the
purchaser and the Company shall agree.
The foregoing settlement procedures may
be modified with respect to any purchase
of Notes by an Agent as principal if so
agreed by the Company and such Agent.
Procedure for Changing
Rates or Other
Variable Terms: When a decision has been reached to
change the interest rate or any other
variable term on any Notes being sold by
the Company, the Company will promptly
advise the Agents and the Trustee by
facsimile transmission and the Agents
will forthwith suspend solicitation of
offers to purchase such Notes. The
Agents will telephone the Company with
recommendations as to the changed
interest rates or other variable terms.
At such time as the Company notifies the
Agents and the Trustee of the new
interest rates or other variable terms,
the Agents may resume solicitation of
offers to purchase such Notes. Until
such time, only "indications of
interest" may be recorded. Immediately
after acceptance by the Company of an
offer to purchase Notes at a new
interest rate or new variable term, the
Company, the Offering Agent and the
10
<PAGE>
Trustee shall follow the procedures set
forth under the applicable "Settlement
Procedures".
Suspension of
Solicitation;
Amendment or
Supplement: The Company may instruct the Agents to
suspend solicitation of offers to
purchase Notes at any time. Upon
receipt of such instructions, the
Agents will forthwith suspend
solicitation of offers to purchase from
the Company until such time as the
Company has advised the Agents that
solicitation of offers to purchase may
be resumed. If the Company decides to
amend or supplement the Registration
Statement or the Prospectus (other than
to establish or change interest rates or
formulas, maturities, prices or other
similar variable terms with respect to
the Notes), it will promptly advise the
Agents and will furnish the Agents and
their counsel with copies of the
proposed amendment or supplement.
Copies of such amendment or supplement
will be delivered or mailed to the
Agents, their counsel and the Trustee in
quantities which such parties may
reasonably request at the following
respective addresses: Merrill Lynch &
Co., World Financial Center, North
Tower, 10th Floor, New York, New York
10281-1310, Attention: MTN Product
Management, (212) 449-7476, telecopier:
(212) 449-2234; and Smith Barney Inc.,
390 Greenwich Street, 4th Floor, New
York, New York 10013, Address,
Attention: MTN Product Management/
Origination, (212) 723-5123, telecopier:
(212) 723-8854; and if to the Trustee,
to: First Security Bank, N.A.,
Attention: Corporate Trust Department,
79 south Main Street, Salt Lake City,
Utah 84111, telecopier: (801) 246-5053.
For record keeping purposes, one copy of
each such amendment or supplement shall
also be mailed or telecopied to Brown &
Wood LLP, 555 California Street, San
Francisco, California 94104, Attention:
11
<PAGE>
Paul C. Pringle, Esq., (415) 772-1200,
telecopier: (415) 397-4621.
In the event that at the time the
solicitation of offers to purchase from
the Company is suspended (other than to
establish or change interest rates or
formulas, maturities, prices or other
similar variable terms with respect to
the Notes) there shall be any offers to
purchase Notes that have been accepted
by the Company which have not been
settled, the Company will promptly
advise the Offering Agent and the
Trustee whether such offers may be
settled and whether copies of the
Prospectus as theretofore amended and/or
supplemented as in effect at the time of
the suspension may be delivered in
connection with the settlement of such
offers. The Company will have the sole
responsibility for such decision and for
any arrangements which may be made in
the event that the Company determines
that such offers may not be settled or
that copies of such Prospectus may not
be so delivered.
Delivery of Prospectus
and applicable
Pricing Supplement: A copy of the most recent Prospectus and
the applicable Pricing Supplement, which
pursuant to Rule 434 may be delivered
separately from the Prospectus, must
accompany or precede the earlier of (a)
the written confirmation of a sale sent
to an investor or other purchaser or its
agent and (b) the delivery of Notes to
an investor or other purchaser or its
agent.
Authenticity of
Signatures: The Agents will have no obligation or
liability to the Company or the Trustee
in respect of the authenticity of the
signature of any officer, employee or
agent of the Company or the Trustee on
any Note.
12
<PAGE>
Documents Incorporated
by Reference: The Company shall supply the Agents with
an adequate supply of all documents
incorporated by reference in the
Registration Statement and the
Prospectus.
Taxes: Under the Indenture, Notes may be issued
at a discount from the stated principal
amount thereof or with such terms (such
as contingent interest, interest
holidays, irregular accrual periods,
interest payable in additional Notes,
stepped rates, rates based on multiple
or non-conventional interest indices or
Notes on which payments are tied to the
value of a single stock, a basket of
stocks, a commodity or a stock or
commodities index) so as to cause the
Notes to be subject to the original
issue discount rules of federal, state,
local or foreign tax laws. In the event
Notes are issued at such discount or
with such terms so as to cause original
issue discount rules to apply, the terms
of such Notes and additional disclosure
regarding the federal income tax
treatment of such Notes as well as
certain other considerations will be
provided in the applicable Pricing
Supplement relating thereto.
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<PAGE>
PART II: PROCEDURES FOR NOTES ISSUED
IN BOOK-ENTRY FORM
In connection with the qualification of Notes issued in book-entry form for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representations
from the Company and the Trustee to DTC, dated , 1997, and a Certificate
Agreement, dated _______________, 19__, between the Trustee and DTC, as amended
(the "Certificate Agreement"), and its obligations as a participant in DTC,
including DTC's Same-Day Funds Settlement System ("SDFS").
Issuance: All Fixed Rate Notes issued in
book-entry form having the same Original
Issue Date, Specified Currency, Interest
Rate, Default Rate, Interest Payment
Dates, redemption and/or repayment
terms, if any, and Stated Maturity Date
(collectively, the "Fixed Rate Terms")
will be represented initially by a
single Global Note; and all Floating
Rate Notes issued in book-entry form
having the same Original Issue Date,
Specified Currency, Interest Category,
formula for the calculation of interest
(including the Interest Rate Basis or
Bases, which may be the Commercial Paper
rate, the Federal Funds Rate, LIBOR, the
Prime Rate or the Treasury Rate or any
other interest rate basis or formula,
and Spread and/or Spread Multiplier, if
any), Day Count Convention, Initial
Interest Rate, Default Rate, Index
Maturity (if applicable), Minimum
Interest Rate, if any, Maximum Interest
Rate, if any, redemption and/or
repayment terms, if any, Interest
Payment Dates, Initial Interest Reset
Date, Interest Reset Dates and Stated
Maturity Date(collectively, the
"Floating Rate Terms") will be
represented initially by a single Global
Note.
For other variable terms with respect to
the Fixed Rate Notes and Floating Rate
Notes, see the Prospectus and the
applicable Pricing Supplement.
14
<PAGE>
Owners of beneficial interests in Global
Notes will be entitled to physical
delivery of Certificated Notes equal in
principal amount to their respective
beneficial interests only upon certain
limited circumstances described in the
Prospectus.
Identification: The Company has arranged with the CUSIP
Service Bureau of Standard & Poor's
Corporation (the "CUSIP Service Bureau")
for the reservation of one series of
CUSIP numbers, which series consists of
approximately 900 CUSIP numbers which
have been reserved for and relating to
Global Notes and the Company has
delivered to each of the Trustee and DTC
such list of such CUSIP numbers. The
Company will assign CUSIP numbers to
Global Notes as described below under
Settlement Procedure B. DTC will notify
the CUSIP Service Bureau periodically of
the CUSIP numbers that the Company has
assigned to Global Notes. The Trustee
will notify the Company at any time when
fewer than 100 of the reserved CUSIP
numbers remain unassigned to Global
Notes, and, if it deems necessary, the
Company will reserve and obtain
additional CUSIP numbers for assignment
to Global Notes. Upon obtaining such
additional CUSIP numbers, the Company
will deliver a list of such additional
numbers to the Trustee and DTC. Notes
issued in book-entry form in excess of
$200,000,000 aggregate principal amount
and otherwise required to be represented
by the same Global Note will instead be
represented by two or more Global Notes
which shall all be assigned the same
CUSIP number.
Registration: Unless otherwise specified by DTC, each
Global Note will be registered in the
name of Cede & Co., as nominee for DTC,
on the register maintained by the
Trustee under the Indenture. The
beneficial owner of a Note issued in
book-entry form (i.e., an owner of a
beneficial interest in a Global Note)
(or one or more indirect participants in
DTC designated by such owner) will
15
<PAGE>
designate one or more participants in
DTC (with respect to such Note issued in
book-entry form, the "Participants") to
act as agent for such beneficial owner
in connection with the book-entry system
maintained by DTC, and DTC will record
in book-entry form, in accordance with
instructions provided by such
Participants, a credit balance with
respect to such Note issued in
book-entry form in the account of such
Participants. The ownership interest of
such beneficial owner in such Note
issued in book-entry form will be
recorded through the records of such
Participants or through the separate
records of such Participants and one or
more indirect participants in DTC.
Transfers: Transfers of beneficial ownership
interests in a Global Note will be
accomplished by book entries made by DTC
and, in turn, by Participants (and in
certain cases, one or more indirect
participants in DTC) acting on behalf of
beneficial transferors and transferees
of such Global Note.
Exchanges: The Trustee may deliver to DTC and the
CUSIP Service Bureau at any time a
written notice specifying (a) the CUSIP
numbers of two or more Global Notes
outstanding on such date that represent
Global Notes having the same Fixed Rate
Terms or Floating Rate Terms, as the
case may be (other than Original Issue
Dates), and for which interest has been
paid to the same date; (b) a date,
occurring at least 30 days after such
written notice is delivered and at least
30 days before the next Interest Payment
Date for the related Notes issued in
book-entry form, on which such Global
Notes shall be exchanged for a single
replacement Global Note; and (c) a new
CUSIP number, obtained from the Company,
to be assigned to such replacement
Global Note. Upon receipt of such a
notice, DTC will send to its
Participants (including the Trustee) a
written reorganization notice to the
effect that such exchange will occur on
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<PAGE>
such date. Prior to the specified
exchange date, the Trustee will deliver
to the CUSIP Service Bureau written
notice setting forth such exchange date
and the new CUSIP number and stating
that, as of such exchange date, the
CUSIP numbers of the Global Notes to be
exchanged will no longer be valid. On
the specified exchange date, the Trustee
will exchange such Global Notes for a
single Global Note bearing the new CUSIP
number and the CUSIP numbers of the
exchanged Notes will, in accordance with
CUSIP Service Bureau procedures, be
canceled and not immediately reassigned.
Notwithstanding the foregoing, if the
Global Notes to be exchanged exceed
$200,000,000 in aggregate principal
amount, one replacement Note will be
authenticated and issued to represent
each $200,000,000 in aggregate principal
amount of the exchanged Global Notes and
an additional Global Note or Notes will
be authenticated and issued to represent
any remaining principal amount of such
Global Notes (See "Denominations"
below).
Denominations: Unless otherwise provided in the
applicable Pricing Supplement, Notes
issued in book-entry form will be issued
in denominations of $1,000 and integral
multiples thereof. Global Notes will
not be denominated in excess of
$200,000,000 aggregate principal amount.
If one or more Notes are issued in
book-entry form in excess of
$200,000,000 aggregate principal amount
and would, but for the preceding
sentence, be represented by a single
Global Note, then one Global Note will
be issued to represent each $200,000,000
in aggregate principal amount of such
Notes issued in book-entry form and an
additional Global Note or Notes will be
issued to represent any remaining
aggregate principal amount of such Note
or Notes issued in book-entry form. In
such a case, each of the Global Notes
representing Notes issued in book-entry
form shall be assigned the same CUSIP
number.
17
<PAGE>
Payments of Principal
and Interest: Payments of Interest Only. Promptly
after each Regular Record Date, the
Trustee will deliver to the Company and
DTC a written notice specifying by CUSIP
number the amount of interest to be paid
on each Global Note on the following
Interest Payment Date (other than an
Interest Payment Date coinciding with
the Maturity Date) and the total of such
amounts. DTC will confirm the amount
payable on each Global Note on such
Interest Payment Date by reference to
the daily bond reports published by
Standard & Poor's Corporation. On such
Interest Payment Date, the Company will
pay to the Trustee in immediately
available funds an amount sufficient to
pay the interest then due and owing on
the Global Notes, and upon receipt of
such funds from the Company, the Trustee
in turn will pay to DTC such total
amount of interest due on such Global
Notes (other than on the Maturity Date)
which is payable in U.S. dollars, at the
times and in the manner set forth below
under "Manner of Payment". The Trustee
shall make payment of that amount of
interest due and owing on any Global
Notes that Participants have elected to
receive in foreign or composite cur-
rencies directly to such Participants.
Notice of Interest Rates. Promptly after
each Interest Determination Date or
Calculation Date, as the case may be,
for Floating Rate Notes issued in
book-entry form, the Trustee will notify
each of Moody's Investors Service, Inc.
and Standard & Poor's Corporation of the
interest rates determined as of such
Interest Determination Date.
Payments at Maturity. On or about the
first Business Day of each month, the
Trustee will deliver to the Company and
DTC a written list of principal,
premium, if any, and interest to be paid
on each Global Note maturing or
otherwise becoming due in the following
month. The Trustee, the Company and DTC
will confirm the amounts of such
18
<PAGE>
principal, premium, if any, and interest
payments with respect to each such
Global Note on or about the fifth
Business Day preceding the Maturity Date
of such Global Note. On the Maturity
Date, the Company will pay to the
Trustee in immediately available funds
an amount sufficient to make the
required payments, and upon receipt of
such funds the Trustee in turn will pay
to DTC the principal amount of Global
Notes, together with premium, if any,
and interest due on the Maturity Date,
which are payable in U.S. dollars, at
the times and in the manner set forth
below under "Manner of Payment". The
Trustee shall make payment of the
principal, premium, if any, and interest
to be paid on the Maturity Date of each
Global Note that Participants have
elected to receive in foreign or
composite currencies directly to such
Participants. Promptly after (i) payment
to DTC of the principal, premium, if
any, and interest due on the Maturity
Date of such Global Note which are
payable in U.S. dollars and (ii) payment
of the principal, premium, if any, and
interest due on the Maturity Date of
such Global Note to those Participants
who have elected to receive such
payments in foreign or composite
currencies, the Trustee will cancel such
Global Note and deliver it to the
Company with an appropriate debit
advice. On the first Business Day of
each month, the Trustee will deliver to
the Company a written statement
indicating the total principal amount of
outstanding Global Notes as of the close
of business on the immediately preceding
Business Day.
Manner of Payment. The total amount of
any principal, premium, if any, and
interest due on Global Notes on any
Interest Payment Date or the Maturity
Date, as the case may be, which is
payable in U.S. dollars shall be paid by
the Company to the Trustee in funds
available for use by the Trustee no
later than 10:00 a.m., New York City
time, on such date. The Company will
19
<PAGE>
make such payment on such Global Notes
to an account specified by the Trustee.
Upon receipt of such funds, the Trustee
will pay by separate wire transfer
(using Fedwire message entry
instructions in a form previously
specified by DTC) to an account at the
Federal Reserve Bank of New York
previously specified by DTC, in funds
available for immediate use by DTC, each
payment in U.S. dollars of principal,
premium, if any, and interest due on
Global Notes on such date. Thereafter on
such date, DTC will pay, in accordance
with its SDFS operating procedures then
in effect, such amounts in funds
available for immediate use to the
respective Participants in whose names
the beneficial interests in such Global
Notes are recorded in the book-entry
system maintained by DTC. Neither the
Company nor the Trustee shall have any
responsibility or liability for the
payment in U.S. dollars by DTC of the
principal of, or premium, if any, or
interest on, the Global Notes. The
Trustee shall make all payments of
principal, premium, if any, and interest
on each Global Note that Participants
have elected to receive in foreign or
composite currencies directly to such
Participants.
Withholding Taxes. The amount of any
taxes required under applicable law to
be withheld from any interest payment on
a Global Note will be determined and
withheld by the Participant, indirect
participant in DTC or other Person
responsible for forwarding payments and
materials directly to the beneficial
owner of such Global Note.
Settlement
Procedures: Settlement Procedures with regard to
each Note in book-entry form sold by an
Agent, as agent of the Company, or
purchased by an Agent, as principal,
will be as follows:
A. The Offering Agent will advise the
Company by telephone, confirmed by
20
<PAGE>
facsimile, of the following
settlement information:
1. Principal amount, Authorized
Denomination, and Specified
Currency.
2. Exchange Rate Agent, if any.
3. (a) Fixed Rate Notes:
(i) Interest Rate.
(ii) Interest Payment Dates.
(iii) Whether such Note is
being issued with
Original Issue
Discount and, if so,
the terms thereof.
(b) Floating Rate Notes:
(i) Interest Category.
(ii) Interest Rate Basis or
Bases.
(iii) Initial Interest Rate.
(iv) Spread and/or Spread
Multiplier, if any.
(v) Initial Interest Reset
Date or Interest Reset
Dates.
(vi) Interest Payment Dates.
(vii) Index Maturity, if any.
(viii) Maximum and/or Minimum
Interest Rates, if any.
(ix) Day Count Convention.
(viii) Calculation Agent.
4. Price to public, if any, of
such Note (or whether such
Note is being offered at
varying prices relating to
prevailing market
21
<PAGE>
prices at time of resale as
determined by the Offering
Agent).
5. Trade Date.
6. Settlement Date (Original
Issue Date).
7. Stated Maturity Date.
8. Redemption provisions, if
any.
9. Repayment provisions, if any.
10. Default Rate, if any.
11. Net proceeds to the Company.
12. The Offering Agent's
discount or commission.
13. Whether such Note is being
sold to the Offering Agent
as principal or to an
investor or other
purchaser through the
Offering Agent acting as
agent for the Company.
14. Such other information
specified with respect to
such Note (whether by
Addendum or otherwise).
B. The Company will assign a CUSIP
number to the Global Note
representing such Note and then
advise the Trustee by facsimile
transmission or other electronic
transmission of the above settlement
information received from the
Offering Agent, such CUSIP number
and the name of the Offering Agent.
The Company will also advise the
Offering Agent of the CUSIP number
assigned to the Global Note.
C. The Trustee will communicate to DTC
and the Offering Agent through DTC's
Participant Terminal System a
pending deposit message specifying
22
<PAGE>
the following settlement
information:
1. The information set forth in
the Settlement Procedure A.
2. Identification numbers of the
participant accounts
maintained by DTC on behalf
of the Trustee and the
Offering Agent.
3. Identification of the Global
Note as a Fixed Rate Global
Note or Floating Rate Global
Note.
4. Initial Interest Payment
Date for such Note, number
of days by which such date
succeeds the related record
date for DTC purposes (or,
in the case of Floating Rate
Notes which reset daily or
weekly, the date five
calendar days preceding the
Interest Payment Date) and,
if then calculable, the
amount of interest payable on
such Interest Payment Date
(which amount shall have
been confirmed by the
Trustee).
5. CUSIP number of the Global
Note representing such Note.
6. Whether such Global Note
represents any other Notes
issued or to be issued in
book-entry form.
DTC will arrange for each pending
deposit message described above
to be transmitted to Standard &
Poor's Corporation, which will
use the information in the
message to include certain terms
of the related Global Note in the
appropriate daily bond report
published by Standard & Poor's
Corporation.
D. The Trustee will complete and
authenticate the Global Note
representing such Note.
23
<PAGE>
++ E. DTC will credit such Note to the
participant account of the Trustee
maintained by DTC.
F. The Trustee will enter an SDFS
deliver order through DTC's
Participant Terminal System
instructing DTC (i) to debit such
Note to the Trustee's participant
account and credit such Note to the
participant account of the Offering
Agent maintained by DTC and (ii) to
debit the settlement account of the
Offering Agent and credit the
settlement account of the Trustee
maintained by DTC, in an amount
equal to the price of such Note less
such Offering Agent's discount or
underwriting commission, as
applicable. Any entry of such a
deliver order shall be deemed to
constitute a representation and
warranty by the Trustee to DTC that
(i) the Global Note representing
such Note has been issued and
authenticated and (ii) the Trustee
is holding such Global Note pursuant
to the Certificate Agreement.
G. In the case of Notes in book-entry
form sold through the Offering
Agent, as agent, the Offering Agent
will enter an SDFS deliver order
through DTC's Participant Terminal
System instructing DTC (i) to debit
such Note to the Offering Agent's
participant account and credit such
Note to the participant account of
the Participants maintained by DTC
and (ii) to debit the settlement
accounts of such Participants and
credit the settlement account of the
Offering Agent maintained by DTC in
an amount equal to the initial
public offering price of such Note.
H. Transfers of funds in accordance
with SDFS deliver orders
described in Settlement
Procedures F and G will be
settled in accordance with SDFS
operating procedures in effect on
the Settlement Date.
24
<PAGE>
I. Upon receipt, the Trustee will pay
the Company, by wire transfer of
immediately available funds to an
account specified by the Company to
the Trustee from time to time, the
amount transferred to the Trustee in
accordance with Settlement Procedure
F.
J. The Trustee will send a copy of the
Global Note by first class mail to
the Company together with a
statement setting forth the
principal amount of Notes
Outstanding as of the related
Settlement Date after giving effect
to such transaction and all other
offers to purchase Notes of which
the Company has advised the Trustee
but which have not yet been settled.
K. If such Note was sold through the
Offering Agent, as agent, the
Offering Agent will confirm the
purchase of such Note to the
investor or other purchaser either
by transmitting to the Participant
with respect to such Note a
confirmation order through DTC's
Participant Terminal System or by
mailing a written confirmation to
such investor or other purchaser.
Settlement Procedures
Timetable: For offers to purchase Notes accepted by
the Company, Settlement Procedures A
through K set forth above shall be com-
pleted as soon as possible following the
trade but not later than the respective
times (New York City time) set forth
below:
SETTLEMENT
PROCEDURE TIME
---------- ----
A 11:00 a.m. on the trade
date or within one hour
following the trade
B 12:00 noon on the trade
date or within one hour
following the trade
25
<PAGE>
C No later than the close of
business on the trade date
D 9:00 a.m. on Settlement
Date
E 10:00 a.m. on Settlement
Date
F-G No later than 2:00 p.m. on
Settlement Date
H 4:00 p.m. on Settlement
Date
I-K 5:00 p.m. on Settlement
Date
Settlement Procedure H is subject to
extension in accordance with any
extension of Fedwire closing deadlines
and in the other events specified in the
SDFS operating procedures in effect on
the Settlement Date.
If settlement of a Note issued in
book-entry form is rescheduled or
canceled, the Trustee will deliver to
DTC, through DTC's Participant Terminal
System, a cancellation message to such
effect by no later than 5:00 p.m., New
York City time, on the Business Day
immediately preceding the scheduled
Settlement Date.
Failure to Settle: If the Trustee fails to enter an SDFS
deliver order with respect to a Note
issued in book-entry form pursuant to
Settlement Procedure F, the Trustee may
deliver to DTC, through DTC's
Participant Terminal System, as soon as
practicable a withdrawal message
instructing DTC to debit such Note to
the participant account of the Trustee
maintained at DTC. DTC will process the
withdrawal message, provided that such
participant account contains a principal
amount of the Global Note representing
such Note that is at least equal to the
principal amount to be debited. If
withdrawal messages are processed with
respect to all the Notes represented by
a Global Note, the Trustee will mark
such Global Note "canceled", make
appropriate entries in its records and
send certification of destruction of
26
<PAGE>
such canceled Global Note to the
Company. The CUSIP number assigned to
such Global Note shall, in accordance
with CUSIP Service Bureau procedures, be
canceled and not immediately reassigned.
If withdrawal messages are processed
with respect to a portion of the Notes
represented by a Global Note, the
Trustee will exchange such Global Note
for two Global Notes, one of which shall
represent the Global Notes for which
withdrawal messages are processed and
shall be canceled immediately after
issuance and the other of which shall
represent the other Notes previously
represented by the surrendered Global
Note and shall bear the CUSIP number of
the surrendered Global Note.
In the case of any Note in book-entry
form sold through the Offering Agent, as
agent, if the purchase price for any
such Note is not timely paid to the
Participants with respect thereto by the
beneficial investor or other purchaser
thereof (or a person, including an
indirect participant in DTC, acting on
behalf of such investor or other
purchaser), such Participants and, in
turn, the related Offering Agent may
enter SDFS deliver orders through DTC's
Participant Terminal System reversing
the orders entered pursuant to
Settlement Procedures F and G,
respectively. Thereafter, the Trustee
will deliver the withdrawal message and
take the related actions described in
the preceding paragraph. If such failure
shall have occurred for any reason other
than default by the applicable Offering
Agent to perform its obligations
hereunder or under the Distribution
Agreement, the Company will reimburse
such Offering Agent on an equitable
basis for its reasonable loss of the use
of funds during the period when the
funds were credited to the account of
the Company.
Notwithstanding the foregoing, upon any
failure to settle with respect to a Note
in book-entry form, DTC may take any
27
<PAGE>
actions in accordance with its SDFS
operating procedures then in effect. In
the event of a failure to settle with
respect to a Note that was to have been
represented by a Global Note also
representing other Notes, the Trustee
will provide, in accordance with
Settlement Procedure D, for the
authentication and issuance of a Global
Note representing such remaining Notes
and will make appropriate entries in its
records.
PART III: PROCEDURES FOR CERTIFICATED NOTES
Denominations: Unless otherwise provided in the
applicable Pricing Supplement, the
Certificated Notes will be issued in
denominations of $1,000 and integral
multiples thereof.
Payments of Principal,
Premium, if any,
and Interest: Upon presentment and delivery of the
Certificated Note, the Trustee upon
receipt of immediately available funds
from the Company will pay the principal
of, premium, if any, and interest on,
each Certificated Note on the Maturity
Date in immediately available funds.
All interest payments on a Certificated
Note, other than interest due on the
Maturity Date, will be made by check
mailed to the address of the person
entitled thereto as such address shall
appear in the Security Register;
provided, however, that Holders of
$10,000,000 or more in aggregate
principal amount of Certificated Notes
(whether having identical or different
terms and provisions) shall be entitled
to receive such interest payments by
wire transfer of immediately available
funds if appropriate wire transfer
instructions have been received in
writing by the Trustee not less than 15
calendar days prior to the applicable
Interest Payment Date.
28
<PAGE>
The Trustee will provide monthly to the
Company a list of the principal,
premium, if any, and interest to be paid
on Certificated Notes maturing in the
next succeeding month. The Trustee will
be responsible for withholding taxes on
interest paid as required by applicable
law.
Certificated Notes presented to the
Trustee on the Maturity Date for payment
will be canceled by the Trustee. All
canceled Certificated Notes held by the
Trustee shall be destroyed, and the
Trustee shall furnish to the Company a
certificate with respect to such
destruction.
Settlement
Procedures: Settlement Procedures with regard to
each Certificated Note purchased by an
Agent, as principal, or through an
Agent, as agent, shall be as follows:
A. The Offering Agent will advise the
Company by telephone of the
following Settlement information
with regard to each Certificated
Note:
1. Exact name in which the
Certificated Note(s) is to be
registered (the "Registered
Owner").
2. Exact address or addresses of
the Registered Owner for
delivery, notices and payments
of principal, premium, if any,
and interest.
3. Taxpayer identification number
of the Registered Owner.
4. Principal amount, Authorized
Denomination and Specified
Currency.
5. Exchange Rate Agent, if any.
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<PAGE>
6. (a) Fixed Rate Notes:
(i) Interest Rate.
(ii) Interest Payment
Dates.
(iii) Whether such Note
is being issued with
Original Issue
Discount and, if so,
the terms thereof.
(b) Floating Rate Notes:
(i) Interest Category.
(ii) Interest Rate Basis
or Bases.
(iii) Initial Interest
Rate.
(iv) Spread and/or Spread
Multiplier, if any.
(v) Initial Interest
Reset Date and
Interest Reset
Dates.
(vi) Interest Payment
Dates.
(vii) Index Maturity, if
any.
(viii) Maximum and/or
Minimum Interest
Rates, if any.
(ix) Day Count
Convention.
(x) Calculation Agent.
7. Price to public of such
Certificated Note (or whether
such Note is being offered at
varying prices relating to
prevailing market prices at time
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<PAGE>
of resale as determined by the
Offering Agent).
8. Trade Date.
9. Settlement Date (Original Issue
Date).
10. Stated Maturity Date.
11. Redemption provisions, if any.
12. Repayment provisions, if any.
13. Default Rate, if any.
14. Net proceeds to the Company.
15. The Offering Agent's discount or
commission.
16. Whether such Note is being
sold to the Offering Agent
as principal or to an
investor or other
purchaser through the
Offering Agent acting as
agent for the Company.
17. Such other information specified
with respect to such Note
(whether by Addendum or
otherwise).
B. After receiving such settlement
information from the Offering Agent,
the Company will advise the Trustee
of the above settlement information
by facsimile transmission confirmed
by telephone. The Company will
cause the Trustee to issue, authen-
ticate and deliver the Certificated
Note.
C. The Trustee will complete the
Certificated Note in the form
approved by the Company and the
Offering Agent, and will make
three copies thereof (herein
called "Stub 1", "Stub 2" and
"Stub 3"):
1. Certificated Note with the
Offering Agent's confirmation,
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<PAGE>
if traded on a principal
basis, or the Offering
Agent's customer
confirmation, if traded on
an agency basis.
2. Stub 1 for Trustee.
3. Stub 2 for Offering Agent.
4. Stub 3 for the Company.
D. With respect to each trade, the
Trustee will deliver the
Certificated Note and Stub 2 thereof
to the Offering Agent at the follow-
ing applicable address: Merrill
Lynch, Pierce, Fenner & Smith
Incorporated, Merrill Lynch Money
Markets Clearance, 55 Water Street,
Concourse Level, N.S.C.C. Window,
New York, New York 10041, Attention:
Al Mitchell, (212) 558-2405, tele-
copier: (212) 558-2457; and Smith
Barney Inc., 390 Greenwich Street,
4th Floor, New York, New York 10013,
Attention: MTN Product Management/
Origination, (212) 723-5123,
telecopier: (212) 723-8854; and
the Trustee will keep Stub 1. The
Offering Agent will acknowledge
receipt of the Certificated Note
through a broker's receipt and will
keep Stub 2. Delivery of the
Certificated Note will be made only
against such acknowledgment of
receipt. Upon determination that
the Certificated Note has been
authorized, delivered and completed
as aforementioned, the Offering
Agent will wire the net proceeds of
the Certificated Note after deduc-
tion of its applicable commission to
the Company pursuant to standard
wire instructions given by the
Company.
E. In the case of a Certificated Note
sold through the Offering Agent, as
agent, the Offering Agent will
deliver such Certificated Note (with
the confirmation) to the purchaser
32
<PAGE>
against payment in immediately
available funds.
F. The Trustee will send Stub 3 to the
Company.
Settlement
Procedures
Timetable: For offers to purchase Certificated
Notes accepted by the Company,
Settlement Procedures A through F set
forth above shall be completed as soon
as possible following the trade but not
later than the respective times (New
York City time) set forth below:
SETTLEMENT
PROCEDURE TIME
---------- ----
A 11:00 a.m. on the trade
date or within one hour
following the trade
B 12:00 noon on the trade
date or within one hour
following the trade
C-D 2:15 p.m. on Settlement
Date
E 3:00 p.m. on Settlement
Date
F 5:00 p.m. on Settlement
Date
Failure to Settle: In the case of Certificated Notes sold
through the Offering Agent, as agent, if
an investor or other purchaser of a
Certificated Note from the Company shall
either fail to accept delivery of or
make payment for such Certificated Note
on the date fixed for settlement, the
Offering Agent will forthwith notify the
Trustee and the Company by telephone,
confirmed in writing, and return such
Certificated Note to the Trustee.
The Trustee, upon receipt of such
Certificated Note from the Offering
Agent, will immediately advise the
Company and the Company will promptly
arrange to credit the account of the
Offering Agent in an amount of
immediately available funds equal to the
amount previously paid to the Company by
33
<PAGE>
such Offering Agent in settlement for
such Certificated Note. Such credits
will be made on the Settlement Date if
possible, and in any event not later
than the Business Day following the
Settlement Date; provided that the
Company has received notice on the same
day. If such failure shall have occurred
for any reason other than failure by
such Offering Agent to perform its
obligations hereunder or under the
Distribution Agreement, the Company will
reimburse such Offering Agent on an
equitable basis for its reasonable loss
of the use of funds during the period
when the funds were credited to the
account of the Company. Immediately upon
receipt of the Certificated Note in
respect of which the failure occurred,
the Trustee will cancel and destroy such
Certificated Note, make appropriate
entries in its records to reflect the
fact that such Certificated Note was
never issued, and accordingly notify in
writing the Company.
34
<PAGE>
INSTRUMENT OF
APPOINTMENT AND ACCEPTANCE OF
SUCCESSOR TRUSTEE
INSTRUMENT OF APPOINTMENT AND ACCEPTANCE OF SUCCESSOR TRUSTEE, dated as
of May 21, 1997, by and between Mountain Fuel Supply Company (the "Company"), a
Utah corporation having its principal office at 180 East 100 South, Salt Lake
City, Utah, and First Security Bank, National Association (the "Successor
Trustee"), a national banking association duly organized and existing under the
laws of the United States of America, having its principal Corporate Trust
office at 79 South Main Street, Salt Lake City, Utah, and Citibank, N.A., a
national banking association duly incorporated and existing under the laws of
the United States of America, having its principal Corporate Trust office at 120
Wall Street, New York, NY 10043 (herein called "Citibank").
RECITALS:
WHEREAS, The Company and Citibank, N.A. (the "Resigning Trustee")
entered into an Indenture (the "Indenture") dated as of May 1, 1992;
WHEREAS, Section 606(b) of the Indenture provides that the trustee may
at any time resign by giving written notice of such resignation to the Company,
effective upon the appointment of a successor trustee and acceptance of such
appointment by a successor trustee;
WHEREAS, Section 606(e) of the Indenture provides that, if the trustee
shall resign, the Company shall promptly appoint a successor trustee;
WHEREAS, Resigning Trustee gave notice of resignation as trustee under
the Indenture on May 1, 1997;
WHEREAS, the Company by a Board Resolution dated May 20, 1997 has duly
appointed the Successor Trustee as trustee to succeed Resigning Trustee under
the Indenture;
WHEREAS, Section 607 of the Indenture provides that any successor
trustee appointed in accordance with Section 606(e) thereof shall execute,
acknowledge and deliver to the Company and the retiring trustee an instrument
accepting such appointment under the Indenture, and thereupon the resignation of
the retiring trustee shall become effective and such successor trustee, without
any further act, deed, or conveyance, shall become vested with all rights,
powers, duties and obligations of the retiring trustee; and
WHEREAS, Successor Trustee is willing to accept such appointment as
successor trustee under the Indenture;
NOW, THEREFORE, the Company and Successor Trustee, for and in
consideration of the premises and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, hereby consent and
agree as follows;
ARTICLE I
THE BENEFICIARY
SECTION 101. The Company hereby accepts the resignation of Citibank as
Trustee under the Indenture, such resignation to be effective May 21,
<PAGE>
1997. From May 21, 1997 Citibank shall have no further responsibility for the
exercise of the rights and powers or of the performance of the trusts and duties
vested in the Trustee under the Indenture.
SECTION 102. The Company hereby appoints Successor Trustee as Trustee
under the Indenture to succeed to, and hereby vests Successor Trustee with, all
the rights, powers, duties and obligations of Resigning Trustee under the
Indenture with like effect as if Successor Trustee were originally named as
Trustee under the Indenture.
SECTION 103. In accordance with Section 606(f) of the Indenture, the
Company shall cause notice to be given of the resignation of Citibank and the
appointment of the Successor Trustee.
SECTION 104. The Company hereby represents and warrants that:
(a) It has performed or fulfilled each covenant, agreement and
condition on its part to be performed or fulfilled under the Indenture, or the
other documents to which it is a party, on or prior to the date hereof;
(b) No default or Event of Default or, to the best of its knowledge,
any event which with notice or the passage of time or both would constitute an
Event of Default under the Indenture has occurred and is continuing as of the
date hereof.
ARTICLE II
THE SUCCESSOR TRUSTEE
SECTION 201. Successor Trustee hereby represents and warrants to
Resigning Trustee and to the Company, that Successor Trustee is eligible under
the provisions of Section 609 of the Indenture.
SECTION 202. Successor Trustee hereby accepts its appointment as
Successor Trustee under the Indenture and accepts the rights, powers, duties and
obligations of Resigning Trustee under the Indenture, upon the terms and
conditions set forth therein, with like effect as if originally named as Trustee
under the Indenture.
ARTICLE III
MISCELLANEOUS
SECTION 301. Except as otherwise expressly provided herein or unless
the context otherwise requires, all terms used herein which are defined in the
Indenture shall have the meaning assigned to them in the Indenture.
SECTION 302. This Agreement shall be governed by and construed in
accordance with the laws of the jurisdiction whose laws govern the Indenture.
SECTION 303. This Agreement 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.
2
<PAGE>
IN WITNESS HEREOF, the parties have caused this Instrument of
Appointment and Acceptance to be duly executed and acknowledged as of the day
and year first above written.
Mountain Fuel Supply Company
By: /s/ S.E. Parks
---------------------------
Its: Vice President, Treasurer and CFO
First Security Bank, National Association,
as Successor Trustee
By: /s/ Brett R. King
---------------------------
Its: Assistant Vice President
Citibank, N.A.,
as Resigning Trustee
By: /s/ Wafaa Orfy
-----------------------------
Its: Senior Trust Officer
<PAGE>
[QUESTAR CORPORATION Letterhead]
May 28, 1997
Mountain Fuel Supply Company
180 East First South Street
P.O. Box 45360
Salt Lake City, Utah 84145-0360
Gentlemen:
Re: Mountain Fuel Supply Company, Registration
Statement on Form S-3 Relating to $75,000,000
Aggregate Principal Amount of Medium-Term Notes
I am acting as counsel for Mountain Fuel Supply Company, a Utah
corporation (the "Company"), in connection with preparation of a Registration
Statement on Form S-3 to be filed by the Company with the Securities and
Exchange Commission (the "Commission") on May 28, 1997, (the "Registration
Statement"). The Registration Statement relates to the issuance and sale from
time to time, pursuant to Rule 415 of the General Rules and Regulations
promulgated under the Securities Act of 1933 (the "1933 Act"), of up to
$75,000,000 aggregate principal amount of the Company's Medium-Term Notes (the
"Notes") to be issued pursuant to an Indenture dated as of May 1, 1992, (the
"Indenture") by and between the Company First Security Bank, N.A., as successor
trustee to Citibank, N.A. (the "Trustee"). The Indenture is filed as Exhibit 4
to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1992, and is incorporated by reference as Exhibit 4.01 to the Registration
Statement. The forms of the Fixed Rate Note and Floating Rate Note
(collectively, the "Notes") issuable under the Indenture are filed as Exhibits
4.03 and 4.04, respectively, to the Registration Statement on Form S-3 (No. 33-
46910) filed with the Commission on April 2, 1992, and are incorporated by
reference as Exhibits 4.03 and 4.04, respectively, to the Registration
Statement.
This opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the 1933 Act.
In connection with this opinion, I have examined and am familiar with
origi-
<PAGE>
Mountain Fuel Supply Company -2- May 28, 1997
nals or copies, certified or otherwise identified to my satisfaction, of
such documents, agreements, certificates and corporate or other records as I
have deemed necessary or appropriate as a basis for this opinion, including (i)
the Registration Statement (together with the form of preliminary prospectus
forming a part of it), in the form to be filed by the Company with the
Commission on May 28, 1997, (ii) the Indenture; (iii) the form of the Notes
issuable under the Indenture; (iv) the Form T-1 of the Trustee to be filed with
the Commission pursuant to the Trust Indenture Act of 1939, as amended (the
"1939 Act"); (v) the Restated Articles of Incorporation and Bylaws of the
Company, each as amended to the date of my opinion; (vi) resolutions of the
Board of Directors of the Company
relating to the filing of the Registration Statement, the proposed issuance of
the Notes, the designation of a committee of the Board of Directors (the
"Committee") authorized to take certain actions in connection with the issuance
of Notes, and (vii) the form of Distribution Agreement to be entered into by and
among the Company, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Smith Barney Inc. In my examination, I have assumed the
genuineness of all signatures, the legal capacity of all natural persons, the
authenticity of all documents submitted to me as originals, the conformity to
the original documents 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 my opinion that were not independently
established or verified, I have relied on statements and representations of
officers and other representatives of the Company and others.
I am admitted to the Bar of the State of Utah, and I express no opinion
as to the laws of any jurisdiction except Utah and the United States of America.
To the extent that my opinion relates to matters under the laws of the State of
New York, I have relied solely on the opinion of Skadden, Arps, Slate, Meagher &
Flom LLP, special counsel for the Company, which is being filed as Exhibit 5.02
to the Registration Statement.
Based on and subject to the foregoing, I am of the opinion that when
(i) the Registration Statement has become effective under the 1933 Act, (ii) the
Indenture, in the form in which it is incorporated by reference as Exhibit 4.01
to the Registration Statement, has been qualified under the 1939 Act, (iii) the
definitive terms of the Notes and of their issue and sale have been duly
established in conformity with the Indenture so as not to violate any applicable
law or agreement or instrument then binding on the Company, (iv) the Notes have
been duly executed and authenticated in accordance with such Indenture, and
(iiv) the Notes have been issued and sold as contemplated in the Registration
Statement and the prospectus contained in it and any supplement to it (the
"Prospectus"), the Notes will constitute valid and legally binding obligations
of the Company, entitled to the benefits provided by the Indenture and
enforceable against the Company in accordance with their terms,
<PAGE>
Mountain Fuel Supply Company -3- May 28, 1997
except to the extent that enforcement may be limited by (a) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and (b)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
I further consent to the reference made to me under the heading "Legal
Opinions" in the Prospectus and the filing of this opinion as Exhibit 5.01 to
the Registration Statement. My consent should not be viewed as an admission that
I am in the category of persons whose consent is required under Section 7 of the
1933 Act.
Very truly yours,
/s/ Gary G. Sackett
Gary G. Sackett
Attorney for
Mountain Fuel Supply Company
<PAGE>
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
May 28, 1997
Mountain Fuel Supply Company
180 East First South Street
Salt Lake City, Utah 84145-0360
Re: Mountain Fuel Supply Company, Registration
Statement on Form S-3 Relating to
$75,000,000 Aggregate Principal Amount of
Medium-Term Notes
Ladies and Gentlemen:
We have acted as special counsel to Mountain Fuel Supply
Company, a Utah corporation (the "Company"), in connection with the preparation
of a Registration Statement on Form S-3 to be filed by the Company with the
Securities and Exchange Commission (the "Commission") on the date hereof (the
"Registration Statement"). The Registration Statement relates to the issuance
and sale from time to time, pursuant to Rule 415 of the General Rules and
Regulations promulgated under the Securities Act of 1933, as amended (the "1933
Act"), of up to $75,000,000 aggregate principal amount of the Company's
Medium-Term Notes (the "Notes") to be issued pursuant to an indenture (the
"Indenture"), dated as of May 1, 1992, by and between the Company and First
Security Bank, N.A., as successor trustee to Citibank, N.A. (the "Trustee"). The
Indenture is incorporated by reference as Exhibit 4.01 to the Registration
Statement and the form of the Fixed Rate Note and Floating Rate Note
(collectively, the "Notes") issuable thereunder are incorporated by reference as
Exhibits 4.03 and 4.04, respectively, to the Registration Statement,
respectively.
This opinion is delivered in accordance with the requirements
of Item 601(b)(5) of Regulation S-K under the 1933 Act.
In connection with this opinion, we have examined and are
familiar with originals or copies, certified or otherwise identified to our
satisfaction, of such documents, agreements, certificates and corporate or other
records as we have deemed necessary or appropriate
<PAGE>
Mountain Fuel Supply Company
May 28, 1997
Page 2
as a basis for the opinion set forth herein, including (i) the Registration
Statement (together with the form of preliminary prospectus forming a part
thereof), in the form to be filed by the Company with the Commission on the date
hereof, (ii) the Indenture, (iii) the forms of the Notes issuable under the
Indenture, (iv) the Form T-1 of the Trustee to be filed with the Commission
pursuant to the Trust Indenture Act of 1939, as amended (the "1939 Act"), and
(v) the form of Distribution Agreement by and among the Company, Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Smith Barney Inc.
being filed as an exhibit to the Registration Statement.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such copies. In addition, we have assumed
that the Notes will be executed in substantially the form reviewed by us. We
have also assumed that the terms of the Notes will have been established so as
not to, and the execution and delivery by the Company of the Indenture and the
Notes and the performance of its obligations thereunder do not and will not,
violate, conflict with or constitute a default under (i) any agreement or
instrument to which the Company or its properties is subject, (ii) any law,
rule, or regulation to which the Company is subject, (iii) any judicial or
regulatory order or decree of any governmental authority or (iv) any consent,
approval, license, authorization or validation of, or filing, recording or
registration with any governmental authority. As to any facts material to the
opinion expressed herein which were not independently established or verified,
we have relied upon statements and representations of officers and other
representatives of the Company and others.
Members of our firm are admitted to the bar in the State of
New York, and we do not express any opinion as to the laws of any other
jurisdiction.
Based upon and subject to the qualifications, exceptions and
assumptions set forth herein, we are of the opinion that, assuming that the
Indenture and the issuance and sale of the Notes have been duly authorized by
requisite action on the part of the Company, when (i)
<PAGE>
Mountain Fuel Supply Company
May 28, 1997
Page 3
the Registration Statement has become effective under the 1933 Act, (ii) the
Indenture, in the form in which it is incorporated by reference as Exhibit 4.01
to the Registration Statement, has been qualified under the 1939 Act, (iii) the
definitive terms of the Notes and of their issue and sale have been duly
established in conformity with the Indenture, (iv) the Notes have been duly
executed and authenticated in accordance with the Indenture and (v) the Notes
have been issued and sold as contemplated in the Registration Statement and the
prospectus contained therein and any supplement thereof (the "Prospectus"), the
Notes will constitute valid and binding obligations of the Company, entitled to
the benefits provided by the Indenture and enforceable against the Company in
accordance with their terms, except to the extent that enforcement thereof may
be limited by (a) bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (b) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
We hereby consent to the reference to our firm under the
heading "Legal Opinions" in the Prospectus and the filing of this opinion as
Exhibit 5.02 to the Registration Statement. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the 1933 Act.
Very truly yours,
/s/ Skadden, Arps, Slate,
Meagher & Flom LLP
<PAGE>
EXHIBIT 12.01
MOUNTAIN FUEL SUPPLY COMPANY
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
12 MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------- ---------
1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Earnings
Income before income taxes................. $30,846 $32,778 $31,255 $31,374 $42,434 $48,603
Plus debt expense.......................... 15,254 15,423 15,886 16,580 16,637 16,707
Plus allowance for borrowed funds used
during construction..................... 246 228 321 390 277 265
Plus interest portion of rental
expense................................. 83 126 204 430 187 170
------- ------- ------- ------- ------- ---------
$46,429 $48,555 $47,666 $48,774 $59,535 $65,745
------- ------- ------- ------- ------- ---------
------- ------- ------- ------- ------- ---------
Fixed Charges
Debt expense............................... $15,254 $15,423 $15,886 $16,580 $16,637 $16,707
Plus allowance for borrowed funds used
during construction..................... 246 228 321 390 277 265
Plus interest portion of rental
expense................................. 83 126 204 430 187 170
------- ------- ------- ------- ------- ---------
$15,583 $15,777 $16,411 $17,400 $17,101 $17,142
------- ------- ------- ------- ------- ---------
------- ------- ------- ------- ------- ---------
Ratio of Earnings to Fixed Charges(1)........ 2.98 3.08 2.90 2.80 3.48 3.84
</TABLE>
- ------------------
(1) For the purposes of this presentation, earnings represent income before
income taxes and fixed charges. Fixed charges consist of total interest
charges, amortization of debt issuance costs and losses from repurchasing
debt, and the interest portion of rental costs.
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Mountain Fuel Supply
Company for the registration of $75,000,000 medium-term notes and to the
incorporation by reference therein of our report dated February 7, 1997, with
respect to the financial statements of Mountain Fuel Supply Company included in
its Annual Report (Form 10-K) for the year ended December 31, 1996, filed with
the Securities and Exchange Commission.
/s/ Ernst & Young LLP
May 27, 1997
Salt Lake City, Utah
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
------------------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
NOT APPLICABLE 87-0131890
(Jurisdiction of Incorporation (I.R.S. Employer
if not a U.S. national bank) identification No.)
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
(Address of principal executive offices) (Zip Code)
NOT APPLICABLE
(Name, address and telephone number of agent for service)
MOUNTAIN FUEL SUPPLY COMPANY
(Exact name of obligor as specified in its charter)
UTAH 87-0155877
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
180 East First South Street
Salt Lake City, Utah 84111
(Address or principal executive offices) (Zip Code)
Medium Term Notes
(Title of the Indenture securities)
<PAGE>
Item 1. General Information. Furnish the following information as to the
trustee:
(a) Name and address of each examining of supervising authority to
which it is subject.
Comptroller of the Currency, Washington, D.C. 20230; Federal
Reserve Bank of San Francisco, San Francisco, CA 94120; Federal
Deposit Insurance Corporation, Washington, D.C. 20429.
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations With The Obligor. If the obligor is an affiliate of
the trustee, describe each such affiliation.
Neither the obligor nor any underwriter for the obligor is an
affiliate of the Trustee.
Item 16. List of Exhibits. List below all exhibits filed as part of this
statement of eligibility and qualification.
Exhibit 1: copy of the articles of association as now in effect
Exhibit 2: certificate of authority to commence business
including a certificate of the Comptroller of the
Currency evidencing the change of the Trustee's name
Exhibit 3: copy of the authorization of the trustee to exercise
corporate trust powers
Exhibit 4: copy of the bylaws of the trustee
Exhibit 5: Not applicable
Exhibit 6: Not applicable
Exhibit 7: A copy of the latest report published pursuant to law
or its supervising or examining authority
Exhibit 8: Not applicable
Exhibit 9: Not applicable
<PAGE>
Signature
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, First Security Bank, National Association, a national
banking association organized and existing under the laws of the United States,
has duly caused this statement of eligibility and qualification to be signed on
its behalf by the undersigned thereunder duly authorized, all in the City of
Salt Lake City, and State of Utah, on the 9th day of May, 1997.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, Trustee
By: /s/ Brett R. King
---------------------------
Brett R. King
Assistant Vice President
<PAGE>
EXHIBIT 1
ARTICLES OF ASSOCIATION
OF
FIRST SECURITY BANK
NATIONAL ASSOCIATION
(As Amended)
FIRST. The title of this Association, which shall carry on
the business of banking under the laws of the United States, shall be "First
Security Bank, National Association."
SECOND. The place where the main banking house or office of
this Association shall be located shall be Ogden, County of Weber, State of
Utah. Its general business and its operations of discount and deposit shall also
be carried on in said city, and the branch or branches established or maintained
by it in accordance with the provisions of Section 36 of Title 12, United States
Code. The Board of Directors shall the power to change the location of the main
office of this Association (i) to any other authorized branch location within
the limits of Ogden, Utah, without the approval of the shareholders of this
Association and upon notice to the Comptroller of the Currency or, (ii) to any
other place within Ogden, Utah, or within thirty (30) miles of Ogden, Utah, with
the approval of the shareholders and the Comptroller of the Currency. The Board
of Directors shall have the power to change the location of any branch or
branches of this Association to any other location, without the approval of the
shareholders of this Association but subject to the approval of the Comptroller
of the Currency.
THIRD. The Board of Directors of the consolidated
association shall consist of not less than five (5) nor more than twenty-five
(25) of its shareholders.
FOURTH. There shall be an annual meeting of the shareholders
the purpose of which shall be the election of Directors and the transaction of
whatever other business may be brought before said meeting. It shall be held at
the main office of the Bank or other convenient place as the Board of Directors
may designate, on the third Monday of March of each year, but if no election is
held on that day, it may be held on any subsequent day according to such lawful
rules as may be prescribed by the Board of Directors. Nominations for election
to the Board of Directors may be made by the Board of Directors or by any
stockholder of any outstanding class of capital stock of the Bank entitled to
vote for election of directors. Nominations, other than those made by or on
behalf of the existing management of the Bank, shall be made in writing and
shall be delivered or mailed to the President of the Bank and to the Comptroller
of the Currency, Washington, D.C., not less than 14 days nor more than 50 days
prior to any meeting of stockholders called for the election of directors,
provided, however, that if less than 21 days notice of the meeting is given to
shareholders, such nomination shall be mailed or delivered to the President of
the Bank and to the Comptroller of the Currency not later than the close of
business on the seventh day following the day on which the notice of meeting was
mailed. Such notification shall contain the following information to the extent
known to the notifying shareholder: (a) the name and address of each proposed
nominee; (b) the principal occupation of each proposed nominee; (c) the total
number of shares of capital stock of the Bank that will be voted for each
proposed nominee; (d) the name and residence address of the notifying
shareholder; and (e) the number of shares of capital stock of the Bank owned by
the notifying shareholder. Nominations not made in accordance herewith may, in
his discretion, be disregarded by the Chairman of the meeting, and upon his
instructions, the voting inspectors may disregard all votes cast for each such
nominee.
<PAGE>
FIFTH. The authorized amount of capital stock of this
Association shall be One Hundred Million Dollars ($100,000,000.00), divided into
4,000,000 shares of common stock of the par value of Twenty-five Dollars
($25.00) each; provided, however, that said capital stock may be increased or
decreased from time to time, in accordance with the provision of the laws of the
United States. The shareholders of this Association shall not have any
pre-emptive rights to acquire unissued shares of this Association.
<PAGE>
SIXTH. (1) The Board of Directors shall appoint one of its
members President of this Association. It may also appoint a Chairman of the
Board, and one or more Vice Chairman. The Board of Directors shall have the
power to appoint one or more Vice Presidents, at least one of whom shall also be
a member of the Board of Directors, and who shall be authorized, in the absence
of the President, to perform all acts and duties pertaining to the office of the
President; to appoint a Cashier and such other officers and employees as may be
required to transact the business of this Association; to fix the salaries to be
paid to such officers or employees and appoint others to take their place.
(2) The Board of Directors shall have the power to
define the duties of officers and employees of this Association and to require
adequate bonds from them for the faithful performance of their duties; to make
all By-Laws that may be lawful for the general regulation of the business of
this Association and the management of its affairs, and generally to do and
perform all acts that may be lawful for a Board of Directors to do and perform.
(3) Each person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, administrative or investigative (other than an action
by or in the right of the Association) by reason of the fact that he is or was a
director, officer, employee or agent of the Association or is or was serving at
the request of the Association as a director, officer, employee, fiduciary or
agent of another corporation, partnership, joint venture, trust, estate or other
enterprise or was acting in furtherance of the Association's business shall be
indemnified against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Association; provided, however, no indemnification shall be given to a person
adjudged guilty of, or liable for, willful misconduct, gross neglect of duty, or
criminal acts or where there is a final order assessing civil money penalties or
requiring affirmative action by such person in the form of payments to the
Association. The termination of any action, suit or proceeding by judgment,
order, settlement, or its equivalent, shall not of itself, create a presumption
that the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Association.
(4) Each person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the Association (such action or suit being known as a
"derivative proceeding") to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the Association
or is or was serving at the request of the Association as a director, officer,
employee, fiduciary or agent of another corporation, partnership, joint venture,
trust, estate or other enterprise shall be indemnified against expenses
(including attorney's fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Association; provided, however, that no indemnification
shall be given where there is a final order assessing civil money penalties or
requiring affirmative action by such person in the form of payments to the
Association; and provided further that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Association, unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that, despite
the
<PAGE>
adjudication of liability but in view of all circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper.
(5) To the extent that a director, officer, employee
or agent of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in (3) or (4) of this
Article or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorney's fees) actually and
reasonably incurred by him in connection therewith.
<PAGE>
(6) Any indemnification under (3) or (4) of this
Article (unless ordered by a court) shall be made by the Association only as
authorized in the specific case upon a reasonable determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
(3) or (4) of this Article. Such determination shall be made (a) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in written opinion, or (c) by the
stockholders.
(7) Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Association in advance of the
final disposition of such action, suit or proceeding as authorized in the manner
provided in (6) of this Article (i) if the Board of Directors determines, in
writing, that (1) the director, officer, employee or agent has a substantial
likelihood or prevailing on the merits; (2) in the event the director, officer,
employee or agent does not prevail, he or she will have the financial capability
or reimburse the Association; and (3) payment of expenses by the Association
will not adversely affect its safety and soundness; and (ii) upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to repay
such amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Association as authorized in this Article.
(8) The indemnification provided by this Article shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any By-Law, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors, successors in interest, and
administrators of such a person.
SEVENTH. This Association shall have succession from the date
of its organization certificate until such time as it be dissolved by the act of
its shareholders in accordance with the provisions of the banking laws of the
United States, or until its franchise becomes forfeited by reason of violation
of law, or until terminated by either a general or a special act of Congress, or
until its affairs be placed in the hands of a receiver and finally wound up by
him.
EIGHTH. The Board of Directors of this Association, or any
three or more shareholders owning, in the aggregate, not less than ten per
centum of the stock of this Association, may call a special meeting of
shareholders at any time: Provided, however, that unless otherwise provided by
law, not less than ten days prior to the date fixed for any such meeting, a
notice of the time, place and purpose of the meeting shall be given by
first-class mail, postage prepaid, to all shareholders of record of this
Association. These Articles of Association may be amended at any regular or
special meeting of the Shareholders by the affirmative vote of the shareholders
owning at least a majority of the stock of this Association, subject to the
provisions of the banking laws of the United States. The notice of any
shareholders' meeting, at which an amendment to the Articles of Association of
this Association is to be considered shall be given as hereinabove set forth.
<PAGE>
EXHIBIT 2
CERTIFICATE
TREASURY DEPARTMENT )
Office of ) ss:
Comptroller of the Currency )
I, Thomas G. DeShazo, Deputy Comptroller of the Currency, do hereby certify
that:
Pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., the
Comptroller of the Currency charters and exercises regulatory and supervisory
authority over all national banking associations;
On December 9, 1881, The First National Bank of Ogden, Ogden, Utah was
chartered as a National Banking Association under the laws of the United
States and under Charter No. 2597;
The document hereto attached is a true and complete copy of the Comptroller
Certificate issued to The First National Bank of Ogden, Ogden, Utah, the
original of which certificate was issued by this Office on December 9, 1881;
On October 2, 1922, in connection with a consolidation of The First Bank of
Ogden, Ogden, Utah, and The Utah National Bank of Ogden, Ogden, Utah, the title
was charged to "The First & Utah National Bank of Ogden"; on January 18, 1923,
The First & Utah National Bank of Ogden changed its title to "First Utah
National Bank of Ogden"; on January 19, 1926, the title was changed to "First
National Bank of Ogden"; and on February 24, 1934, the title was changed to
"First Security Bank of Utah, National Association"; and
First Security Bank of Utah, National Association, Ogden, Utah, continues to
hold a valid certificate to do business as a National Banking Association.
IN TESTIMONY WHEREOF, I have
hereunto subscribed my name and
caused the seal of Office of the
Comptroller of the Currency to be
affixed to these presents at the
Treasury Department, in the City of
Washington and District of Columbia,
this fourth day of April, A.D. 1972.
Thomas G. DeShazo
----------------------------------
Deputy Comptroller of the Currency
<PAGE>
TREASURY DEPARTMENT
Comptroller of the Currency,
Washington, December 9th, 1881
WHEREAS, by satisfactory evidence presented to the
undersigned it has been made to appear that "The First
National Bank of Ogden" in Ogden City in the County of Weber,
and Territory of Utah has complied with all the provisions of
the Revised Statutes of the United States, required to be
complied with before an association shall be authorized to
commence the business of Banking. Now, therefore, I, John Jay
Knox, Comptroller of the Currency, do hereby certify that
"The First National Bank of Ogden" in Ogden City in the
County of Weber, and Territory of Utah is authorized to
commence the business of Banking, as provided in Section
Fifty-one hundred and sixty-nine of the Revised Statutes of
the United States.
In testimony whereof, witness my hand and
seal of office this 9th day of December, 1881.
John Jay Knox
----------------------------------------
Comptroller of the Currency
<PAGE>
EXHIBIT 3
FEDERAL RESERVE BOARD
WASHINGTON, D.C.
I, S.R. Carpenter, Assistant Secretary of the Federal Reserve
Board, do hereby certify that it appears from the records of
the Federal Reserve Board that:
(1) Pursuant to authority vested in the Federal Reserve
Board by an Act of Congress approved December 23, 1913, known
as the Federal Reserve Act, as amended, the Federal Reserve
Board has heretofore granted to the First National Bank of
Ogden, Ogden, Utah, the right to act when not in
contravention of State or local law, as trustee, executor,
administrator, registrar of stocks and bonds, guardian of
estates, assignee, receiver, committee of estates of
lunatics, or in any other fiduciary capacity in which State
banks, trust companies or other corporations which come into
competition with national banks are permitted to act under
the laws of the State of Utah;
(2) On February 24, 1934, the First National Bank of
Ogden, Ogden, Utah, changed its title to First Security Bank
of Utah, National Association, under the provisions of an Act
of Congress approved May 1, 1886, whereby all of the rights,
liabilities and powers of such national bank under its old
name devolved upon and inured to the bank under its new name;
and
(3) Pursuant to the permission heretofore granted by
the Federal Reserve Board to the First National Bank of Ogden,
Ogden, Utah, as aforesaid, and by virtue of the change in the
title of such bank, the First Security Bank of Utah, National
Association has authority to act, when not in contravention
of State or local law, as trustee, executor, administrator,
registrar of stocks and bonds, guardian of estates of
lunatics, or in any other
<PAGE>
fiduciary capacity in which State banks, trust companies or
other corporations which come into competition with national
banks are permitted to act under the laws of the State of
Utah, subject to regulations prescribed by the Federal
Reserve Board.
IN WITNESS WHEREOF, I have hereunto subscribed my
name and caused the seal of the Federal Reserve Board to
be affixed at the City of Washington, in the District of
Columbia, on the 1st day of March, 1934.
S.R. Carpenter
------------------------------------------------
Assistant Secretary, Federal Reserve Board.
<PAGE>
FEDERAL RESERVE BOARD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE TO
THE FEDERAL RESERVE BOARD
March 1, 1934.
First Security Bank of Utah, National Association,
Ogden, Utah.
Dear Sirs:
Reference is made to the change in the name of the First National Bank
of Ogden, Ogden, Utah, pursuant to the provisions of the Act of May 1, 1886, to
First Security Bank of Utah, National Association, and there is inclosed a
certificate issued by the Federal Reserve Board showing the trust powers
heretofore granted to the bank under its former name and that it is authorized
to exercise such powers under its new name.
Very truly yours,
S.R. Carpenter
S.R. Carpenter,
Assistant Secretary.
Enclosure
<PAGE>
[LOGO]
- --------------------------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
- --------------------------------------------------------------------------------
Licensing Unit (Applications)
50 Fremont Street, Suite 3900
San Francisco, CA 94105
(415) 545-5900, FAX (415) 545-5925
June 20, 1996
Board of Directors
First Security Bank of Utah, N.A.
c/o First Security Corporation
Attn: Brad D. Hardy, EVP
Post Office Box 30006
Salt Lake City, Utah 84130
Re: Merger - First Security Bank of Idaho, N.A., Boise, Idaho into First
Security Bank of Utah, N.A., Ogden, Utah, under the title of First
Security Bank, N.A., Odgen, Utah. Control No: 96-WE-02-010
Dear Members of the Board:
This letter is the official certification of the Comptroller of the Currency to
merge First Security Bank of Idaho, National Association, Boise, Idaho into
First Security Bank of Utah, National Association, Ogden, Utah, effective as of
June 21, 1996. The resulting bank title is First Security Bank, National
Association and charter number is 2597.
This is also the official authorization given to First Security Bank, National
Association to operate the branches of the target institution and to operate the
main office of the target institution as a branch. Branches of a national bank
target are not listed since they are automatically carried over to the resulting
bank and retain their current OCC branch numbers.
Please be advised that the Charter Certificate for the merged bank, First
Security Bank of Idaho, National Association, must be returned to the Western
District Office for cancellation.
Very truly yours,
Robert G. Tornborg
Robert G. Tornborg
Acting Director of Bank Supervision - Compliance and Analysis
<PAGE>
EXHIBIT 4
BY-LAWS OF THE
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
Organized under the National Banking laws of the United States.
MEETINGS
SECTION 1. Unless otherwise provided by the articles of association a notice
of each shareholder's meeting, setting forth clearly the time, place and
purpose of the meeting, shall be given, by mail, to each shareholder of record
of this bank at lease 10 days prior to the date of such meeting. Any failure
to mail such notice or any irregularity therein, shall not affect the validity
of such meeting or of any of the proceedings thereat.
SECTION 2. A record shall be made of the shareholders represented in person
and by proxy, after which the shareholders shall proceed to the transaction of
any business that may properly come before the meeting. A record of the
shareholder's meeting, giving the names of the shareholders present and the
number of shares of stock held by each, the names of the shareholders
represented by proxy and the number of shares held by each, and the names of the
proxies, shall be entered in the records of the meeting in the minute book of
the bank. This record shall show the names of the shareholders and the number of
shares voted for each resolution or voted for each candidate for director.
Proxies shall be secured for the annual meeting alone, shall be dated, and shall
be filed with the records of the meeting. No officer, director, employee, or
attorney for the bank may act as proxy.
The chairman or Secretary of the meeting shall notify the directors-elect of
their election and of the time at which they are required to meet at the banking
house for the purpose of organizing the new board. At the appointed time, which
as closely as possible shall follow their election, the directors-elect shall
convene and organize.
The president or cashier shall then forward to the office of the Comptroller of
the Currency a letter stating that a meeting of the shareholders was held in
accordance with these by-laws, stating the number of shares represented in
person and the number of shares represented by proxy, together with a list of
the directors elected and the report of the appointment and signatures of
officers.
OFFICERS
SECTION 3. Each officer and employee of this bank shall be responsible for all
such moneys, funds, valuables, and property of every kind as may be entrusted to
his care or otherwise come into his possession, and shall faithfully and
honestly discharge his duties and apply and account for all such moneys, funds,
valuables and other property that may come into his hands as such officer or
employee and pay over and deliver the same to the order of the Board of
Directors or to such person or persons as may be authorized to demand and
receive same.
<PAGE>
SECTION 4. If the Board of Directors shall not require separate bonds, it
shall require a blanket bond in an amount deemed by it to be sufficient.
SECTION 5. The following is an impression of the seal adopted by the Board of
Directors of this bank: (Here in the original resolution was imprinted the
Association's seal).
SECTION 6. The various branches of this bank shall be open for business during
such hours as shall be customary in the vicinity, or as shall be fixed, as to
any branch, by the clearing house association of which such branch shall be a
member.
SECTION 7. The regular meeting of the board of directors shall be held on the
first Wednesday after the first Tuesday of each month. When any regular meeting
of the board of directors falls upon a holiday, the meeting shall be held on
such other day as the board may previously designate. Special meetings may be
called by the president, any vice-president, the secretary or the cashier, or at
the request of three or more directors.
MINUTE BOOK
SECTION 8. The organization papers of this bank, the returns of the elections,
the proceedings of all regular and special meetings of the directors and of the
shareholders, the by-laws and any amendments thereto, and reports of the
committees of directors shall be recorded in the minute book; and the minutes of
each meeting shall be signed by the chairman and attest by the secretary of the
meeting.
TRANSFERS OF STOCK
SECTION 9. The stock of this bank shall be assignable and transferable only on
the books of this bank, subject to the restrictions and provisions of the
national banking laws; and a transfer book shall be provided in which all
assignments and transfers of stock shall be made.
SECTION 10. Certificates of stock, signed by the president or vice-president,
and the secretary or the cashier or any assistant cashier, may be issued to
shareholders, and when stock is transferred the certificates thereof shall be
returned to the association, cancelled, preserved, and new certificates issued.
Certificates of stock shall state upon the face thereof that the stock is
transferable only upon the books of the association, and shall meet the
requirements of section 5139, United States Revised Statutes, as amended.
EXPENSES
SECTION 11. All the current expenses of the bank shall be paid by the cashier,
except that the current expenses of each branch shall be paid by the manager
thereof; and such officer shall, every six months, or more often if required,
make to the board a report thereof.
<PAGE>
EXAMINATIONS
SECTION 12. There shall be appointed by the board of directors a committee of
three members, exclusive of the active officers of the bank, whose duty it shall
be to examine, at least once in each period of eighteen months, the affairs of
each branch as well as the head office of the association, count its cash, and
compare its assets and liabilities with the accounts of the general ledgers,
ascertain whether the accounts are correctly kept and that the condition of the
bank corresponds therewith, and whether the bank is in a sound and solvent
condition, and to recommend to the board such changes in the manner of doing
business, etc., as shall seem to be desirable, the result of which examination
shall be reported in writing to the board at the next regular meeting
thereafter, provided that the appointment of such committee and the examinations
by it may be dispensed with if the board shall cause such examination to be made
and reported to the board by accountants approved by it.
CHANGES IN BY-LAWS
SECTION 13. These by-laws may be changed or amended by the vote of a majority
of the directors at any regular or special meeting of the board, provided,
however, that the directors shall have been given 10 days notice of the
intention to change or offer an amended thereto.
REPEAL
SECTION 14. All by-laws heretofore adopted are repealed.
