Filed Pursuant to Rule 424(b)(5)
Registration No. 333-83497
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 20, 1999)
$500,000,000
NATIONAL FUEL GAS COMPANY
MEDIUM-TERM NOTES, SERIES E
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National Fuel Gas Company may offer from time to time up to $500,000,000
aggregate principal amount of its unsecured Medium Term
Notes, Series E. The specific terms of any Notes offered will be included in a
pricing supplement. Unless the pricing supplement provides otherwise:
. The Notes will mature between . The Notes may be subject to
nine months and 40 years from redemption at the option of
the issue date. National Fuel Gas Company or
purchase at the option of the
holder or may not be subject
to redemption or purchase at
all.
. The Notes will bear interest . The Notes will be denominated
at either a fixed or a in U.S. dollars and have
floating rate. Floating rate minimum denominations of $1,000
interest may be based on: and any larger amount in integral
multiples of $1,000.
. CD Rate
. CMT Rate . The Notes will be held in global
. Commercial Paper Rate form by The Depository Trust
. Federal Funds Rate Company exept under the
. LIBOR circumstances described in this
. Prime Rate prospectus supplement.
. Treasury Rate
. Any other rate or index . The Notes will be a new issue of
specified in the securities with no established
applicable pricing trading market.
supplement.
. The Notes will not be listed on
. Interest payment dates for any securities exchange.
each fixed rate Note will
be March 1 and September
1 of each year and at
maturity.
. Interest payment dates on
floating rate Notes will
be monthly, quarterly,
semi-annually or annually.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS
OR ANY PRICING SUPPLEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
National Fuel Gas Company may sell the Notes to the Agents as
principals for resale at varying or fixed offering prices or through
the Agents as agents using their reasonable best efforts on National
Fuel Gas Company's behalf. Unless otherwise specified in the pricing
supplement, the price to the public for the Notes will be 100% of the
principal amount. If National Fuel Gas Company sells all of the Notes,
it expects to receive proceeds of between $496,250,000 and $499,375,000
after paying the Agents' discounts and commissions of between $625,000
and $3,750,000 and before deducting expenses payable by National Fuel
Gas Company. National Fuel Gas Company may also sell the Notes without
the assistance of the Agents (whether acting as principal or as agent).
---------------
Merrill Lynch & Co.
Bear, Stearns & Co. Inc.
Goldman, Sachs & Co.
Lehman Brothers
Morgan Stanley Dean Witter
PaineWebber Incorporated
Salomon Smith Barney
October 14, 1999
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THE ACCOMPANYING PROSPECTUS INCORPORATES BY REFERENCE IMPORTANT
BUSINESS AND FINANCIAL INFORMATION ABOUT NATIONAL FUEL GAS COMPANY THAT IS NOT
INCLUDED IN OR DELIVERED WITH THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. THIS INFORMATION IS AVAILABLE TO YOU AS SET FORTH IN THE
ACCOMPANYING PROSPECTUS.
---------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
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DESCRIPTION OF NOTES.........................................................S-3
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS.....................S-19
SUPPLEMENTAL PLAN OF DISTRIBUTION...........................................S-21
LEGALITY....................................................................S-22
PROSPECTUS
NATIONAL FUEL GAS COMPANY......................................................2
WHERE YOU CAN FIND MORE INFORMATION............................................2
RATIO OF EARNINGS TO FIXED CHARGES.............................................3
USE OF PROCEEDS................................................................3
DESCRIPTION OF DEBT SECURITIES.................................................4
PLAN OF DISTRIBUTION..........................................................13
EXPERTS.......................................................................14
LEGALITY......................................................................15
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DESCRIPTION OF NOTES
National Fuel Gas Company ("National") intends to issue its
Medium-Term Notes, Series E (the "Notes"). The following description of the
particular terms of the Notes supplements and supersedes, to the extent
inconsistent, the description of the general terms and provisions of the Debt
Securities set forth under "Description of Debt Securities" in the accompanying
prospectus, to which description reference is hereby made. Certain capitalized
terms used and not defined in this prospectus supplement are defined under
"Description of Debt Securities" in the accompanying prospectus. The particular
terms and conditions of the Notes sold pursuant to any pricing supplement to
this prospectus supplement will be described therein. The terms and conditions
set forth in this "Description of Notes" will apply to each Note unless
otherwise specified in the pricing supplement and in such Note.
GENERAL
The Notes will be issued as a series of debt securities under an
Indenture, dated as of October 1, 1999 (the "Indenture"), between National and
The Bank of New York, as Trustee (the "Trustee").
The Notes will be issued in fully registered form only, without
coupons. Each Note will be issued initially in book-entry form (a "Book-Entry
Note") or in a fully registered certificated form (a "Certificated Note").
Except as set forth herein under "-- Book-Entry Only Issuance - The Depository
Trust Company" or in any pricing supplement relating to specific Notes, the
Notes will not be issuable as Certificated Notes.
Each Note will mature from nine months to 40 years from its date of
issue (the "Stated Maturity"), as selected by the purchaser and agreed to by
National. Each Note may also be subject to redemption at the option of National
or to redemption or purchase by National at the option of the registered holder
of the Note (a "Holder") before its Stated Maturity or may not be subject to
redemption or purchase at all.
The pricing supplement relating to each Note will describe the
following terms:
(a) the date or dates on which the principal of the Note is
payable or the method of determination thereof and the right, if any,
to extend such date or dates;
(b) whether the Note bears interest at a fixed rate (a
"Fixed Rate Note") or at a floating rate (a "Floating Rate Note");
(c) if the Note is a Fixed Rate Note, the rate per annum at
which the Note will bear interest;
(d) if the Note is a Floating Rate Note, the Base Rate, the
Initial Interest Rate, the Interest Reset Period, the Interest Reset
Dates, the Index Maturity, the Maximum Interest Rate, if any, the
Minimum Interest Rate, if any, the Spread or Spread Multiplier, if any
(all as defined below), and any other terms relating to the particular
method of calculating the interest rate on the Note;
(e) the date or dates from which interest will accrue on the
Note (the "Original Interest Accrual Date"), the date or dates on
which such interest shall be payable (each, an "Interest Payment
Date"), the right, if any, of National to defer or extend an Interest
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Payment Date, and the Regular Record Date (as defined below) for any
interest payable on any Interest Payment Date and the person or
persons to whom interest on the Notes shall be payable on any Interest
Payment Date, if other than the person in whose name the Note is
registered at the close of business on the Regular Record Date for
such interest or, in the case of maturity or earlier redemption, the
person to whom principal is payable;
(f) the place or places where, subject to the terms of the
Indenture as described in the accompanying prospectus under
"Description of Debt Securities -- Payment and Paying Agents," the
principal of and premium, if any, and interest, if any, on the Note
will be payable and where, subject to the terms of the Indenture as
described in the accompanying prospectus under "Description of Debt
Securities -- Registration and Transfer," the Note may be presented
for registration of transfer or exchange and the place or places where
notices and demands to or upon National in respect of the Note and the
Indenture may be served; and, if such is the case, that the principal
of the Note shall be payable without presentation or surrender
thereof;
(g) any period or periods within which, or date or dates on
which, the price or prices at which and the terms and conditions upon
which the Note may be redeemed, in whole or in part, at the option of
National;
(h) the obligation or obligations, if any, of National to
redeem or purchase the Note or any portion thereof pursuant to any
sinking fund or other mandatory redemption provisions or at the option
of the holder thereof, and the period or periods within which, or date
or dates on which, the price or prices at which, and the terms and
conditions upon which the Note shall be redeemed or purchased, in
whole or in part, pursuant to such obligation, and applicable
exceptions to the requirements of a notice of redemption in the case
of mandatory redemption or redemption at the option of the holder;
(i) the denominations in which the Note shall be issuable if
other than denominations of $1,000 and any larger amount that is an
integral multiple of $1,000; and
(j) any other terms of the Note.
"Business Day" with respect to any Note means any day, other than
Saturday or Sunday, which is (a) not a day on which banking institutions or
trust companies in the City of New York, New York or other city in which is
located any office or agency maintained for the payment of principal of or
premium, if any, or interest on such Note, are authorized or required by law,
regulation or executive order to be closed and (b) if such Note is a LIBOR Note
(as defined below), a London Banking Day. "London Banking Day" with respect to
any Note means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
PAYMENT OF PRINCIPAL AND INTEREST
The interest payable on the Notes on any Interest Payment Date (other
than interest payable at maturity or earlier redemption) will be paid to the
Holders in whose names the Notes are registered as of the Regular Record Date
immediately preceding such Interest Payment Date, such payment to be made by
check mailed to the addresses appearing in the Note register. Notwithstanding
the foregoing,
(a) if the Original Interest Accrual Date of a Note is after
a Regular Record Date and before the corresponding Interest Payment
Date, interest so payable for the period from and including the
Original Interest Accrual Date to but excluding such Interest Payment
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Date will be paid on the next succeeding Interest Payment Date to the
Holder of such Note on the related Regular Record Date;
(b) interest payable at maturity or earlier redemption will
be paid to the Person to whom principal is paid;
(c) defaulted interest will be payable as described under
"Description of Debt Securities -- Payment and Paying Agents" in the
accompanying prospectus;
(d) if the Holder is a securities depositary, payment may be
made by such other means in lieu of check, as shall be agreed upon by
National, the Trustee and the Holder; and
(e) upon the written request of a Holder of not less than
$10 million in aggregate principal amount of Notes of the same tranche
delivered to National and the Paying Agent at least ten days before
any Interest Payment Date, payment of interest on such Notes to such
Holder on such Interest Payment Date will be made by wire transfer of
immediately available funds to an account maintained within the
continental United States specified by the Holder or, if the Holder
maintains an account with the entity acting as Paying Agent, by
deposit into such account.
The principal of and premium, if any, and interest on the Notes at
maturity will be made upon presentation at the corporate trust office of the
Paying Agent.
The "Regular Record Date" with respect to any Interest Payment Date
for a Fixed Rate Note will be the close of business on the fifteenth day of the
month (whether or not a Business Day) immediately preceding such Interest
Payment Date; and the "Record Date" with respect to any Interest Payment Date
for a Floating Rate Note will be the date (whether or not a Business Day)
fifteen calendar days immediately preceding such Interest Payment Date.
Interest rates offered by National with respect to the Notes may
differ depending upon, among other things, the aggregate principal amount of
Notes purchased in any transaction. Notes with similar variable terms but
different interest rates may be offered concurrently at any time. National may
also concurrently offer Notes having different variable terms (as are described
herein or in the pricing supplement and Note).
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Interest
Accrual Date at the rate per annum stated on its face until the principal amount
of the Note is paid or duly provided for. Unless otherwise set forth in the
pricing supplement, interest on each Fixed Rate Note will be payable
semi-annually in arrears on each Interest Payment Date and at maturity. Each
payment of interest in respect of an Interest Payment Date will include interest
accrued through the day before such Interest Payment Date. Interest on Fixed
Rate Notes will be computed on the basis of a 360-day year of twelve 30-day
months.
If, with respect to any Fixed Rate Note, any Interest Payment Date,
any redemption date or the Stated Maturity is not a Business Day, payment of the
amounts due on the Note on such date may be made on the next Business Day; and,
if such payment is made or duly provided for on such Business Day, no interest
will accrue on such amounts for the period from and after such Interest Payment
Date, redemption date or Stated Maturity, as the case may be, to such Business
Day.
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FLOATING RATE NOTES
General
Each Floating Rate Note will bear interest from its Original Interest
Accrual Date to the first Interest Reset Date (as defined below) for the Note at
the Initial Interest Rate set forth on the face of the Note and in the pricing
supplement. Thereafter, the interest rate on the Note for each Interest Reset
Period will be determined by reference to an interest rate basis (the "Base
Rate"), plus or minus the Spread, if any, and/or multiplied by the Spread
Multiplier, if any. The "Spread" is the number of basis points (one basis point
being equal to one one-hundredth of a percentage point) that may be specified in
the pricing supplement as being applicable to the Note, and the "Spread
Multiplier" is the percentage that may be specified in the pricing supplement as
being applicable to the Note. The pricing supplement will designate one of the
following Base Rates as applicable to a Floating Rate Note:
(a) the CD Rate (a "CD Rate Note");
(b) the Constant-Maturity Treasury Rate (a "CMT Rate Note");
(c) the Commercial Paper Rate (a "Commercial Paper Rate
Note");
(d) the Federal Funds Rate (a "Federal Funds Rate Note");
(e) LIBOR (a "LIBOR Note");
(f) the Prime Rate (a "Prime Rate Note");
(g) the Treasury Rate (a "Treasury Rate Note"); or
(h) such other Base Rate as is set forth in the pricing
supplement.
As used herein, "H.15(519)" means the publication entitled "Statistical Release
H.15(519)," Selected Interest Rates, or any successor publication, published by
the Board of Governors of the Federal Reserve System; "H.15 Daily Update" means
the daily update of H.15(519), so published; and "Calculation Date," with
respect to an interest determination date for any Note, means the earlier of
(x) the tenth calendar day after such interest determination date, or, if such
day is not a Business Day, the next succeeding Business Day, and (y) the
Business Day immediately preceding the related Interest Payment Date or the
maturity of that Note, as the case may be. H.15(519) and H.15 Daily Update are
available through the Internet site maintained by the Board of Governors of the
Federal Reserve System at http://www.bog.frb.fed.us/releases/H15/.
Maximum Rate; Minimum Rate
As specified in the pricing supplement, a Floating Rate Note may also
have either or both of the following (in each case expressed as a rate per annum
on a simple interest basis):
(a) a maximum limitation, or ceiling, on the rate at which
interest may accrue during any interest period ("Maximum Interest
Rate"); and
(b) a minimum limitation, or floor, on the rate at which
interest may accrue during any interest period ("Minimum Interest
Rate").
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In addition to any Maximum Interest Rate that may be applicable to any Floating
Rate Note, the interest rate on a Floating Rate Note will in no event be higher
than the maximum rate permitted by New York law, as the same may be modified by
U.S. law of general application.
Calculation Agent
National will appoint, and enter into an agreement with, an agent (the
"Calculation Agent") to calculate interest rates on Floating Rate Notes. Unless
otherwise specified in the pricing supplement, The Bank of New York will be the
Calculation Agent. All determinations of interest rates by the Calculation Agent
will, in the absence of manifest error, be conclusive for all purposes and
binding on the Holders of the Floating Rate Notes.
Interest Rate Reset
The interest rate on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semi-annually or annually (such period being the
"Interest Reset Period" for the Note, and the first day of each Interest Reset
Period being an "Interest Reset Date"), as specified in the pricing supplement;
and such interest rate, as so reset, will be effective as of and for the related
Interest Reset Date and for the balance of the Interest Reset Period to, but
excluding, the next succeeding Interest Reset Date. Unless otherwise specified
in the pricing supplement, the Interest Reset Dates will be:
. in the case of Floating Rate Notes that reset daily, each
Business Day;
. in the case of Floating Rate Notes (other than Treasury Rate
Notes) that reset weekly, Wednesday of each week;
. in the case of Treasury Rate Notes that reset weekly,
Tuesday of each week (except as provided below under
"Treasury Rate Notes");
. in the case of Floating Rate Notes that reset monthly, the
third Wednesday of each month;
. in the case of Floating Rate Notes that reset quarterly, the
third Wednesday of March, June, September and December of
each year;
. in the case of Floating Rate Notes that reset semi-annually,
the third Wednesday of the two months of each year specified
in the pricing supplement; and
. in the case of Floating Rate Notes that reset annually, the
third Wednesday of the month of each year specified in the
pricing supplement.
If an Interest Reset Date for any Floating Rate Note would otherwise be a day
that is not a Business Day, such Interest Reset Date will be postponed to the
next succeeding Business Day, except that, in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, the Interest Reset Date
shall be the immediately preceding Business Day.
Interest Payment Dates
Unless otherwise indicated in the pricing supplement and except as
provided below, interest on Floating Rate Notes will be payable monthly,
quarterly, semi-annually or annually (each, an "Interest Payment Period") on the
dates set forth below (each such date, an "Interest Payment Date"):
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. in the case of Floating Rate Notes that reset daily, weekly
or monthly, on the third Wednesday of each month or on the
third Wednesday of March, June, September and December of
each year, as specified in the pricing supplement;
. in the case of Floating Rate Notes that reset quarterly, on
the third Wednesday of March, June, September and December
of each year;
. in the case of Floating Rate Notes that reset semi-annually,
on the third Wednesday of the two months of each year
specified in the pricing supplement; and
. in the case of Floating Rate Notes that reset annually, on
the third Wednesday of the month of each year specified in
the pricing supplement.
If, with respect to any Floating Rate Note, any Interest Payment Date
other than a redemption date or the Stated Maturity is not a Business Day, such
Interest Payment Date will be postponed to the next Business Day, except that,
if such Note is a LIBOR Note and such next Business Day is in the next calendar
month, such Interest Payment Date will be the immediately preceding Business
Day. If a redemption date or the Stated Maturity is not a Business Day, payment
of the amounts due on the Note on such date in respect of principal, premium, if
any, and/or interest, if any, may be made on the next Business Day; and if
payment is made or duly provided for on such Business Day, no interest shall
accrue on such amounts for the period from and after such redemption date or
Stated Maturity, as the case may be, to such Business Day.
Accrual of Interest
Unless otherwise specified in the pricing supplement, interest
payments on each Interest Payment Date for Floating Rate Notes will be the
amount of interest accrued from and including the last date to which interest
has been paid or duly provided for, or, if no interest has been paid or duly
provided for, from and including the Original Interest Accrual Date, to, but
excluding, such Interest Payment Date.
Accrued interest for each Floating Rate Note will be calculated by
multiplying the principal amount of the Note by an accrued interest factor. Such
accrued interest factor will be computed by adding the interest factors
calculated for each day in the Interest Payment Period for which accrued
interest is being calculated. The interest factor (expressed as a decimal
calculated to seven decimal places without rounding) for each such day is
computed by dividing the interest rate applicable to such day by 360, in the
case of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes,
LIBOR Notes and Prime Rate Notes or by the actual number of days in the year, in
the case of CMT Rate Notes and Treasury Rate Notes. For purposes of making the
foregoing calculation, the interest rate in effect on any Interest Reset Date
will be the applicable rate as reset on such date. Unless otherwise specified in
the pricing supplement, all percentages resulting from any calculation of the
rate of interest on a Floating Rate Note will be rounded, if necessary, to the
nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage
point rounded upward, and all dollar amounts used in or resulting from such
calculation will be rounded to the nearest one-hundredth of a cent (with .005 of
a cent being rounded upward).
CD Rate Notes
Each CD Rate Note will bear interest for each Interest Reset Period at
a rate calculated with reference to the CD Rate and the Spread or Spread
Multiplier, if any, and subject to the Maximum Interest Rate, if any, and the
Minimum Interest Rate, if any, specified in the CD Rate Note and the pricing
supplement.
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Unless otherwise specified in the pricing supplement, the "CD Rate"
for each Interest Reset Period in respect of each CD Rate Note will be
determined by the Calculation Agent on the Calculation Date and will be:
(a) the rate (expressed as a percentage per annum) as of the
second Business Day before the related Interest Reset Date (a "CD Rate
Determination Date") for negotiable certificates of deposit having the
Index Maturity specified in the CD Rate Note and the pricing
supplement as published in H.15(519) under the heading "CDs (Secondary
Market)";
(b) if such rate is not so published by 9:00 A.M., New York
City time, on the Calculation Date, the rate as of the CD Rate
Determination Date for negotiable certificates of deposit of such
Index Maturity as published in H.15 Daily Update under the heading
"CDs (Secondary Market)"; or
(c) if neither of such rates is published by 3:00 P.M., New
York City time, on the Calculation Date, the arithmetic mean of the
secondary market offered rates as of 10:00 A.M., New York City time,
on the CD Rate Determination Date for certificates of deposit in an
amount that is representative of a single transaction at that time
with a remaining maturity closest to such Index Maturity of three
leading nonbank dealers in negotiable U.S. dollar certificates of
deposit in the City of New York selected by the Calculation Agent, in
its discretion (after consultation with National); provided, however,
that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as described above, the CD Rate for such Interest Reset
Period will be the same as the CD Rate for the immediately preceding
Interest Reset Period (or, if there was no previous Interest Reset
Period in respect of the CD Rate Note, the rate of interest on the
Note for such Interest Reset Period shall be the Initial Interest
Rate).
CMT Rate Notes
Each CMT Rate Note will bear interest for each Interest Reset Period
at a rate calculated with reference to the CMT Rate and the Spread or Spread
Multiplier, if any, and subject to the Maximum Interest Rate, if any, and the
Minimum Interest Rate, if any, specified in the CMT Rate Note and the pricing
supplement.
Unless otherwise specified in the pricing supplement, the "CMT Rate"
for each Interest Reset Period in respect of each CMT Rate Note will be
determined by the Calculation Agent on the Calculation Date and will be the rate
(expressed as a percentage per annum) displayed on the Designated CMT Telerate
Page (as defined below) under the caption "...Treasury Constant
Maturities...Federal Reserve Board Release H.15...Mondays Approximately 3:45
p.m." under the column for the Designated CMT Maturity Index (as defined below)
for:
(a) (1) if the Designated CMT Telerate Page is 7055, the
second Business Day before the related Interest Reset Date (a "CMT
Rate Determination Date") or (2) if the Designated CMT Telerate Page
is 7052, the week or the month, as applicable, ended immediately
preceding the week in which such CMT Rate Determination Date occurs;
(b) if that rate is no longer displayed on the relevant
page, or if not displayed by 3:00 P.M., New York City time, on the
Calculation Date, the Treasury Constant Maturity rate for the
Designated CMT Maturity Index as published in H.15(519);
(c) if that rate is no longer published or, if not published
by 3:00 P.M., New York City time, on the Calculation Date, the
Treasury Constant Maturity rate for the Designated CMT
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Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Determination Date
as may then be published by either the Board of Governors of the
Federal Reserve System or the United States Department of the Treasury
that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published
in H.15(519);
(d) if that information is not provided by 3:00 P.M., New
York City time, on the Calculation Date, then the CMT Rate for the CMT
Rate Determination Date shall be a yield to maturity, based on the
arithmetic mean of the secondary market closing offer side prices as
of approximately 3:30 P.M., New York City time, on the CMT Rate
Determination Date reported, according to their written records, by
three leading primary United States government securities dealers
(each, a "Reference Dealer") in the City of New York selected by the
Calculation Agent (from five such Reference Dealers selected by the
Calculation Agent, in its discretion (after consultation with
National), and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for the most recently issued
direct noncallable fixed rate obligations of the United States
("Treasury notes") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not
less than such Designated CMT Maturity Index minus one year;
(e) if the Calculation Agent cannot obtain three such
Treasury notes quotations, a yield to maturity based on the arithmetic
mean of the secondary market offer side prices as of approximately
3:30 P.M., New York City time, on the CMT Rate Determination Date of
three Reference Dealers in the City of New York (from five such
Reference Dealers selected by the Calculation Agent, in its discretion
(after consultation with National), and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)),
for Treasury notes with an original maturity of the number of years
that is the next highest to the Designated CMT Maturity Index and a
remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100 million; or
(f) if three or four (and not five) of such Reference
Dealers are quoting as described in clause (e) above, the arithmetic
mean of the offer prices obtained without the elimination of either
the highest or the lowest of such quotes; provided, however, that if
fewer than three Reference Dealers selected by the Calculation Agent
are quoting as described in this clause (f), the CMT Rate for such
Interest Reset Period will be the same as the CMT Rate for the
immediately preceding Interest Reset Period (or, if there was no such
previous Interest Reset Period in respect of such CMT Rate Note, the
rate of interest on such Note for such Interest Reset Period shall be
the Initial Interest Rate).
For purposes of clause (e) above, if two Treasury notes have remaining terms to
maturity equally close to the Designated CMT Maturity Index, the quotes for the
Treasury note with the shorter remaining term to maturity shall be used.
"Designated CMT Maturity Index," with respect to any CMT Rate Note,
will be the original period to maturity of the U.S. Treasury securities (either
1, 2, 3, 5, 7, 10, 20 or 30 years) specified in such CMT Rate Note and the
pricing supplement with respect to which the CMT Rate will be calculated. If no
such maturity is so specified, the Designated CMT Maturity Index will be two
years.
"Designated CMT Telerate Page", with respect to any CMT Rate Note,
means the display on Bridge Telerate, Inc. on the page specified in the CMT Rate
Note and the pricing supplement, for the
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purpose of displaying Treasury Constant Maturities as reported in H.15(519) (or
any other page that may replace such page on that service, or any successor
service, for the purpose of displaying Treasury Constant Maturities as reported
in H.15(519)). If no such page is so specified, the page shall be 7052, for the
most recent week.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest for each Interest
Reset Period at a rate calculated with reference to the Commercial Paper Rate
and the Spread or Spread Multiplier, if any, and subject to the Maximum Interest
Rate, if any, and the Minimum Interest Rate, if any, specified in the Commercial
Paper Rate Note and the pricing supplement.
Unless otherwise specified in the pricing supplement, the "Commercial
Paper Rate" for each Interest Reset Period in respect of each Commercial Paper
Rate Note will be determined by the Calculation Agent on the Calculation Date
and will be:
(a) the Money Market Yield (as defined below) as of the
second Business Day before the related Interest Reset Date (a
"Commercial Paper Rate Determination Date") of the rate (expressed as
a percentage per annum) for commercial paper having the Index Maturity
specified in such Commercial Paper Rate Note and the pricing
supplement, as such rate shall be published in H.15(519) under the
heading "Commercial Paper-Nonfinancial";
(b) if that rate is not so published before 9:00 A.M., New
York City time, on the Calculation Date, the Money Market Yield as of
the Commercial Paper Rate Determination Date of the rate for
commercial paper of the Index Maturity specified in the Commercial
Paper Rate Note and in the pricing supplement, as published in H.15
Daily Update under the heading "Commercial Paper-Nonfinancial"; or
(c) if none of those rates is published by 3:00 P.M., New
York City time, on the Calculation Date, the Money Market Yield of the
arithmetic mean of the offered rates, as of 11:00 A.M., New York City
time, on such Commercial Paper Rate Determination Date, of three
leading dealers in commercial paper in the City of New York selected
by the Calculation Agent, in its discretion (after consultation with
National), for commercial paper of the Index Maturity specified in the
Commercial Paper Rate Note and in the pricing supplement placed for an
industrial issuer whose bond rating is "AA," or the equivalent, from a
nationally recognized statistical rating organization; provided,
however, that if the dealers selected are not quoting offered rates as
described above, the Commercial Paper Rate for the Interest Reset
Period will be deemed to be the same as the Commercial Paper Rate for
the preceding Interest Reset Period (or, if there was no such previous
Interest Reset Period in respect of such Commercial Paper Rate Note,
the rate of interest on the Note for such Interest Reset Period shall
be the Initial Interest Rate).
"Money Market Yield" is a yield calculated in accordance with the
following formula and expressed as a percentage:
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 Index Maturity specified in the Commercial Paper Rate Note
and the pricing supplement.
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Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest for each Interest
Reset Period at a rate calculated with reference to the Federal Funds Rate and
the Spread or Spread Multiplier, if any, and subject to the Maximum Interest
Rate, if any, and the Minimum Interest Rate, if any, specified in the Federal
Funds Rate Note and the pricing supplement.
Unless otherwise specified in the pricing supplement, the "Federal
Funds Rate" for each Interest Reset Period in respect of each Federal Funds Rate
Note will be determined by the Calculation Agent on the Calculation Date and
will be:
(a) the rate (expressed as a percentage per annum) as of the
second Business Day before the related Interest Reset Date (a "Federal
Funds Rate Determination Date") for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)";
(b) if that rate is not so published by 9:00 A.M., New York
City time, on the Calculation Date, the rate on the Federal Funds Rate
Determination Date as published in H.15 Daily Update under the heading
"Federal Funds (Effective)"; or
(c) if neither of those rates is published by 3:00 P.M., New
York City time, on the Calculation Date, the arithmetic mean of the
rates for the last transaction in overnight Federal Funds as of
9:00 A.M., New York City time, on such Federal Funds Rate
Determination Date arranged by three leading brokers in Federal Funds
transactions in the City of New York selected by the Calculation
Agent, in its discretion (after consultation with National); provided,
however, that if the brokers selected by the Calculation Agent are not
quoting as described above, the Federal Funds Rate for the Interest
Reset Period will be the same as the Federal Funds Rate for the
immediately preceding Interest Reset Period (or, if there was no such
previous Interest Reset Period in respect of such Federal Funds Rate
Note, the rate of interest on the Note for such Interest Reset Period
will be the Initial Interest Rate).
LIBOR Notes
Each LIBOR Note will bear interest for each Interest Reset Period at a
rate calculated with reference to LIBOR and the Spread or Spread Multiplier, if
any, and subject to the Maximum Interest Rate, if any, and the Minimum Interest
Rate, if any, specified in the LIBOR Note and the pricing supplement.
Unless otherwise specified in the pricing supplement, "LIBOR" for each
Interest Reset Period will be determined by the Calculation Agent and will be:
(a) (1) if "LIBOR Reuters" is specified in the Note and the
pricing supplement as the reporting service, the arithmetic mean of
the offered rates (unless the specified Designated LIBOR Page (as
hereinafter defined) by its terms provides only for a single rate, in
which case the single rate will be used) for deposits in U.S. dollars
in the London interbank market, for the period of the Index Maturity
so specified commencing on the related Interest Reset Date for the
Interest Reset Period, which appear or appears on the Designated LIBOR
Page at approximately 11:00 A.M., London time, on the second London
Banking Day before such Interest Reset Date (a "LIBOR Determination
Date"), or (2) if "LIBOR Telerate" is specified in the Note and the
pricing supplement as the reporting service, the rate for deposits in
U.S. dollars, for the period of such Index Maturity commencing on the
Interest Reset Date, that appears on the Designated LIBOR Page at
approximately 11:00 A.M., London time, on the LIBOR Determination
Date;
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(b) with respect to a LIBOR Determination Date on which
fewer than two offered rates appear (if "LIBOR Reuters" is specified
in the Note as the reporting service and calculation of LIBOR is based
on the arithmetic mean of the offered rates) or on which no rate
appears (if the reporting service specified in the Note and the
pricing supplement is either (1) "LIBOR Reuters" and the Designated
LIBOR Page by its terms provides only for a single rate or (2) "LIBOR
Telerate"), the Calculation Agent will request the principal London
office of each of four major reference banks in the London interbank
market selected by the Calculation Agent, in its discretion (after
consultation with National), to provide the Calculation Agent with its
offered quotations for deposits in U.S. dollars, for the period of the
Index Maturity commencing on the Interest Reset Date for such Interest
Reset Period and in a principal amount equal to an amount of not less
than U.S.$1 million that is representative of a single transaction in
U.S. dollars in the market at such time, to prime banks in the London
interbank market at approximately 11:00 A.M., London time, on the
LIBOR Determination Date; if at least two such quotations are
provided, LIBOR, in respect of the LIBOR Determination Date, shall be
the arithmetic mean of such quotations; or
(c) if fewer than two quotations are so provided, LIBOR in
respect of the LIBOR Determination Date will be the arithmetic mean of
the rates quoted by three major banks in the City of New York on the
LIBOR Determination Date selected by the Calculation Agent, in its
discretion (after consultation with National), at approximately 11:00
A.M. on the LIBOR Determination Date, for loans in U.S. dollars to
leading European banks, for the period of the Index Maturity
commencing on the Interest Reset Date for the Interest Reset Period
and in a principal amount of not less than U.S.$1 million that is
representative of a single transaction in U.S. dollars in the market
at such time; provided, however, that if fewer than three banks
selected by the Calculation Agent are quoting rates described above,
LIBOR for such Interest Reset Period shall be the same as LIBOR for
the immediately preceding Interest Reset Period (or, if there was no
such previous Interest Reset Period, the rate of interest on the Note
for the Interest Reset Period shall be the Initial Interest Rate).
"Designated LIBOR Page" means (x) if "LIBOR Reuters" is specified in a
LIBOR Note and the pricing supplement as the reporting service, the display on
the Reuters monitor money rates service (or any successor service) for the
purpose of displaying the London interbank rates of major banks for U.S.
dollars, or (y) if "LIBOR Telerate" is so specified as the reporting service,
the display on Bridge Telerate, Inc., or any successor service, for the purpose
of displaying the London interbank rates of major banks for U.S. dollars.
Prime Rate Notes
Each Prime Rate Note will bear interest for each Interest Reset Period
at a rate calculated with reference to the Prime Rate and the Spread or Spread
Multiplier, if any, and subject to the Maximum Interest Rate, if any, and the
Minimum Interest Rate, if any, specified in the Prime Rate Note and the pricing
supplement.
Unless otherwise specified in the pricing supplement, the "Prime Rate"
for each Interest Reset Period in respect of each Prime Rate Note will be
determined by the Calculation Agent on the Calculation Date and will be:
(a) the rate (expressed as a percentage per annum) as of the
second Business Day before the related Interest Reset Date (a "Prime
Rate Determination Date") as published in H.15(519) opposite the
heading "Bank Prime Loan";
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(b) if that rate is not so published prior to 9:00 A.M., New
York City time, on the Calculation Date, the rate as of such Prime
Rate Determination Date as published in H.15 Daily Update under the
heading "Bank Prime Loan";
(c) if that rate is not so published before 3:00 P.M., New
York City time, on the Calculation Date, the arithmetic mean of the
rates publicly announced by each bank named on the Reuters Screen
USPRIME1 Page (as defined below) as the bank's prime rate or base
lending rate as in effect on such Prime Rate Determination Date as
quoted on the Reuters Screen USPRIME1 Page on such Prime Rate
Determination Date; or
(d) if fewer than four such rates appear on the Reuters
Screen USPRIME1 Page for the Prime Rate Determination Date, the
arithmetic mean of the prime rates quoted on the basis of the actual
number of days in the year divided by 360 as of the close of business
on the Prime Rate Determination Date by at least two of three major
money center banks in the City of New York selected by the Calculation
Agent, in its discretion (after consultation with National), from
which quotations are requested; provided, however, that if fewer than
two prime rates are quoted by major money center banks as described
above, there shall be included in the group of rates whose arithmetic
mean is to be so determined the prime rates or base lending rates, as
of such Prime Rate Determination Date, of that number of substitute
banks or trust companies organized and doing business under the laws
of the United States, or any state thereof, in each case having total
equity capital of at least U.S. $500 million and being subject to
supervision or examination by federal or state authority, selected by
the Calculation Agent, in its discretion (after consultation with
National), which, when added to the number of rates provided by major
money center banks as aforesaid, shall equal two.
If in any calendar month the Prime Rate is not published in H.15(519)
or H.15 Daily Update and the banks or trust companies selected are not quoting
as described in the preceding paragraph, the "Prime Rate" for the Interest Reset
Period will be Prime Rate for the immediately preceding Interest Reset Period
(or, if there was no such previous Interest Reset Period in respect of such
Prime Rate Note, the rate of interest on the Prime Rate Note for the Interest
Reset Period shall be the Initial Interest Rate).
"Reuters Screen USPRIME1 Page" means the display designated as Page
"USPRIME1" on the Reuters monitor money rates service (or such other page as may
replace the USPRIME1 Page on that service for the purpose of displaying prime
rates or base lending rates of major United States banks).
Treasury Rate Notes
Each Treasury Rate Note will bear interest for each Interest Reset
Period at a rate calculated with reference to the Treasury Rate and the Spread
or Spread Multiplier, if any, and subject to the Maximum Interest Rate, if any,
and the Minimum Interest Rate, if any, specified in the Treasury Rate Note and
the pricing supplement.
Unless otherwise specified in the pricing supplement, the "Treasury
Rate" for each Interest Reset Period in respect of each Treasury Rate Note will
be determined by the Calculation Agent on the Calculation Date and will be
(a) the rate (expressed as a percentage per annum) for the
auction held on the Treasury Rate Determination Date (as defined
below) for the Interest Reset Period of direct obligations of the
United States ("Treasury Bills") having the Index Maturity specified
in the Treasury Rate Note and the pricing supplement, as such rate
shall appear under the heading "Investment Rate"
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on the display on Bridge Telerate, Inc., or any successor service,
on page 56 or page 57, or any other page that may replace either
thereof on that service;
(b) if that rate is not published by 3:00 P.M., New York
City time, on the Calculation Date, the Bond Equivalent Yield (as
defined below) of the rate on Treasury Bills having the Index Maturity
specified in the Treasury Rate Note and in the pricing supplement as
of such Treasury Rate Determination Date, as such rate shall be
published in H.15 Daily Update under the heading "U.S. Government
Securities/Treasury Bills/Auction High";
(c) if that rate is not so published by 3:00 P.M., New York
City time, on the Calculation Date, the Bond Equivalent Yield of the
auction rate of Treasury Bills having the Index Maturity specified
above, as otherwise announced by the United States Department of the
Treasury;
(d) if that rate is not so announced by the United States
Department of the Treasury, or if that auction is not held, the Bond
Equivalent Yield of the rate as of such Treasury Rate Determination
Date of Treasury Bills having the Index Maturity specified above, as
such rate shall be published in H.15 (519) under the heading "U.S.
Government Securities/Treasury Bills/Secondary Market";
(e) if that rate is not so published by 3:00 P.M., New York
City time, on the Calculation Date, the rate as of such Treasury Rate
Determination Date of Treasury Bills having the Index Maturity
specified above, as that rate shall be published in H.15 Daily Update
under the heading "U.S. Government Securities/Treasury Bills/Secondary
Market"; or
(f) if that rate is not so published by 3:00 P.M., New York
City time, on the Calculation Date, the Bond Equivalent Yield of the
arithmetic mean of the secondary market bid rates, as of approximately
3:30 P.M., New York City time, on the Treasury Rate Determination
Date, of three leading primary United States government securities
dealers selected by the Calculation Agent, in its discretion (after
consultation with National), for the issue of Treasury Bills with a
remaining maturity closest to the Index Maturity specified in the
Treasury Rate Note and in the pricing supplement; provided, however,
that if the dealers selected as aforesaid by the Calculation Agent are
not quoting bid rates as described above, then the "Treasury Rate" for
such Interest Reset Period will be deemed to be the same as the
Treasury Rate for the immediately preceding Interest Reset Period (or,
if there was no such previous Interest Reset Period in respect of such
Treasury Rate Note, the rate of interest on the Note for the Interest
Reset Period shall be the Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset Period
is the day of the week in which the Interest Reset Date for the Interest Reset
Period falls on which Treasury Bills would normally be auctioned. (As of the
date of this prospectus supplement, 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.) If, as the result of a legal holiday, an
auction is held on the preceding Friday, such Friday is the Treasury Rate
Determination Date pertaining to the Interest Reset Period commencing in the
next week. If an auction date falls on any day that would otherwise be an
Interest Reset Date for a Treasury Rate Note, then the Interest Reset Date is
instead the Business Day immediately following such auction date.
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"Bond Equivalent Yield" shall be calculated in accordance with the
following formula and expressed as a percentage:
Bond Equivalent Yield = D x N
----------------
360 - (D x M)
where "D" refers to the applicable rate per annum for Treasury Bills quoted on a
bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the Interest Reset Period for which the
interest rate is being calculated.
REDEMPTION
The pricing supplement relating to each Note will indicate either that
such Note cannot be redeemed at the election of National before Stated Maturity
or that the Note will be redeemable, at the election of National, in whole or in
part, on any date on or after the date designated as the "Initial Redemption
Date" in the pricing supplement, at the applicable redemption price plus accrued
interest to the date fixed for redemption. If the Note is so redeemable, the
redemption price will initially be a percentage of the principal amount of the
Note to be redeemed equal to the "Initial Redemption Price" specified in the
pricing supplement for the twelve-month period commencing on the Initial
Redemption Date and will decline for the twelve-month period commencing on each
anniversary of the Initial Redemption Date by a percentage of principal amount
equal to the "Reduction Percentage" specified in the pricing supplement until
the redemption price is 100% of the principal amount of the Note. The pricing
supplement may specify a "Redemption Limitation Date" before which National may
not redeem a Note as contemplated above as a part of, or in anticipation of, any
refunding operation by the application, directly or indirectly, of moneys
borrowed having an effective interest cost to National (calculated in accordance
with generally accepted financial practice) less than the effective interest
cost to National (similarly calculated) of such Note.
The pricing supplement relating to each Note will also specify any
sinking fund or other mandatory redemption provisions applicable to the Note,
and any provisions for the redemption or purchase by National of the Note at the
option of the Holder.
BOOK-ENTRY ONLY ISSUANCE - THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary
for the Notes. The Notes will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global certificates for the Notes, representing the aggregate
principal amount of Notes, will be issued and will be deposited with DTC.
The following is based upon information furnished by DTC:
DTC is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC
holds securities that its participants ("Participants") deposit with
DTC. DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. "Direct Participants" in DTC
include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations.
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DTC is owned by a number of its Direct Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc., and
the National Association of Securities Dealers, Inc. Access to the
DTC system is also available to others, such as securities brokers
and dealers, banks and trust companies that clear transactions 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 Notes within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Notes
on DTC's records. The ownership interest of each actual purchaser of
each Note ("Beneficial Owner") is in turn to be recorded on the Direct
and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchase, but Beneficial Owners
are expected to receive written confirmation providing details of the
transaction, as well as periodic statements of their holdings, from
the Direct or Indirect Participants through which the Beneficial
Owners entered into the transaction. Transfers of ownership interests
in the Notes are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners
will not receive certificates representing their ownership interests
in the Notes, except in the event that use of the book-entry system
for the Notes is discontinued, as discussed below.
To facilitate subsequent transfers, all Notes deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Notes with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Notes; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Notes are credited, which may or
may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
The delivery of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect Participants,
and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to
time.
Redemption notices will be sent to Cede & Co., as registered
Holder of the Notes. If less than all of the Notes are being redeemed,
DTC's practice is to determine by lot the amount of the interest of
each Direct Participant to be redeemed.
Neither DTC nor Cede & Co. will itself consent or vote with
respect to Notes. Under its usual procedures, DTC mails an Omnibus
Proxy to National as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts the Notes are credited on
the record date (identified in a listing attached to the Omnibus
Proxy).
Payments on the Notes will be made to DTC. DTC's practice is
to credit Direct Participants' accounts on the relevant 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 payment 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 Participants and not of DTC or National, subject to any statutory
or regulatory requirements as may be in effect from time to time.
Payment to DTC will be the responsibility of National, disbursement of
payments to Direct Participants will be the responsibility of DTC, and
further
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disbursement of payments to the Beneficial Owners will be the
responsibility of Direct Participants and Indirect Participants.
Management of DTC is aware that some computer applications,
systems and the like for processing data ("Systems") that are
dependent upon calendar dates, including dates before, on, and after
January 1, 2000, may encounter "Year 2000 problems." DTC has informed
Direct Participants and Indirect Participants and other members of the
financial community (the "Industry") that it has developed and is
implementing a program so that its Systems, as the same relate to the
timely payment of distributions (including principal and interest
payments) to securityholders, book-entry deliveries, and settlement of
trades within DTC ("Depositary Services"), continue to function
appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan
includes a testing phase, which is expected to be completed within
appropriate time frames.
However, DTC's ability to perform its services properly is
also dependent upon other parties, including, but not limited to,
issuers and their agents, as well as DTC's Direct Participants and
Indirect Participants, third party vendors from whom DTC licenses
software and hardware, and third party vendors on whom DTC relies for
information or the provision of services, including telecommunication
and electrical utility service providers, among others. DTC has
informed the Industry that it is contacting (and will continue to
contact) third party vendors from whom DTC acquires services to: (1)
impress upon them the importance of such services being Year 2000
compliant; and (2) determine the extent of their efforts for Year 2000
remediation (and, as appropriate, testing) of their services. In
addition, DTC is in the process of developing such contingency plans
as it deems appropriate.
According to DTC, the information in the preceding two
paragraphs with respect to DTC has been provided to the Industry for
informational purposes only and is not intended to serve as a
representation, warranty, or contract modification of any kind.
DTC may discontinue providing its services as securities depositary
for the Notes at any time by giving written notice to National and the Trustee.
Under such circumstances, in the event that a successor securities depositary is
not obtained, Note certificates will be delivered to the Beneficial Owners.
Additionally, National may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor depositary) or to replace any such
securities depositary. After an Event of Default under the Indenture, the
holders of a majority in aggregate principal amount of the Notes may determine
to discontinue the system of book-entry transfers through DTC (or a successor
depositary). Under any of these circumstances, and in the case of
any such discontinuance if a successor depositary is not obtained, then
certificates for the Notes will be delivered.
The information in this section concerning DTC and DTC's book-entry
system and procedures has been obtained from sources that National believes to
be reliable, but National takes no responsibility for the accuracy thereof.
Neither National nor the Trustee will have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in the Notes or for maintaining, supervising or reviewing
any records relating thereto.
Except as provided herein, a Beneficial Owner of an interest in a
global Note certificate may not receive physical delivery of Notes. Accordingly,
each Beneficial Owner must rely on the procedures of DTC to exercise any rights
under the Notes.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain United States federal income
tax consequences of the purchase, ownership and disposition of the Notes as of
the date hereof and represents the opinion of Thelen Reid & Priest LLP, counsel
to National, insofar as it relates to matters of law or legal conclusions. The
following summary is based upon laws, regulations, rulings and decisions now in
effect, all of which are subject to change (including changes in effective
dates) or possible differing interpretations. It deals only with Notes held as
capital assets within the meaning of Section 1221 of the Internal Revenue Code
of 1986 (the "Code") and does not purport to deal with persons in special tax
situations, such as financial institutions, insurance companies, regulated
investment companies, dealers in securities or currencies, traders in securities
that elect to mark to market, persons holding Notes as a hedge, conversion
transaction or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the United States dollar. It also does not deal with
holders other than original purchasers who purchased Notes at the initial
offering price (except where otherwise specifically noted). The United States
federal income tax consequences of ownership of Floating Rate Notes or Notes
issued with original issue discount will be discussed in an applicable pricing
supplement.
PROSPECTIVE PURCHASERS OF NOTES, INCLUDING PERSONS WHO ARE NOT UNITED
STATES HOLDERS AND PERSONS WHO PURCHASE NOTES IN THE SECONDARY MARKET, ARE
ADVISED TO CONSULT WITH THEIR TAX ADVISORS AS TO THE UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES IN
LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE,
LOCAL OR OTHER TAX LAWS.
As used in this prospectus supplement, the term "U.S. Holder" means a
beneficial owner of a Note that is for United States federal income tax
purposes:
(a) a citizen or resident of the United States,
(b) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of
any political subdivision thereof,
(c) an estate the income of which is subject to United States
federal income taxation regardless of its source, or
(d) a trust if a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more United States persons have the
authority to control all substantial decisions of the trust.
As used in this prospectus supplement, the term "non-U.S. Holder" means a
beneficial owner of a Note that is not a U.S. Holder.
U.S. HOLDERS
Payments of Interest
Payments of interest on a Note generally will be taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting).
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Premium
If a U.S. Holder purchases a Note for an amount that is greater than
its principal amount, such U.S. Holder will be considered to have purchased the
Note with "amortizable bond premium" equal in amount to such excess. A U.S.
Holder may elect to amortize such premium using a constant yield method over the
remaining term of the Note and may offset interest otherwise required to be
included in respect of the Note during any taxable year by the amortized amount
of such excess for the taxable year. However, if the Note may be optionally
redeemed after the U.S. Holder acquires it at a price in excess of its principal
amount, special rules would apply which could result in a deferral of the
amortization of some bond premium until later in the term of the Note. Any
election to amortize bond premium applies to all taxable debt instruments then
owned and thereafter acquired by the U.S. Holder on or after the first day of
the first taxable year to which such election applies and may be revoked only
with the consent of the Internal Revenue Service (the "IRS").
Disposition of a Note
Upon the sale, exchange, retirement or other taxable disposition of a
Note, a U.S. Holder generally will recognize gain or loss equal to the
difference between the amount realized on the sale, exchange or retirement
(other than amounts representing accrued and unpaid interest) and such U.S.
Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax basis in a
Note generally will equal such U.S. Holder's initial investment in the Note
decreased by the amount of any payments, other than qualified stated interest
payments, received and amortizeable bond premium taken with respect to such
Note. Such gain or loss generally will be long-term capital gain or loss if the
Note was held for more than one year at the time of the disposition.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States withholding tax
on payments of principal, premium (if any) or interest on a Note, unless such
non-U.S. Holder (i) directly or indirectly owns 10% or more of the voting stock
of National, (ii) is a controlled foreign corporation related to National or
(iii) is a bank receiving interest described in Section 881(c)(3)(A) of the
Code. To qualify for the exemption from taxation, the last United States payor
in the chain of payment prior to payment to a non-U.S. Holder (the "Withholding
Agent") must have received in the year in which a payment of interest or
principal occurs, or in either of the two preceding calendar years, a statement
that (1) is signed by the beneficial owner of the Note under penalties of
perjury, (2) certifies that such owner is not a U.S. Holder and (3) provides the
name and address of the beneficial owner. The statement may be made on an IRS
Form W-8 or a substantially similar form, and the beneficial owner must inform
the Withholding Agent of any change in the information on the statement within
30 days of such change. If a Note is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent. However, in
such case, the signed statement must be accompanied by a copy of the IRS
Form W-8 or the substitute form provided by the beneficial owner to the
organization or institution.
Generally, a non-U.S. Holder will not be subject to United States
federal income tax on any amount which constitutes capital gain upon retirement
or other disposition of a Note, provided the gain is not effectively connected
with the conduct of a trade or business in the United States by the non-U.S.
Holder. Certain other exceptions may be applicable, and non-U.S. Holders should
consult their tax advisors in this regard.
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BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding of United States federal income tax at a rate of
31% may apply to payments made in respect of the Notes to registered owners who
are not "exempt recipients" and who fail to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the required manner. Generally, individuals are not exempt recipients, whereas
corporations and certain other entities generally are exempt recipients.
Payments made in respect of the Notes to a U.S. Holder must be reported to the
IRS, unless the U.S. Holder is an exempt recipient or establishes an exemption.
Compliance with the identification procedures described in the preceding section
would establish an exemption from backup withholding for those non-U.S. Holders
who are not exempt recipients.
In addition, upon the sale of a Note to (or through) a broker, the
broker must withhold 31% of the entire purchase price, unless either (1) the
broker determines that the seller is a corporation or other exempt recipient or
(2) the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-U.S.
Holder (and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS, unless either (1) the broker determines that the
seller is an exempt recipient or (2) the seller certifies its non-U.S. status
(and certain other conditions are met). Certification of the registered owner's
non-U.S. status would normally be made on IRS Form W-8 under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.
Any amounts withheld under the backup withholding rules from a payment
to a beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States federal income tax provided the required
information is furnished to the IRS.
SUPPLEMENTAL PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by National to or
through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Bear, Stearns & Co. Inc., Goldman, Sachs & Co., Lehman Brothers Inc., Morgan
Stanley & Co. Incorporated, PaineWebber Incorporated and Salomon Smith Barney
Inc. and any additional agents appointed by National from time to time and named
in the pricing supplement (the "Agents"); provided that National has reserved
the right to sell, solicit and accept offers to purchase Notes directly on its
own behalf to investors and other purchasers. National will have the sole right
to accept offers to purchase Notes and may reject any offer in whole or in part.
An Agent will have the right to reject any offer in whole or in part. Payment of
the purchase price of the Notes will be required to be made in immediately
available funds. Unless otherwise specified in the pricing supplement, National
will pay an Agent, in connection with sales of Notes resulting from a
solicitation made or an offer to purchase received by such Agent, a commission
ranging from .125% to .750% of the principal amount of the Notes to be sold,
depending upon the maturity of the Notes.
National may also sell Notes to an Agent as principal for its own
account at discounts to be agreed upon at the time of sale. The Notes may be
resold to investors and other purchasers at a fixed offering price or at
prevailing market prices, or prices related thereto at the time of such resale
or otherwise, as determined by the Agent and specified in the pricing
supplement. An Agent may offer the Notes it has purchased as principal to other
dealers. An Agent may sell the Notes to any dealer at a discount and, unless
otherwise specified in the pricing supplement, such discount allowed to any
dealer will not be in excess of the discount to be received by such Agent from
National After the initial public offering of the Notes that are to be resold by
the Agents to investors and other purchasers on a fixed public offering price
basis, the public offering price, concession, and discount may be changed.
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In order to facilitate the offering of the Notes, the Agents may
engage in transactions that stabilize, maintain or otherwise affect the price of
the Notes. Specifically, the Agents may overallot in connection with the
offering, creating a short position in the Notes for their own account. In
addition, to cover overallotments or to stabilize the price of the Notes, the
Agents may bid for, and purchase, the Notes in the open market. Finally, any
underwriting syndicate participating in a sale of Notes to one or more Agents
acting as principal may reclaim selling concessions allowed to an underwriter or
a dealer for distributing the Notes in the offering, if the syndicate
repurchases previously distributed Notes in transactions to cover syndicate
short positions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market price of the Notes above
independent market levels. The Agents are not required to engage in these
activities, and may end any of these activities at any time.
The Agents may be deemed to be "underwriters" within the meaning of
the Securities Act of 1933. National and the Agents have agreed to indemnify
each other against certain liabilities, including liabilities under the federal
securities laws, or to contribute to payments made in respect of any such
liabilities. National has also agreed to reimburse the Agents for certain
expenses.
National does not intend to apply for the listing of the Notes on a
national securities exchange, but has been advised by the Agents that the Agents
intend to make a market in the Notes, as permitted by applicable laws and
regulations. The Agents are not obligated to do so, however, and the Agents may
discontinue making a market at any time without notice. No assurance can be
given as to the liquidity of any trading market for the Notes.
Concurrently with the offering of Notes through the Agent as described
herein, National may issue other Debt Securities under the Indenture referred to
herein. Any Debt Securities sold by National pursuant to the prospectus will
reduce the aggregate principal amount of Notes that may be offered by this
prospectus supplement and the prospectus.
The Agents and/or certain of their affiliates may engage in
transactions with and perform services for National and certain of its
affiliates in the ordinary course of business.
LEGALITY
The following information supplements the information regarding legal
opinions contained under "Legality" in the accompanying prospectus. The opinions
of Stryker, Tams & Dill LLP and Thelen Reid & Priest LLP, each as counsel to
National, and Winthrop, Stimson, Putnam & Roberts, as counsel to the Agents,
will be conditioned upon, and subject to certain assumptions regarding, future
action required to be taken by National and the Trustee in connection with the
issuance and sale of any particular Note, the specific terms of Notes and other
matters which may affect the validity of Notes but which cannot be ascertained
on the date of such opinions.
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PROSPECTUS
- ----------
$500,000,000
NATIONAL FUEL GAS COMPANY
DEBT SECURITIES
----------------------------
National Fuel Gas Company may offer from time to time its debt securities
(including debentures and medium-term notes).
National Fuel Gas Company will provide specific terms of its debt
securities, including their offering prices, interest rates, and maturities, in
supplements to this prospectus. The supplements may also add, update or change
information contained in this prospectus. You should read this prospectus and
any supplements carefully before you invest.
National Fuel Gas Company may offer its debt securities directly or through
underwriters, agents or dealers. The supplements to this prospectus will
describe the terms of any particular plan of distribution, including any
underwriting arrangements. The "Plan of Distribution" section on page 13 of this
prospectus also provides more information on this topic.
National Fuel Gas Company's principal executive offices are located at
10 Lafayette Square, Buffalo, New York 14203 and its telephone number is
(716) 857-7000.
----------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------------------
The date of this prospectus is August 20, 1999.
<PAGE>
NATIONAL FUEL GAS COMPANY
National Fuel Gas Company (National), a registered holding company under
the Public Utility Holding Company Act of 1935, was organized under the laws of
New Jersey in 1902. National is engaged in the business of owning and holding
securities issued by its subsidiaries: National Fuel Gas Distribution
Corporation, National Fuel Gas Supply Corporation, Seneca Independence Pipeline
Company, Seneca Resources Corporation, Horizon Energy Development, Inc.,
National Fuel Resources, Inc., Upstate Energy, Inc., Niagara Independence
Marketing Company, Leidy Hub, Inc., Highland Land & Minerals, Inc., Data-Track
Account Services, Inc. and Utility Constructors, Inc.
National and its subsidiaries (System) comprise a diversified energy
company consisting of five major business segments:
. the Utility segment, which sells natural gas and provides natural gas
transportation services through a local distribution system located in
western New York and northwestern Pennsylvania;
. the Pipeline and Storage segment, which provides interstate natural gas
transportation and storage services;
. the Exploration and Production segment, which is engaged in the exploration
for, and the development and purchase of, natural gas and oil reserves in
the Gulf Coast of Texas, Louisiana, and Alabama, in California, in Wyoming,
and in the Appalachian region of the United States;
. the International segment, which is engaged in foreign and domestic energy
projects through investments as a sole or substantial owner in various
business entities; and
. the Other Nonregulated segment, which engages in the marketing and
brokerage of natural gas and electricity and the performance of energy
management services for utilities and end-users, natural gas marketing and
other energy-related activities, the providing of various natural gas hub
services to customers, the marketing of timber, the operating of sawmill
and kilns, and the providing of collection services for other subsidiaries
of National.
WHERE YOU CAN FIND MORE INFORMATION
National files annual, quarterly and other reports and other information
with the SEC. You can read and copy any information filed by National with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You can obtain additional information about the Public Reference
Room by calling the SEC at 1-800-SEC-0330.
In addition, the SEC maintains an Internet site (http://www.sec.gov) that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC, including National.
National also maintains an Internet site (http://www.nationalfuelgas.com).
Information contained on National's Internet site does not constitute part of
this prospectus.
The SEC allows National to "incorporate by reference" the information that
National files with the SEC, which means that National may disclose important
information to you by referring you to those documents in this prospectus. The
information incorporated by reference is an important part of this prospectus.
National is incorporating by reference the documents listed below and any future
filings National makes with the SEC under Section 13(a), 13(c), 14 or 15(d) of
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the Securities Exchange Act of 1934 until National sells all of these debt
securities. Any of those future filings will update, supersede and replace the
information contained in any documents incorporated by reference in this
prospectus at the time of the future filings.
1. National's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998 (Form 10-K).
2. National's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1998, March 31, 1999, and June 30, 1999.
You may request a copy of these documents, at no cost to you, by writing or
calling Anna Marie Cellino, Secretary, National Fuel Gas Company, 10 Lafayette
Square, Buffalo, New York 14203, telephone (716) 857-7858.
You should rely only on the information contained in, or incorporated by
reference in, this prospectus and the prospectus supplement. National has not,
and any underwriters, agents or dealers have not, authorized anyone else to
provide you with different information. National is not, and any underwriters,
agents or dealers are not, making an offer of these securities in any state
where the offer is not permitted. You should not assume that the information
contained in this prospectus and the prospectus supplement is accurate as of any
date other than the date on the front of the prospectus supplement or that the
information incorporated by reference in this prospectus is accurate as of any
date other than the date on the front of those documents.
RATIO OF EARNINGS TO FIXED CHARGES
The following table shows National's ratio of earnings to fixed charges for
the periods indicated:
Fiscal Years Ended September 30,
Twelve Months ended ---------------------------------------------
June 30, 1999 1998 1997 1996 1995 1994
------------------ ---- ---- ---- ---- ----
2.87 1.66 4.01 3.80 3.06 3.52
USE OF PROCEEDS
Except as may otherwise be set forth in the prospectus supplement, the
proceeds from the sale of these securities may be used to reduce short-term
indebtedness, to redeem or discharge higher cost indebtedness, to finance a
portion of the System's capital expenditures, for corporate development
purposes, including, without limitation, acquisitions made by or on behalf of
National or its subsidiaries, and for other general corporate purposes.
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DESCRIPTION OF DEBT SECURITIES
GENERAL
The following description sets forth certain general terms and provisions
of National's unsecured debt securities, consisting of debentures and
medium-term notes, that National may offer by this prospectus (Debt Security or
Debt Securities). National will describe the particular terms of the Debt
Securities, and provisions that vary from those described below, in one or more
prospectus supplements.
The Debt Securities will be National's direct unsecured general
obligations. The Debt Securities will be senior debt securities. National may
issue the Debt Securities from time to time in one or more series. National will
issue the Debt Securities under one or more separate Indentures (Indenture)
between National and The Bank of New York, as trustee (Trustee).
The following descriptions of the Debt Securities and the Indenture are
summaries and are qualified by reference to the Indenture. The form of the
Indenture is being filed as an exhibit to the registration statement, and you
should read the Indenture for provisions that may be important to you.
References to certain sections of the Indenture are included in parentheses.
Whenever particular provisions or defined terms in the Indenture are referred to
under this "Description of Debt Securities," such provisions or defined terms
are incorporated by reference herein. The Indenture will be qualified under the
Trust Indenture Act of 1939. You should refer to the Trust Indenture Act of 1939
for provisions that apply to the Debt Securities.
The Debt Securities will rank equally with all of National's other senior,
unsecured and unsubordinated debt.
Because National is a holding company that conducts all of its operations
through subsidiaries, holders of Debt Securities will generally have a position
junior to claims of creditors (including trade creditors of and holders of
indebtedness issued by any such subsidiary) and preferred stockholders of the
subsidiaries of National. No subsidiary currently has outstanding shares of
preferred stock.
The prospectus supplement relating to any series of Debt Securities being
offered will include specific terms relating to that offering. These terms will
include any of the following terms that apply to that series:
. the title of the Debt Securities;
. the total principal amount of the Debt Securities;
. the date or dates on which the principal of the Debt Securities will
be payable and how it will be paid;
. the rate or rates at which the Debt Securities will bear interest, or
how such rate or rates will be determined;
. the date or dates from which interest on the Debt Securities will
accrue, the interest payment dates on which interest will be paid, and
the record dates for interest payments;
. any right to extend the interest payment periods for the Debt
Securities and the duration of the extension;
. the percentage, if less than 100%, of the principal amount of the Debt
Securities that will be payable if the maturity of the Debt Securities
is accelerated;
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. any date or dates on which, and the price or prices at which, the Debt
Securities may be redeemed at the option of National and any
restrictions on such redemptions;
. any sinking fund or other provisions or options held by holders of
Debt Securities that would obligate National to repurchase or
otherwise redeem the Debt Securities;
. any changes or additions to the Events of Default under the Indenture
or changes or additions to the covenants of National under the
Indenture;
. if the Debt Securities will be issued in denominations other than
$1,000;
. if payments on the Debt Securities may be made in a currency or
currencies other than United States dollars;
. any convertible feature or options regarding the Debt Securities;
. any rights or duties of another person to assume the obligations of
National with respect to the Debt Securities;
. any collateral, security, assurance or guarantee for the Debt
Securities; and
. any other terms of the Debt Securities not inconsistent with the terms
of the Indenture.
(See Section 301.)
The Indenture does not limit the principal amount of Debt Securities or
other debt securities thereunder that may be issued. The Indenture allows debt
securities thereunder to be issued up to the principal amount that may be
authorized by National.
Debt Securities may be sold at a discount below their principal amount.
United States federal income tax considerations applicable to Debt Securities
sold at an original issue discount may be described in the prospectus
supplement. In addition, certain United States federal income tax or other
considerations applicable to any Debt Securities which are denominated or
payable in a currency or currency unit other than United States dollars may be
described in the prospectus supplement.
Except as may otherwise be described in the prospectus supplement, the
covenants contained in the Indenture will not afford holders of Debt Securities
protection in the event of a highly-leveraged or similar transaction involving
National or in the event of a change in control.
PAYMENT AND PAYING AGENTS
Except as may be provided in the prospectus supplement, interest, if any,
on each Debt Security payable on each Interest Payment Date will be paid to the
person in whose name such Debt Security is registered as of the close of
business on the Regular Record Date for the Interest Payment Date. However,
interest payable at maturity will be paid to the person to whom the principal is
paid. If there has been a default in the payment of interest on any Debt
Security, the defaulted interest may be paid to the holder of such Debt Security
as of the close of business on a date to be fixed by the Trustee, which will be
between 10 and 15 days prior to the date proposed by National for payment of
such defaulted interest or in any other manner permitted by any securities
exchange on which such Debt Security may be listed, if the Trustee finds it
practicable. (See Section 307.)
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<PAGE>
Unless otherwise specified in the prospectus supplement, principal of, and
premium, if any, and interest, if any, on the Debt Securities at maturity will
be payable upon presentation of the Debt Securities at the corporate trust
office of the Trustee, in The City of New York, as Paying Agent for National.
National may change the place of payment on the Debt Securities, may appoint one
or more additional Paying Agents (including National) and may remove any Paying
Agent, all at the discretion of National. (See Section 602.)
REGISTRATION AND TRANSFER
Unless otherwise specified in the prospectus supplement, the transfer of
Debt Securities may be registered, and Debt Securities may be exchanged for
other Debt Securities of the same series or Tranche, of authorized denominations
and with the same terms and principal amount, at the corporate trust office of
the Trustee in The City of New York. National may change the place for
registration of transfer and exchange of the Debt Securities and may designate
additional places for such registration and exchange. Unless otherwise provided
in the prospectus supplement, no service charge will be made for any transfer or
exchange of the Debt Securities. However, National may require payment to cover
any tax or other governmental charge that may be imposed. National will not be
required to execute or to provide for the registration of transfer of, or the
exchange of, (a) any Debt Security during a period of 15 days prior to giving
any notice of redemption or (b) any Debt Security selected for redemption except
the unredeemed portion of any Debt Security being redeemed in part. (See
Section 305.)
SATISFACTION AND DISCHARGE
National will be discharged from its obligations on the Debt Securities of
a particular series, or any portion of the principal amount of the Debt
Securities of such series, if it irrevocably deposits with the Trustee
sufficient cash or government securities to pay the principal, or portion of
principal, interest, any premium and any other sums when due on the Debt
Securities of such series at their maturity, stated maturity date, or
redemption. (See Section 701.)
The Indenture will be deemed satisfied and discharged when no Debt
Securities remain outstanding and when National has paid all other sums payable
by National under the Indenture. (See Section 702.)
All moneys National pays to the Trustee or any Paying Agent on Debt
Securities which remain unclaimed at the end of two years after payments have
become due will be paid to or upon the order of National. Thereafter, the Holder
of such Debt Security may look only to National for payment thereof. (See
Section 603.)
LIMITATION ON LIENS ON SUBSIDIARY CAPITAL STOCK
The Indenture provides that, except as otherwise specified with respect to
a particular series of Debt Securities, National will not pledge, mortgage,
hypothecate or grant a security interest in, or permit any pledge, mortgage,
security interest or other lien upon, any capital stock of any of its
majority-owned subsidiaries, which capital stock National now or hereafter
directly owns, to secure any Indebtedness, as defined below, without also
securing the outstanding Debt Securities (so long as the other Indebtedness
shall be so secured) equally and ratably, with or, at National's option, prior
to, the other Indebtedness and any other Indebtedness similarly entitled to be
so secured.
This limitation does not apply to, or prevent the creation or existence of:
(1) any pledge, mortgage, security interest, lien or encumbrance upon any
such capital stock created at the time National acquires that capital
stock or within 270 days after that time to secure the purchase price
for that capital stock so acquired;
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<PAGE>
(2) any pledge, mortgage, security interest, lien or encumbrance upon any
such capital stock existing at the time National acquires that capital
stock, whether or not National assumes the secured obligations; or
(3) any extension, renewal, replacement or refunding of any pledge,
mortgage, security interest, lien or encumbrance permitted by (1) and
(2) above, or of any Indebtedness secured thereby; provided, that,
(a) the principal amount of Indebtedness so secured immediately after
the extension, renewal, replacement or refunding may not exceed
the principal amount of Indebtedness so secured immediately
before the extension, renewal, replacement or refunding, and
(b) the extension, renewal, replacement or refunding of such pledge,
mortgage, security interest, lien or encumbrance is limited to no
more than the same proportion of all shares of capital stock as
were covered by the pledge, mortgage, security interest, lien or
encumbrance that was extended, renewed, refunded or replaced; or
(4) any judgment, levy, execution, attachment or other similar lien
arising in connection with court proceedings, provided that:
(a) the execution or enforcement of the lien is effectively stayed
within 30 days after entry of the corresponding judgment, or the
corresponding judgment has been discharged within such 30 day
period, and the claims secured thereby are being contested in
good faith by appropriate proceedings timely commenced and
diligently prosecuted; or
(b) the payment of the lien is covered in full by insurance and the
insurance company has not denied or contested coverage thereof;
or
(c) so long as the lien is adequately bonded, any appropriate legal
proceedings that may have been duly initiated for the review of
the corresponding judgment, decree or order shall not have been
fully terminated or the period within which these proceedings may
be initiated shall not have expired.
Any pledge, mortgage, security interest, lien or encumbrance on any shares
of the capital stock of any of the majority-owned subsidiaries of National,
which shares of capital stock National now or hereafter directly owns, to secure
any Indebtedness other than as described in (1) through (4) above, is referred
to in this prospectus as a "Restricted Lien". This limitation on liens does not
apply to the extent that National creates any Restricted Liens to secure
Indebtedness that, together with all other Indebtedness of National secured by
Restricted Liens, does not at the time exceed 5% of National's Consolidated
Capitalization. (See Section 608.)
For this purpose, "Consolidated Capitalization" means the sum of:
(1) Consolidated Common Shareholders' Equity;
(2) Consolidated Indebtedness, exclusive of any that is due and payable
within one year of the date the sum is determined; and, without
duplication
(3) any preference or preferred stock of National or any Consolidated
Subsidiary, as defined below, which is subject to mandatory redemption
or sinking fund provisions.
The term "Consolidated Common Shareholders' Equity" as used above means the
total assets of National and its Consolidated Subsidiaries that would, in
accordance with generally accepted accounting principles in the United States,
be classified on a balance sheet as assets, less: (a) all liabilities of
National and its Consolidated Subsidiaries that would, in accordance with
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generally accepted accounting principles in the United States, be classified on
a balance sheet as liabilities; (b) minority interests owned by third parties in
Consolidated Subsidiaries of National; and (c) preference or preferred stock of
National and its Consolidated Subsidiaries only to the extent any such
preference or preferred stock is subject to mandatory redemption or sinking fund
provisions.
The term "Consolidated Indebtedness" means total indebtedness as shown on
the consolidated balance sheet of National and its Consolidated Subsidiaries.
The term "Consolidated Subsidiary," as used above, means at any date any
majority-owned subsidiary the financial statements of which under generally
accepted accounting principles in the United States would be consolidated with
those of National in its consolidated financial statements as of such date.
For purposes of the limitation described in the first paragraph under this
heading, "Indebtedness" means:
(1) all indebtedness created or assumed by National for the repayment of
money borrowed;
(2) all indebtedness for money borrowed secured by a lien upon capital
stock owned by National and upon which indebtedness for money borrowed
National customarily pays interest, although National has not assumed
or become liable for the payment of such indebtedness for money
borrowed; and
(3) all indebtedness of others for money borrowed which is guaranteed as
to payment of principal by National or in effect guaranteed by
National through a contingent agreement to purchase such indebtedness
for money borrowed, but excluding from this definition any other
contingent obligation of National in respect of indebtedness for money
borrowed or other obligations incurred by others.
The foregoing limitation does not limit in any manner the ability of:
(1) National to place liens on any of its assets other than the capital stock of
directly held, majority-owned subsidiaries; (2) National to cause the transfer
of its assets or those of its subsidiaries, including the capital stock covered
by the foregoing restrictions; or (3) any of the direct or indirect subsidiaries
of National to place liens on any of their assets.
In addition, the Indenture provides that if debentures issued by National
under the indenture dated as of October 15, 1974, as supplemented (1974
Indenture), between National and The Bank of New York, as trustee, in an
aggregate principal amount in excess of 5% of National's Consolidated
Capitalization become secured pursuant to the provisions of the 1974 Indenture,
National will secure the outstanding Debt Securities equally and ratably with
those debentures. If National secures the outstanding Debt Securities, as
provided in the prior sentence, and for so long as the aggregate principal
amount of the debentures secured pursuant to the 1974 Indenture at any time
decreases and as a result constitutes 5% or less of National's Consolidated
Capitalization, the outstanding Debt Securities will no longer be secured. (See
Section 608.)
As of June 30, 1999, the Consolidated Capitalization of National was
approximately $1,670 million.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
Under the terms of the Indenture, National may not consolidate with or
merge into any other entity or convey, transfer or lease its properties and
assets substantially as an entirety to any entity, unless:
. the surviving or successor entity is organized and validly existing
under the laws of any domestic jurisdiction and it expressly assumes
National's obligations on all Debt Securities and under the Indenture;
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. immediately after giving effect to the transaction, no Event of
Default and no event which, after notice or lapse of time or both,
would become an Event of Default shall have occurred and be
continuing; and
. National shall have delivered to the Trustee an officer's certificate
and an opinion of counsel as to compliance with the foregoing.
The terms of the Indenture do not restrict National in a merger in which
National is the surviving entity. (See Section 1101.)
EVENTS OF DEFAULT
"Event of Default" when used in the Indenture with respect to any series of
Debt Securities, means any of the following:
. failure to pay interest, if any, on any Debt Security of the
applicable series for 30 days after it is due;
. failure to pay the principal of or premium, if any, on any Debt
Security of the applicable series when due (whether at maturity or
upon earlier redemption);
. failure to perform any other covenant in the Indenture, other than a
covenant that does not relate to that series of Debt Securities, that
continues for 90 days after National receives written notice from the
Trustee, or National and the Trustee receive a written notice from 33%
of the holders of the Debt Securities of such series; however, the
Trustee or the Trustee and the holders of such principal amount of
Debt Securities of this series can agree to an extension of the 90 day
period and such an agreement to extend will be automatically deemed to
occur if National is diligently pursuing action to correct the
default;
. certain events in bankruptcy, insolvency or reorganization of
National; or
. any other event of default included in any supplemental indenture or
officer's certificate for a specific series of Debt Securities.
(See Section 801).
The Trustee may withhold notice to the holders of Debt Securities of any
default, except default in the payment of principal, premium or interest, if it
considers such withholding of notice to be in the interests of the holders. An
Event of Default for a particular series of Debt Securities does not necessarily
constitute an Event of Default for any other series of Debt Securities issued
under the Indenture.
REMEDIES
Acceleration of Maturity
If an Event of Default with respect to fewer than all the series of Debt
Securities occurs and continues, either the Trustee or the holders of at least
33% in principal amount of the Debt Securities of such series may declare the
entire principal amount of all the Debt Securities of such series, together with
accrued interest, to be due and payable immediately. However, if the Event of
Default is applicable to all outstanding Debt Securities under the Indenture,
only the Trustee or holders of at least 33% in principal amount of all
outstanding Debt Securities of all series, voting as one class, and not the
holders of any one series, may make such a declaration of acceleration.
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At any time after a declaration of acceleration with respect to the Debt
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained, the Event of Default giving rise to
such declaration of acceleration will be considered waived, and such declaration
and its consequences will be considered rescinded and annulled, if:
. National has paid or deposited with the Trustee a sum sufficient to
pay:
(1) all overdue interest, if any, on all Debt Securities of the
series;
(2) the principal of and premium, if any, on any Debt Securities of
the series which have otherwise become due and interest, if any,
that is currently due;
(3) interest, if any, on overdue interest; and
(4) all amounts due to the Trustee under the Indenture; or
. any other Event of Default with respect to the Debt Securities of that
series has been cured or waived as provided in the Indenture.
There is no automatic acceleration, even in the event of bankruptcy,
insolvency or reorganization of National. (See Section 802.)
Right to Direct Proceedings
Other than its duties in case of an Event of Default, the Trustee is not
obligated to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the holders, unless the holders offer the
Trustee a reasonable indemnity. (See Section 903.) If they provide a reasonable
indemnity, the holders of a majority in principal amount of any series of Debt
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any power conferred upon the Trustee. However, if the Event of Default relates
to more than one series, only the holders of a majority in aggregate principal
amount of all affected series will have the right to give this direction. (See
Section 812). The Trustee is not obligated to comply with directions that
conflict with law or other provisions of the Indenture.
Limitation on Right to Institute Proceedings
No holder of Debt Securities of any series will have any right to institute
any proceeding under the Indenture, or to exercise any remedy under the
Indenture, unless:
. the holder has previously given to the Trustee written notice of a
continuing Event of Default;
. the holders of a majority in aggregate principal amount of the
outstanding Debt Securities of all series in respect of which an Event
of Default shall have occurred and be continuing have made a written
request to the Trustee, and have offered reasonable indemnity to the
Trustee to institute proceedings; and
. the Trustee has failed to institute any proceeding for 60 days after
notice and has not received any direction inconsistent with the
written request of holders during such period.
(See Section 807.)
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No Impairment of Right to Receive Payment
However, such limitations do not apply to a suit by a holder of a Debt
Security for payment of the principal of or premium, if any, or interest, if
any, on a Debt Security on or after the applicable due date. (See Section 808.)
Annual Notice to Trustee
National will provide to the Trustee an annual statement by an appropriate
officer as to National's compliance with all conditions and covenants under the
Indenture. (See Section 606.)
MODIFICATION AND WAIVER
National and the Trustee may enter into one or more supplemental indentures
without the consent of any holder of Debt Securities for any of the following
purposes:
. to evidence the assumption by any permitted successor of the covenants
of National in the Indenture and in the Debt Securities;
. to add additional covenants of National or to surrender any right or
power of National under the Indenture;
. to add additional Events of Default;
. to change, eliminate, or add any provision to the Indenture; provided,
however, if the change, elimination, or addition will adversely affect
the interests of the holders of Debt Securities of any series in any
material respect, such change, elimination, or addition will become
effective only:
(1) when the consent of the holders of Debt Securities of such series
has been obtained in accordance with the Indenture; or
(2) when no Debt Securities of the affected series remain outstanding
under the Indenture;
. to provide collateral security for all but not part of the Debt
Securities;
. to establish the form or terms of Debt Securities of any other series
as permitted by the Indenture;
. to provide for the authentication and delivery of bearer securities
and coupons attached thereto;
. to evidence and provide for the acceptance of appointment of a
successor trustee;
. to provide for the procedures required for use of a noncertificated
system of registration for the Debt Securities of all or any series;
. to change any place where principal, premium, if any, and interest
shall be payable, Debt Securities may be surrendered for registration
of transfer or exchange and notices to National may be served; or
. to cure any ambiguity or inconsistency or to make any other provisions
with respect to matters and questions arising under the Indenture;
provided that such action shall not adversely affect the interests of
the holders of Debt Securities of any series in any material respect.
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(See Section 1201.)
The holders of at least a majority in aggregate principal amount of the
Debt Securities of all series then outstanding may waive compliance by National
with certain restrictive provisions of the Indenture. (See Section 607.) The
holders of not less than a majority in principal amount of the outstanding Debt
Securities of any series may waive any past default under the Indenture with
respect to that series, except a default in the payment of principal, premium,
if any, or interest and certain covenants and provisions of the Indenture that
cannot be modified or be amended without the consent of the holder of each
outstanding Debt Security of the series affected. (See Section 813.)
If the Trust Indenture Act of 1939 is amended after the date of the
Indenture in such a way as to require changes to the Indenture, the Indenture
will be deemed to be amended so as to conform to such amendment of the Trust
Indenture Act of 1939. National and the Trustee may, without the consent of any
holders, enter into one or more supplemental indentures to evidence such an
amendment. (See Section 1201.)
The consent of the holders of a majority in aggregate principal amount of
the Debt Securities of all series then outstanding is required for all other
modifications to the Indenture. However, if less than all of the series of Debt
Securities outstanding are directly affected by a proposed supplemental
indenture, then the consent only of the holders of a majority in aggregate
principal amount of all series that are directly affected will be required. No
such amendment or modification may:
. change the stated maturity of the principal of, or any installment of
principal of or interest on, any Debt Security, or reduce the
principal amount of any Debt Security or its rate of interest or
change the method of calculating such interest rate or reduce any
premium payable upon redemption, or change the currency in which
payments are made, or impair the right to institute suit for the
enforcement of any payment on or after the stated maturity of any Debt
Security, without the consent of the holder;
. reduce the percentage in principal amount of the outstanding Debt
Securities of any series whose consent is required for any
supplemental indenture or any waiver of compliance with a provision of
the Indenture or any default thereunder and its consequences, or
reduce the requirements for quorum or voting, without the consent of
all the holders of the series; or
. modify certain of the provisions of the Indenture relating to
supplemental indentures, waivers of certain covenants and waivers of
past defaults with respect to the Debt Securities of any series,
without the consent of the holder of each outstanding Debt Security
affected thereby.
A supplemental indenture which changes the Indenture solely for the benefit
of one or more particular series of Debt Securities, or modifies the rights of
the holders of Debt Securities of one or more series, will not affect the rights
under the Indenture of the holders of the Debt Securities of any other series.
(See Section 1202.)
The Indenture provides that Debt Securities owned by National or anyone
else required to make payment on the Debt Securities shall be disregarded and
considered not to be outstanding in determining whether the required holders
have given a request or consent. (See Section 101.)
National may fix in advance a record date to determine the required number
of holders entitled to give any request, demand, authorization, direction,
notice, consent, waiver or other such act of the holders, but National shall
have no obligation to do so. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other act of the
holders may be given before or after such record date, but only the holders of
record at the close of business on that record date will be considered holders
for the purposes of determining whether holders of the required percentage of
the outstanding Debt Securities have authorized or
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agreed or consented to such request, demand, authorization, direction, notice,
consent, waiver or other act of the holders. For that purpose, the outstanding
Debt Securities shall be computed as of the record date. Any request, demand,
authorization, direction, notice, consent, election, waiver or other act of a
holder shall bind every future holder of the same Debt Securities and the holder
of every Debt Security issued upon the registration of transfer of or in
exchange of such Debt Securities. A transferee will be bound by acts of the
Trustee or National taken in reliance thereon, whether or not notation of such
action is made upon such Debt Security. (See Section 104.)
RESIGNATION OF A TRUSTEE
A Trustee may resign at any time by giving written notice to National or
may be removed at any time by act of the holders of a majority in principal
amount of all series of Debt Securities then outstanding delivered to the
Trustee and National. No resignation or removal of a Trustee and no appointment
of a successor trustee will be effective until the acceptance of appointment by
a successor trustee. So long as no Event of Default or event which, after notice
or lapse of time, or both, would become an Event of Default has occurred and is
continuing and except with respect to a Trustee appointed by act of the holders,
if National has delivered to the Trustee a resolution of its Board of Directors
appointing a successor trustee and such successor has accepted such appointment
in accordance with the terms of the respective Indenture, the Trustee will be
deemed to have resigned and the successor will be deemed to have been appointed
as trustee in accordance with such Indenture. (See Section 910.)
NOTICES
Notices to holders of Debt Securities will be given by mail to the
addresses of such holders as they may appear in the security register therefor.
(See Section 106.)
TITLE
National, the Trustee, and any agent of National or the Trustee, may treat
the person in whose name Debt Securities are registered as the absolute owner
thereof, whether or not such Debt Securities may be overdue, for the purpose of
making payments and for all other purposes irrespective of notice to the
contrary. (See Section 308.)
GOVERNING LAW
Each Indenture and the Debt Securities will be governed by, and construed
in accordance with, the laws of the State of New York. (See Section 112.)
REGARDING THE TRUSTEE
The Trustee will be The Bank of New York. In addition to acting as Trustee,
The Bank of New York acts, and may act, as trustee under various indentures and
trusts of National and its affiliates.
PLAN OF DISTRIBUTION
National may sell the Debt Securities in one or more series in any of three
ways: (i) through underwriters or dealers; (ii) through agents; or (iii)
directly to a limited number of purchasers or to a single purchaser.
THROUGH UNDERWRITERS OR DEALERS. If underwriters are used in the sale, the
Debt Securities will be acquired by the underwriters for their own account and
may be resold from time to time in one or more transactions, including
negotiated transactions, at the initial public offering price or at varying
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prices determined at the time of the sale. The Debt Securities may be offered to
the public either through underwriting syndicates represented by one or more
managing underwriters or directly by one or more managing underwriters. The
underwriter or underwriters with respect to Debt Securities will be named in the
prospectus supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth on
the cover page of such prospectus supplement. Unless otherwise set forth in such
prospectus supplement, the obligations of the underwriters to purchase the Debt
Securities will be subject to certain conditions precedent, and the underwriters
will be obligated to purchase all of the Debt Securities if any are purchased.
THROUGH AGENTS. Debt Securities may be sold through agents designated by
National from time to time. The prospectus supplement will set forth the name of
any agent involved in the offer or sale of the Debt Securities in respect of
which such prospectus supplement is delivered as well as any commissions payable
by National to such agent. Unless otherwise indicated in such prospectus
supplement, any such agent will be acting on a reasonable best efforts basis for
the period of its appointment.
DIRECTLY. National may sell the Debt Securities directly to one or more
purchasers. In this case, no underwriters or agents would be involved.
GENERAL INFORMATION. The prospectus supplement with respect to the Debt
Securities will set forth the terms of the offering of such Debt Securities,
including: (a) the name or names of any underwriters, dealers or agents; (b) the
purchase price of such Debt Securities and the proceeds to National from such
sale; (c) any underwriting discounts, agents' commissions and other items
constituting underwriting compensation; (d) any initial public offering price;
and (e) any discounts or concessions allowed or reallowed or paid to dealers.
Any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If so indicated in the prospectus supplement with respect to the Debt
Securities, National may authorize agents, underwriters or dealers to solicit
offers by certain specified institutions to purchase the Debt Securities from
National at the initial public offering price set forth in the prospectus
supplement pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. Such contracts will be subject to
those conditions set forth in such prospectus supplement, and such prospectus
supplement will set forth the commission payable for solicitation of such
contracts.
Agents, underwriters and dealers may be entitled under agreements entered
into with National to indemnification by National against certain civil
liabilities, including certain liabilities under the Securities Act of 1933 or
to contribution by National with respect to payments which such agents,
underwriters and dealers may be required to make in respect thereof.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to National's most recent Annual Report on Form 10-K have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The information incorporated in this prospectus by reference to National's
most recent Annual Report on Form 10-K relating to the oil and gas reserves of
Seneca Resources Corporation, which has been specifically attributed to Ralph E.
Davis Associates, Inc., has been reviewed and verified by said firm and has been
included herein in reliance upon the authority of said firm as an expert.
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LEGALITY
The legality of the Debt Securities will be passed upon for National by
Thelen Reid & Priest LLP, 40 West 57th Street, New York, New York 10019, and for
the underwriters, dealers, or agents by Winthrop, Stimson, Putnam & Roberts, One
Battery Park Plaza, New York, New York 10004. However, all matters of New Jersey
law, including the incorporation of National, will be passed upon only by
Stryker, Tams & Dill LLP, Two Penn Plaza East, Newark, New Jersey 07105.
