PROSPECTUS SUPPLEMENT
(To Prospectus Dated January 12, 1995)
NUI CORPORATION
$100,000,000
Medium-Term Notes, Series A
Due Not Less Than Nine Months From Date of Issue
NUI Corporation (the "Company") may offer from time to time its Medium-
Term Notes, Series A (the "Notes") in the aggregate initial public
offering price of up to $100,000,000, subject to reduction as a result
of the sale of other Debt Securities or Common Stock of the Company as
described in the accompanying Prospectus. Each Note will be issued in a
denomination of $1,000 or an integral multiple thereof and will mature
on a date not less than nine months from its date of issue (the "Stated
Maturity"). Each Note also may be subject to redemption at the option
of the Company or the holder thereof prior to the Stated Maturity. See
"Supplemental Description of the Notes" herein.
Each Note will bear interest at a fixed rate (a "Fixed Rate Note"),
which may be zero in the case of certain Original Issue Discount Notes,
or at a floating rate (a "Floating Rate Note") either determined by
reference to the Commercial Paper Rate, LIBOR, the Treasury Rate, the CD
Rate, the Prime Rate, the J.J. Kenny Rate, the CMT Rate, the Federal
Funds Rate, the 11th District Cost of Funds Rate or any other Base Rate,
or formula, as selected by the purchaser and agreed to by the Company,
adjusted by the Spread or Spread Multiplier, if any, applicable to such
Note. Unless otherwise indicated, interest on each Fixed Rate Note will
be payable semiannually in arrears on each February 1 and August 1 and
at Stated Maturity or redemption, if any.
The interest rate or interest rate formula, Issue Price, Stated
Maturity, Interest Payment Dates (if other than February 1 and August
1), redemption provisions and certain other terms with respect to each
Note will be established at the time of issuance and set forth in a
pricing supplement to this Prospectus Supplement ("Pricing Supplement").
Each Note will be represented by a global security (a "Global Note")
issued in fully registered book-entry form (a "Book-Entry Note") or,
under certain limited circumstances described herein, in definitive form
(a "Certificated Note"). Each Book-Entry Note will be represented by a
Global Note deposited with or on behalf of The Depository Trust Company
("DTC"), or such other depository as identified in the applicable
Pricing Supplement (the "Depository"), and registered in the name of the
Depository's nominee. Interests in Book-Entry Notes will be shown on,
and transfer thereof will be effected only through, records maintained
by the Depository (with respect to its participants) and the
Depository's participants (with respect to beneficial owners). Book-
Entry Notes will not be issuable as Certificated Notes except under the
circumstances described herein. See "Supplemental Description of the
Notes -- Book-Entry Notes" herein.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY<PAGE>
PRICING SUPPLEMENT HERETO OR THE ACCOMPANYING PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Agents' Discounts Proceeds to
Public(1) or Commissions(2) Company(2)(3)
<S> <C> <C> <C>
Per Note 100.00% .125% to .750% 99.875% to 99.250%
Total $100,000,000 $125,000 to $750,000 $99,875,000 to $99,250,000
<F1>
(1) Unless otherwise specified in the applicable Pricing Supplement,
the price to the public will be 100% of the principal amount.
<F2>
(2) The Company will pay Lehman Brothers, Lehman Brothers Inc.
(including its affiliate, Lehman Government Securities Inc.),
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated or Morgan Stanley & Co. Incorporated (each an
"Agent," and collectively, the "Agents") a commission, in the
form of a discount, ranging from .125% to .750% of the principal
amount of any Note, depending upon its Stated Maturity, sold
through such Agent. Commissions with respect to Notes with
Stated Maturities in excess of thirty years which are sold
through an Agent will be negotiated between the Company and such
Agent at the time of sale. Unless otherwise indicated in the
applicable Pricing Supplement, any Note sold to an Agent as
principal will be purchased by such Agent at a price equal to
100% of the principal amount thereof less a discount equal to the
commission applicable to any agency sale of a Note of identical
maturity and may be resold by such Agent. In connection with the
purchase by any Agent as principal, such Agent may use a selling
group and may reallow any portion of such discount to other
dealers or purchasers. The Company also may sell Notes directly
to investors in which case no commission will be payable. See
"Plan of Distribution."
<F3>
(3) Before deduction of expenses payable by the Company estimated at
$530,400.
</TABLE>
____________________
The Notes may be offered from time to time on a continuing basis by the
Company through the Agents which have agreed to use their reasonable
best efforts to solicit offers to purchase Notes. The Company may sell
Notes at a discount to any Agent for its own account or for resale to
one or more investors or one or more brokers or dealers at varying
prices related to prevailing market prices at the time of resale, as
determined by such Agent or, if so specified in an applicable Pricing
Supplement, for resale at a fixed public offering price. The Company
also may arrange for Notes to be sold directly to investors on its own
behalf. The Notes will not be listed on any securities exchange, and
there can be no assurance that any of the Notes offered by this
Prospectus Supplement will be sold or that there will be a secondary
market for any Notes. The Company reserves the right to withdraw,
cancel or modify the offer made hereby without notice. The Company will
have the sole right to accept offers to purchase Notes and may reject
proposed purchases in whole or in part. An Agent will have the right,
in its discretion reasonably exercised and without notice to the
Company, to reject any proposed purchase of Notes through the Agent in
whole or in part. See "Plan of Distribution."
Lehman Brothers Merrill Lynch & Co. Morgan Stanley & Co.
Incorporated
The date of this Prospectus Supplement is February 6, 1995.<PAGE>
IN CONNECTION WITH THIS OFFERING, THE AGENTS OR UNDERWRITERS MAY OVER-
ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICE OF THE NOTES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
SELECTED CONSOLIDATED EARNINGS INFORMATION
(Dollars in thousands)
The following selected consolidated earnings information should be read
in conjunction with the information and financial statements (including
notes thereto) appearing in the documents incorporated herein by
reference.
<TABLE>
<CAPTION>
Three Three Twelve Fiscal Year
Months Months Months Ended
Ended Ended Ended September 30,
December 31, December 31, December 31, 1994
1994 1993 1994
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Operating Revenues $102,524 $105,603 $389,207 $392,286
Operating Income $8,388 $9,351 $24,870 $25,833
Net Income $3,978 $5,852 $8,906 $10,780
Ratio of Earnings
to Fixed Charges(1)
(unaudited) 1.48 1.66
_____________________
<F1>
(1) Represents Earnings (defined as income from continuing operations
plus income taxes plus Fixed Charges (defined as interest expense before
any reduction for amounts capitalized plus one-third of rentals charged
to operating expense)) divided by Fixed Charges.
</TABLE>
Net income for the three months ended December 31, 1994 was $3.98
million, or $0.44 per share, compared with net income of $5.85 million,
or $0.71 per share, a year ago. The current quarter's results reflect
$1.4 million of non-recurring pre-tax charges relating in part to the
settlement of the Company's Florida Division rate case in December 1994,
and in part to restructuring the Division's operations. The current
quarter also reflects higher interest expense principally associated
with increases in short-term interest rates, as well as increases in
other operation and maintenance expense and depreciation charges. These
increases were partially offset by $1.0 million of pre-tax operating
income from the Company's Pennsylvania and Southern Division, which was
acquired in April 1994.
Because of the seasonal nature of gas utility operations, the results
for interim periods are not necessarily indicative of the results for an
entire year.
SUPPLEMENTAL DESCRIPTION OF THE NOTES
The following summaries of certain terms of the Notes supplements, and
to the extent inconsistent therewith replaces, the description of the
general terms and provisions of the Notes set forth under "Description
of Debt Securities" in the accompanying Prospectus, to which specific<PAGE>
reference is hereby made. Capitalized terms not otherwise defined
herein have the respective meanings given to them in the accompanying
Prospectus or in the Indenture.
The following information, which is a general description of the
Notes, may be modified or supplemented by information in the applicable
Pricing Supplement.
General
The Notes will be issued in fully registered form only, without
coupons. Each Note will be issued initially as either a Book-Entry Note
or a Certificated Note. Except as set forth herein under "Book-Entry
Notes" or in any Pricing Supplement relating to specific Notes, the
Notes will not be issuable as Certificated Notes.
Each Note will mature on the date not less than nine months from its
date of issue (the "Stated Maturity"), as selected by the purchaser and
agreed to by the Company and specified in the applicable Pricing
Supplement. Each Note also may be subject to redemption at the option
of the Company or the Holder thereof prior to its Stated Maturity, as
specified in the applicable Pricing Supplement.
The Pricing Supplement relating to a Note will describe the following
terms: (i) the price (expressed as a percentage of the aggregate
principal amount thereof) at which such Note will be issued (the "Issue
Price"); (ii) the date on which such Note will be issued (the "Original
Issue Date"); (iii) the Stated Maturity; (iv) whether such Note is a
Fixed Rate Note or a Floating Rate Note and the date from which interest
on such Note will accrue; (v) if such Note is a Fixed Rate Note, the
rate per annum at which such Note will bear interest, if any, and the
Interest Payment Dates if other than February 1 and August 1; (vi) if
such Note is a Floating Rate Note, the Base Rate, the Initial Interest
Rate, the Interest Reset Period, the Interest Reset Dates, the Interest
Payment Dates, the Index Maturity, the Maximum Interest Rate, if any,
the Minimum Interest Rate, if any, the Spread or Spread Multiplier, if
any (each as defined below), and any other terms relating to the
particular method of calculating the interest rate for such Notes; (vii)
any index or method used to determine the amounts of payments of
premium, if any, and interest, if any, on such Note; (viii) if such Note
is an Original Issue Discount Note (as defined below), a statement to
that effect; (ix) if such Note may be redeemed at the option of the
Company or the Holder thereof prior to Stated Maturity as described
under "Redemption" below, a description of the provisions relating to
such redemption, including, in the case of an Original Issue Discount
Note, the information necessary to determine the amount due upon
redemption or acceleration of such Note; (x) any sinking fund or other
mandatory redemption provisions applicable to such Note, and any
provisions for the repayment or purchase by the Company of such Note at
the option of the Company or the Holder; (xi) if such Note will be
represented by a Certificated Note, a statement to that effect; (xii) if
such Note is to be issued in the form of one or more Global Notes, a
statement to that effect and identifying the Depository with respect to<PAGE>
such Global Notes; and (xiii) any other terms of such Note not
inconsistent with the provisions of the Indenture.
"Interest Payment Date" means for Fixed Rate Notes, unless otherwise
specified in the applicable Pricing Supplement, each February 1 and
August 1 and in the case of Floating Rate Notes has the meaning
specified under the caption "Floating Rate Notes" below.
"Original Issue Discount Note" means any Note which provides for an
amount less than the principal amount thereof to be due and payable upon
the declaration of acceleration of the Stated Maturity thereof,
described under "Description of Debt Securities Events of Default" in
the accompanying Prospectus.
Payment of Principal and Interest
Payments of interest, if any, on the Notes by the paying agent
referred to below will be made by wire transfer in immediately available
funds (except that interest, if any, on Certificated Notes will be paid
by check) to the Holders of such Notes (which, in the case of Global
Notes representing Book-Entry Notes, will be a nominee of the
Depository) as of the Regular Record Date (as defined below) for each
Interest Payment Date and at Maturity (as defined below); provided,
however, that if the Original Issue Date of a Note is after a Regular
Record Date and before the corresponding Interest Payment Date, interest
for the period from and including the Original Issue Date for such Note
to but excluding such Interest Payment Date will be paid on the next
succeeding Interest Payment Date to the Holder of such Note on the
related Regular Record Date.
The Company has appointed First Fidelity Bank, National Association,
as paying agent for the Notes (the "Paying Agent"). Unless otherwise
specified in the applicable Pricing Supplement, the principal of the
Notes and premium, if any, thereon payable at Maturity will be paid by
wire transfer in immediately available funds (except that payments on
Certificated Notes will be made by check, except in certain
circumstances) upon surrender thereof at the office of the Paying Agent
in Newark, New Jersey, which is the principal office for the payment of
principal, premium, if any, or interest, if any, on the Notes, or at
such other place as may be designated by the Company.
If, with respect to any Fixed Rate Note, any Interest Payment Date,
Redemption Date or the Stated Maturity is not a Business Day (as defined
below), payment of amounts due on such Fixed Rate Note on such date may
be made on the next succeeding Business Day as if each such payment were
made on the date such payment were due and 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.
If, with respect to any Floating Rate Note, any Interest Payment Date
(other than the Stated Maturity or Redemption Date) is not a Business
Day, such Interest Payment Date will be postponed until the next
succeeding Business Day, except that if such Note is a LIBOR Note (as<PAGE>
defined below) and such next succeeding Business Day is in the next
succeeding calendar month, such Interest Payment Date will be the
immediately preceding Business Day. If the Stated Maturity or a
Redemption Date of a Floating Rate Note is not a Business Day, payments
of principal and interest due on such Floating Rate Note may be made on
the next succeeding Business Day, and no interest will accrue on such
amounts for the period from and after such Stated Maturity or Redemption
Date, as the case may be, to such Business Day.
Notwithstanding anything in this Prospectus Supplement to the
contrary, if a Note is an Original Issue Discount Note, the amount
payable on such Note in the event of redemption or repayment prior to
its Stated Maturity will be the Amortized Face Amount of such Note as of
the Redemption Date or the date of repayment, as the case may be. The
"Amortized Face Amount" of an Original Issue Discount Note will be the
amount equal to (i) the Issue Price set forth in the applicable Pricing
Supplement plus (ii) that portion of the difference between the Issue
Price and the principal amount of such Note that has accrued at the
yield to maturity set forth in the applicable Pricing Supplement
(computed in accordance with generally accepted United States bond yield
computation principles) as of such Redemption Date or repayment date,
but in no event will the Amortized Face Amount of an Original Issue
Discount Note exceed its principal amount.
"Maturity" with respect to any Note means the date on which the
principal or any installment of principal of a Note becomes due and
payable, whether at Stated Maturity, by declaration of acceleration,
call for redemption or otherwise.
The "Regular 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, and for a Fixed Rate Note (unless otherwise specified in the
applicable Pricing Supplement) will be the January 15 or July 15
(whether or not a Business Day) immediately preceding an Interest
Payment Date for such Fixed Rate Notes.
"Business Day" with respect to any Note means any Monday, Tuesday,
Wednesday, Thursday or Friday which (i) is not a day on which banking
institutions or trust companies in The City of New York or any Place of
Payment with respect to such Note are generally authorized or obligated
by law, regulation or executive order to close and (ii) if such Note is
a LIBOR Note, is also a London Banking Day. "London Banking Day" with
respect to any LIBOR Note means any day on which dealings in deposits in
U.S. dollars are transacted in the London interbank market.
Fixed Rate Notes
Each Fixed Rate Note will bear interest, if applicable, from its
Original Issue Date at the rate per annum stated on the face thereof
until the principal amount thereof is paid or made available for
payment. Interest payments, if applicable, on Fixed Rate Notes will
equal the amount of interest accrued from and including the next
preceding Interest Payment Date in respect of which interest has been<PAGE>
paid (or from and including the Original Issue Date, if no interest has
been paid with respect to such Fixed Rate Notes), to but excluding the
related Interest Payment Date or Maturity, as the case may be. Unless
otherwise set forth in the applicable Pricing Supplement, interest on
each Fixed Rate Note will be payable, if applicable, semiannually in
arrears on each Interest Payment Date and at the Stated Maturity or
Redemption Date, if any. Interest on Fixed Rate Notes will be computed
on the basis of a 360-day year of twelve 30-day months.
Floating Rate Notes
Each Floating Rate Note will bear interest from its Original Issue
Date to the first Interest Reset Date (as defined below) for such Note
at the Initial Interest Rate set forth on the face thereof and in the
applicable Pricing Supplement. Thereafter, the interest rate on such
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, or multiplied by the Spread Multiplier, if any. The "Spread" is
the number of basis points (one basis point equals one one-hundredth of
a percentage point) that may be specified in the applicable Pricing
Supplement as being applicable to such Note, and the "Spread Multiplier"
is the percentage that may be specified in the applicable Pricing
Supplement as being applicable to such Note. The applicable Pricing
Supplement will designate one of the following Base Rates as applicable
to a Floating Rate Note: (i) the Commercial Paper Rate (a "Commercial
Paper Rate Note"), (ii) LIBOR (a "LIBOR Note"), (iii) the Treasury Rate
(a "Treasury Rate Note"), (iv) the CD Rate (a "CD Rate Note"), (v) the
Prime Rate (a "Prime Rate Note"), (vi) the J.J. Kenny Rate
(a "J.J. Kenny Rate Note"), (vii) the CMT Rate (a "CMT Rate Note"),
(viii) the Federal Funds Rate (a "Federal Funds Rate Note"), (ix) the
11th District Cost of Funds Rate (an "11th District Cost of Funds Rate
Note") or (x) such other Base Rate or formula, as is set forth in such
Pricing Supplement and in such Note.
As specified in the applicable Pricing Supplement, a Floating Rate
Note also may have either or both of the following (in each case
expressed as a rate per annum to be calculated on a simple interest
basis): (i) a maximum limitation, or ceiling, on the rate at which
interest may accrue during any interest period ("Maximum Interest Rate")
and (ii) a minimum limitation, or floor, on the rate at which interest
may accrue during any interest period ("Minimum Interest Rate"). 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 applicable law, as
the same may be modified by United States law of general application.
The Company 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 applicable Pricing Supplement,
First Fidelity Bank, National Association, 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 upon the Company and the Holders of the Floating Rate Notes.<PAGE>
The interest rate on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semiannually or annually (such period being
the "Interest Reset Period" for such Note, and the first day of each
Interest Reset Period being an "Interest Reset Date"), as specified in
the applicable Pricing Supplement and Note. Unless otherwise specified
in the applicable 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, the Wednesday of each week; in the case of Treasury Rate
Notes that reset weekly, the 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 (except in the
case of monthly reset 11th District Cost of Funds Rate Notes which will
reset on the first calendar day 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 semiannually, the third Wednesday of the two months of each
year specified in the applicable 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 applicable Pricing Supplement;
provided, however, that the interest rate in effect from the Original
Issue Date to the first Interest Reset Date will be the Initial Interest
Rate specified on the face of the Floating Rate Note. If any Interest
Reset Date for any Floating Rate Note would otherwise be a day that is
not a Business Day, such Interest Reset Date will be postponed to the
next succeeding Business Day, except that, in the case of a LIBOR Note,
if such Business Day is in the next succeeding calendar month, such
Interest Reset Date will be the immediately preceding Business Day.
The interest rate for each Interest Reset Period will be the rate
determined by the Calculation Agent as of the Interest Determination
Date pertaining to the Interest Reset Date for such Interest Reset
Period. Unless otherwise specified in the applicable Pricing
Supplement, the "Interest Determination Date" pertaining to an Interest
Reset Date for (a) a Commercial Paper Rate Note (the "Commercial Paper
Interest Determination Date"), (b) a CD Rate Note (the "CD Interest
Determination Date"), (c) a Prime Rate Note (the "Prime Interest
Determination Date"), (d) a J.J. Kenny Rate Note (the "Kenny Interest
Determination Date"), (e) a CMT Rate Note (the "CMT Interest
Determination Date") or (f) a Federal Funds Rate Note (the "Federal
Funds Interest Determination Date") will be the second Business Day
prior to such Interest Reset Date. Unless otherwise specified in the
applicable Pricing Supplement, the Interest Determination Date
pertaining to an Interest Reset Date for an 11th District Cost of Funds
Rate Note (the "11th District Interest Determination Date") will be the
last business day of the month immediately preceding such Interest Reset
Date on which the Federal Home Loan Bank of San Francisco (the "FHLB of
San Francisco") publishes the Index (as defined below). Unless
otherwise specified in the applicable Pricing Supplement, the Interest
Determination Date pertaining to an Interest Reset Date for a LIBOR Note
(the "LIBOR Interest Determinate Date") will be the second London
Banking Day immediately preceding each Interest Reset Date. Unless
otherwise specified in the applicable Pricing Supplement, the Interest
Determination Date pertaining to an Interest Reset Date for a Treasury<PAGE>
Rate Note (the "Treasury Interest Determination Date") will be the day
of the week in which such Interest Reset Date falls on which Treasury
bills would normally be auctioned. Treasury bills are usually sold at
auction on Monday of each week, unless that day is a legal holiday, in
which case the auction is usually held on the following Tuesday, except
that such auction may be held on the preceding Friday. If, as a result
of a legal holiday, an auction is so held on the preceding Friday, such
Friday will be the Treasury Interest Determination Date pertaining to
the Interest Reset Period commencing in the next succeeding week. If an
auction date will fall on any Interest Reset Date for a Treasury Rate
Note, then such Interest Reset Date will instead be the first Business
Day immediately following such auction date. Unless otherwise specified
in the applicable Pricing Supplement, the "Calculation Date" applicable
to any Interest Determination Date will be the earlier of (i) the tenth
calendar day after the Interest Determination Date or, if such day is
not a Business Day, the next succeeding Business Day, or (ii) the
Business Day preceding the applicable Interest Payment Date or Maturity,
as the case may be.
Unless otherwise specified in the applicable Pricing Supplement,
interest payable in respect of Floating Rate Notes will be the accrued
interest from and including the Original Issue Date or the last date to
which interest has been paid, as the case may be, to but excluding the
immediately succeeding Interest Payment Date, or Maturity, as the case
may be.
Unless otherwise specified in the applicable Pricing Supplement, with
respect to a Floating Rate Note, accrued interest will be calculated by
multiplying the principal amount of such Note by an accrued interest
factor. Such accrued interest factor will be computed by adding the
interest factors calculated for each day in the 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 rate in effect on such day by 360,
in the case of Commercial Paper Rate Notes, LIBOR Notes, CD Rate Notes,
Prime Rate Notes, Federal Funds Rate Notes and 11th District Cost of
Funds Rate Notes, or by the actual number of days in the year, in the
case of Treasury Rate Notes or CMT Rate Notes, or by 365 days in the
case of a J.J. Kenny Rate Note. For purposes of making the foregoing
calculation, the interest rate in effect on any Interest Reset Date will
be the applicable rate on such date.
Unless otherwise specified in the applicable 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 on Floating Rate Notes will be rounded to the nearest
cent (with one-half of a cent being rounded upward).
Unless otherwise indicated in the applicable Pricing Supplement and
except as provided below, interest will be payable in arrears on the
following Interest Payment Dates: in the case of Floating Rate Notes
that reset daily, weekly or monthly, on the third Wednesday of each<PAGE>
month or the third Wednesday of March, June, September or December of
each year, as specified in the applicable 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 semiannually, 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 applicable Pricing
Supplement.
Upon the request of the Holder of any Floating Rate Note, the
Calculation Agent for such Note will provide the interest rate then in
effect and, if determined, the interest rate that will become effective
on the next Interest Reset Date with respect to such Floating Rate Note.
As used herein, the "Index Maturity" for any Note is the period of
maturity of the instrument or obligation from which the Base Rate is
calculated; "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; and "Composite Quotations" means the daily statistical release
entitled "Composite 3:30 P.M. Quotations for U.S. Government Securities"
or any successor release published by the Federal Reserve Bank of New
York.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest for each Interest
Reset Period at an interest rate calculated with reference to the
Commercial Paper Rate and the Spread or Spread Multiplier, if any,
specified in such Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be the Money
Market Yield (as defined below) as of the Commercial Paper Interest
Determination Date for such Interest Reset Period of the rate for
commercial paper having the Index Maturity specified in the applicable
Pricing Supplement, as such rate will be published in H.15 (519) under
the heading "Commercial Paper" or, in the event that such rate is not
published prior to 9:00 A.M., New York City time, on the Calculation
Date pertaining to such Commercial Paper Interest Determination Date,
then the Commercial Paper Rate for such Interest Reset Period will be
the Money Market Yield as of such Commercial Paper Interest
Determination Date of the rate for commercial paper of the specified
Index Maturity as published in Composite Quotations under the heading
"Commercial Paper." If such rate is not published prior to 3:00 p.m. on
such Calculation Date in either H.15 (519) or Composite Quotations, then
the Commercial Paper Rate for such Interest Reset Period will be the
Money Market Yield of the arithmetic average of the offered rates, as of
11:00 A.M., New York City time, on such Commercial Paper Interest
Determination Date, of three leading dealers in commercial paper in The
City of New York selected by the Calculation Agent, in its discretion,
for commercial paper of the specified Index Maturity placed for an
industrial issuer whose bonds are rated "AA" or the equivalent by a<PAGE>
nationally recognized rating agency; provided, however, that if the
dealers selected as aforesaid are not quoting offered rates described in
this sentence, the Commercial Paper Rate for such Interest Reset Period
will be deemed to be the same as the Commercial Paper Rate for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Interest Rate).
"Money Market Yield" will be a yield calculated in accordance with the
following formula:
Money Market Yield = D x 360 x 100
-------
360 - (DxM)
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 period for which interest is
being calculated.
LIBOR Notes
Each LIBOR Note will bear interest for each Interest Reset Period at
an interest rate calculated with reference to LIBOR and the Spread or
Spread Multiplier, if any, specified in such Note and in the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement,
"LIBOR" for each Interest Reset Period will be determined as follows:
(i) The Calculation Agent will either (a) calculate the
arithmetic average of the offered rates for deposits in U.S. dollars for
the period of the Index Maturity specified in the applicable Pricing
Supplement, commencing on the Interest Reset Date, which appear on the
Reuters Screen LIBO Page as of 11:00 A.M., London time, on such LIBOR
Determination Date ("LIBOR Reuters"), if at least two such offered rates
appear on the Reuters Screen LIBO Page, or (b) determine the offered
rate on the LIBOR Determination Date for deposits in U.S. dollars having
the Index Maturity designated in the applicable Pricing Supplement that
appears on the Telerate Page 3750 as of 11:00 A.M. London time, on that
LIBOR Determination Date ("LIBOR Telerate"). "Reuters Screen LIBO Page"
means the display designated as page "LIBO" on the Reuters Monitor Money
Rates Service (or such other page as may replace the LIBO page on that
service for the purpose of displaying London interbank offered rates of
major banks). "Telerate Page 3750" means the display designated as page
"3750" on the Telerate Service (or such other page as may replace the
3750 page on that Service or such other service or services as may be
nominated by the British Bankers' Association for the purpose of
displaying London interbank offered rates for U.S. dollar deposits). If
neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable
pricing supplement, LIBOR will be determined as if LIBOR Telerate had
been specified. In the case where (a) above applies, if fewer than two
offered rates appear on the Reuters Screen LIBO Page, or, in the case
where (b) above applies, if no rate appears on the Telerate Page 3750,
as applicable, LIBOR with respect to that Interest Reset Date will be<PAGE>
determined as if the parties had specified the rate described in (ii)
below.
(ii) The Calculation Agent will request the principal London
office of each of four major banks in the London interbank market
selected by the Calculation Agent, in its discretion, to provide the
Calculation Agent with its offered quotations for deposits in U.S.
dollars for the period of the specified Index Maturity, commencing on
the Interest Reset Date, to prime banks in the London interbank market
at approximately 11:00 A.M., London time, on such LIBOR Determination
Date and in a principal amount equal to an amount not less than
$1,000,000 that is representative of a single transaction in such market
at such time. If at least two such quotations are provided, "LIBOR" for
such interest rate period will be the arithmetic average of such
quotations. If fewer than two such quotations are provided, "LIBOR" for
such Interest Reset Period will be the arithmetic average of rates
quoted by three major banks in The City of New York selected by the
Calculation Agent, in its discretion, at 11:00 A.M., New York City time,
on such LIBOR Determination Date for loans in U.S. dollars to leading
European banks, for the period of the specified Index Maturity
commencing on such Interest Reset Date and in a principal amount equal
to an amount not less than $1,000,000 that is representative of a single
transaction in such market at such time; provided, however, that if
fewer than three banks selected as aforesaid by the Calculation Agent
are quoting rates as described in this sentence, "LIBOR" for such
Interest Reset Period will be deemed to be the same as LIBOR for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Interest Rate).
Treasury Rate Notes
Each Treasury Rate Note will bear interest for each Interest Reset
Period at an interest rate calculated with reference to the Treasury
Rate and the Spread or Spread Multiplier, if any, specified in such Note
and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" for each Interest Reset Period will be the rate for the
auction held on the Treasury Interest Determination Date for such
Interest Reset Period of direct obligations of the United States
("Treasury bills") having the Index Maturity specified in the applicable
Pricing Supplement, as such rate is published in H.15 (519) under the
heading "U.S. Government Securities-Treasury bills-Auction Average
(Investment)" or, in the event that such a rate is not published prior
to 3:00 P.M., New York City time, on the Calculation Date pertaining to
such Treasury Interest Determination Date, then the Treasury Rate for
such Interest Reset Period will be the auction average rate (expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) on such Treasury Interest
Determination Date as otherwise announced by the United States
Department of the Treasury. In the event that the results of the
auction of Treasury bills having the specified Index Maturity are not
published or reported as provided above prior to 3:00 P.M., New York
City time, on such Calculation Date, or if no such auction is held on<PAGE>
such Treasury Interest Determination Date, then the "Treasury Rate" for
such Interest Reset Period will be calculated by the Calculation Agent
and will be the yield to maturity (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a
daily basis) of the arithmetic average of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on such
Treasury Interest Determination Date, of three leading primary United
States Government securities dealers selected by such Calculation Agent,
it its discretion, for the issue of Treasury bills with a remaining
maturity closest to the specified Index Maturity; provided, however,
that if the dealers selected as aforesaid by the Calculation Agent are
not quoting bid rates as described in this sentence, 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 Interest Reset Period, the Initial Interest
Rate).
CD Rate Notes
Each CD Rate Note will bear interest for each Interest Reset Period at
an interest rate calculated with reference to the CD Rate and the Spread
or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"CD Rate" for each Interest Reset Period will be the rate on the CD
Interest Determination Date for such Interest Reset Period for
negotiable certificates of deposit having the Index Maturity designated
in the applicable Pricing Supplement as published in H.15(519) under the
heading "CDs (Secondary Market)" or, in the event that such a rate is
not published prior to 9:00 A.M., New York City time, on the Calculation
Date pertaining to such CD Interest Determination Date, then the CD Rate
for such Interest Reset Period will be the rate on such CD Interest
Determination Date for negotiable certificates of deposit having the
Index Maturity designated in the applicable Pricing Supplement as
published in Composite Quotations under the heading "Certificates of
Deposit." If such rate is not published prior to 3:00 P.M., New York
City time, on such Calculation Date, then the CD Rate for such Interest
Reset Period will be calculated by the Calculation Agent and will be the
arithmetic average of the secondary market offered rates as of
10:00 A.M., New York City time, on such CD Interest Determination Date
of three leading nonbank dealers in negotiable U.S. dollar certificates
of deposit in The City of New York selected by the Calculation Agent for
negotiable certificates of deposit in denominations of $5,000,000 of
major United States money center banks of the highest credit standing
(in the market for negotiable certificates of deposit) with a remaining
maturity closest to the Index Maturity designated in the applicable
Pricing Supplement; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting rates as described in
this sentence, the CD Rate for such Interest Reset Period will be deemed
to be the same as the CD Rate for the immediately preceding Interest
Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).<PAGE>
Prime Rate Notes
Each Prime Rate Note will bear interest for each Interest Reset Period
at an interest rate calculated with reference to the Prime Rate and the
Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Prime Rate" for each Interest Reset Period will be the rate set forth
in H.15(519) on the Prime Interest Determination Date for such Interest
Reset Period opposite the caption "Bank Prime Loan," or, in the event
that such a rate is not published prior to 9:00 A.M., New York City
time, on the Calculation Date pertaining to such Prime Interest
Determination Date, the Prime Rate for such Interest Reset Period will
be calculated by the Calculation Agent and will be the arithmetic
average of the rates of interest publicly announced by each bank named
on the Reuters Screen NYMF Page as such bank's prime rate or base
lending rate as in effect for such Prime Interest Determination Date as
quoted on the Reuters Screen NYMF Page on such Prime Interest
Determination Date, or, if fewer than four such rates appear on the
Reuters Screen Page for such Prime Interest Determination Date, the
Prime Rate for such Interest Reset Period will be the arithmetic average
of the prime rates quoted on the basis of the actual number of days in
the year divided by 360 as of the close of business on such Prime
Interest Determination Date by at least two of the three major money
center banks in The City of New York selected by the Calculation Agent
from which quotations are requested. If fewer than two quotations are
quoted as aforesaid, the Prime Rate for such Interest Reset Period will
be calculated by the Calculation Agent and will be the arithmetic
average of the prime rates quoted in The City of New York on the Prime
Interest Determination Date by the appropriate number of substitute
banks or trust companies organized and doing business under the laws of
the United States, or any state thereof, having total equity capital of
at least U.S. $500 million and being subject to supervision or
examination by a Federal or state authority, selected by the Calculation
Agent to quote such rate or rates; provided, however, that if the Prime
Rate is not published in H.15(519) and the banks or trust companies
selected as aforesaid are not quoting rates as described in this
sentence, the Prime Rate for such Interest Reset Period will be deemed
to be the same as the Prime Rate for the immediately preceding Interest
Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate). "Reuters Screen NYMF Page" means the display
designated as page "NYMF" on the Reuters Monitor Money Rates Service (or
such other page as may replace page NYMF on that service for the purpose
of displaying prime rates or base lending rates of major United States
banks).
J.J. Kenny Rate Notes
Each J.J. Kenny Rate Note will bear interest for each Interest Reset
Period at an interest rate calculated with reference to the J.J. Kenny
Rate and the Spread or Spread Multiplier, if any, specified in such Note
and in the applicable Pricing Supplement.<PAGE>
Unless otherwise specified in the applicable Pricing Supplement, the
"J.J. Kenny Rate" for each Interest Reset Period will be the high grade
weekly index (the "Weekly Index") on the Kenny Interest Determination
Date for such Interest Reset Period made available by Kenny Information
Systems ("Kenny") to the Calculation Agent. The Weekly Index is, and
will be, based upon 30-day yield evaluations at par of bonds, the
interest on which is exempt from Federal income taxation under the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"),
of not less than five high grade component issuers selected by Kenny
which will include, without limitation, issuers of general obligation
bonds. The specific issuers included among the component issuers may be
changed from time to time by Kenny in its discretion. The bonds on
which the Weekly Index is based will not include any bonds on which the
interest is subject to a minimum tax or similar tax under the Internal
Revenue Code unless all tax-exempt bonds are subject to such tax. In
the event Kenny ceases to make available such Weekly Index, a successor
indexing agent will be selected by the Calculation Agent, such index to
reflect the prevailing rate for bonds rated in the highest short-term
rating category by Moody's Investors Service, Inc. and Standard & Poor's
Corporation in respect of issuers most closely resembling the high grade
component issuers selected by Kenny for its Weekly Index, the interest
on which is (i) variable on a weekly basis, (ii) exempt from Federal
income taxation under the Internal Revenue Code and (iii) not subject to
a minimum tax or similar tax under the Internal Revenue Code unless all
tax-exempt bonds are subject to such tax. If such successor indexing
agent is not available, the J.J. Kenny Rate for such Interest Reset
Period will be 67% of the rate determined as if the Treasury Rate option
had been originally selected.
CMT Rate Notes
Each CMT Rate Note will bear interest for each Interest Reset Period
at the interest rate calculated with reference to the CMT Rate and the
Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"CMT Rate" for each Interest Reset Period will be the rate 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 (i) if the
Designated CMT Telerate Page is 7055, the rate on the CMT Interest
Determination Date for such Interest Reset Period and (ii) if the
Designated CMT Telerate Page is 7052, the week, or the month, as
applicable, ended immediately preceding the week in which the applicable
CMT Interest Determination Date for such Interest Reset Period occurs.
If such rate is no longer displayed on the relevant page, or if not
displayed prior to 3:00 P.M., New York City time, on the Calculation
Date pertaining to such CMT Interest Determination Date, then the CMT
Rate for such Interest Reset Period will be such treasury constant
maturity rate for the Designated CMT Maturity Index as published in the
relevant H.15(519). If such rate is no longer published, or in the
event that such rates is not published prior to 3:00 P.M., New York City<PAGE>
time, on the Calculation Date pertaining to such CMT Interest
Determination Date, then the CMT Rate for such Interest Reset Period
will be such treasury constant maturity rate for the Designated CMT
Maturity Index (or other United States Treasury rate for the Designated
CMT Maturity Index) on such CMT Interest 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 the
relevant H.15(519). If such information is not published prior to
3:00 P.M., New York City time, on such Calculation Date, then the CMT
Rate for such Interest Reset Period will be calculated by the
Calculation Agent and will be a yield to maturity, based on the
arithmetic average of the secondary market closing offer side prices as
of approximately 3:30 P.M., New York City time, on the CMT Interest
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 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. If the
Calculation Agent cannot obtain three such Treasury Note quotations, the
CMT Rate for such Interest Reset Period will be calculated by the
Calculation Agent and will be a yield to maturity based on the
arithmetic average of the secondary market offer side prices as of
approximately 3:30 P.M., New York City time, on the CMT Interest
Determination Date of three Reference Dealers in The City of New York
(from five such Reference Dealers selected by the Calculation Agent 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 $100,000,000. If three or
four (and not five) of such Referenced Dealers are quoting as described
above, then the CMT Rate will be based on the arithmetic average of the
offer prices obtained and neither the highest nor the lowest of such
quotes will be eliminated; provided, however, that if fewer than three
Reference Dealers selected by the Calculation Agent are quoting rates as
described in this sentence, the CMT Rate for such Interest Reset Period
will be deemed to be the same as the CMT Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset
Period, the Initial Interest Rate). If two Treasury Notes with an
original maturity, as described in the third preceding sentence, 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 will be used.<PAGE>
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service on the page specified in the applicable Pricing
Supplement (or any other page as may replace such page on the service
for the purpose of displaying Treasury Constant Maturities as published
in H.15(519)), for the purpose of displaying Treasury Constant
Maturities as published in H.15(519). If no such page is specified in
the applicable Pricing Supplement, the Designated CMT Telerate Page will
be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity
of the Treasury Notes (either one, two, three, five, seven, ten, twenty
or thirty years) specified in the applicable Pricing Supplement with
respect to which the CMT Rate will be calculated. If no such maturity
is specified in the applicable Pricing Supplement, the Designated CMT
Maturity Index will be two years.
Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest for each Interest
Reset Period at the interest rate calculated with reference to the
Federal Funds Rate Note and the Spread or Spread Multiplier, if any,
specified in such Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Federal Funds Rate" for each Interest Reset Period will be the rate on
the Federal Funds Interest Determination Date for such Interest Reset
Period for Federal Funds as published in H.15(519) under the heading
"Federal Funds (Effective)" or, in the event that such rate is not
published prior to 9:00 A.M., New York City time, on the Calculation
Date, pertaining to such Federal Funds Interest Determination Date, the
Federal Funds Rate for such Interest Reset Period will be the rate on
such Federal Funds Interest Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate." If such
rate is not published prior to 3:00 P.M., New York City time, on such
Calculation Date, then the Federal Funds Rate for such Interest Reset
Period will be calculated by the Calculation Agent and will be the
arithmetic average of the rates as of 9:00 A.M., New York City time, on
such Federal Funds Interest Determination Date for the last transaction
in overnight Federal Funds arranged by three leading brokers of Federal
Funds transactions in The City of New York selected by the Calculation
Agent; provided, however, that if the brokers selected as aforesaid by
the Calculation Agent are not quoting rates as described in this
sentence, the Federal Funds Rate for such Interest Reset Period will be
deemed to be the same as the Federal Funds Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset
Period, the Initial Interest Rate).
11th District Cost of Funds Rate Notes
Each 11th District Cost of Funds Rate Note will bear interest for each
Interest Reset Period at the interest rate calculated with reference to
the 11th District Cost of Funds Rate and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.<PAGE>
Unless otherwise specified in the applicable Pricing Supplement, the
"11th District Cost of Funds Rate" for each Interest Reset Period will
be the rate equal to the monthly weighted average cost of funds for the
calendar month preceding such 11th District Cost of Funds Rate Interest
Determination Date for such Interest Reset Period as such weighted
average cost of funds is set forth under the caption "11th District" on
Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such
11th District Determination Date. If such rate does not appear on
Telerate Page 7058 on any related 11th District Interest Determination
Date, the 11th District Cost of Funds Rate for such 11th District
Interest Determination Date will be the monthly weighted average cost of
funds paid by member institutions of the Eleventh Federal Home Loan Bank
District that was most recently announced (the "Index") by the FHLB of
San Francisco as such cost of funds for the calendar month preceding the
date of such announcement. If the FHLB of San Francisco fails to
announce such rate for the calendar month next preceding such
11th District Interest Determination Date, then the 11th District Cost
of Funds Rate for such Interest Reset Period will be deemed to be the
same as the 11th District Cost of Funds Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset
Period, the Initial Interest Rate).
Redemption
The Pricing Supplement relating to each Note will indicate either that
such Note cannot be redeemed prior to the Stated Maturity or that such
Note will be redeemable at the option of the Company or at the option of
the Holder thereof, as described in such Pricing Supplement (subject, in
the case of redemption at the option of the Company, to any refunding
limitations described therein), in whole or in part, on any date on or
after the date designated as the Initial Redemption Date in such Pricing
Supplement, at prices declining from a specified premium, if any, to
par, together with accrued interest, if any, to the date fixed for
redemption.
Notice of redemption will be given not less than 30 or more than 60
days prior to the date fixed for redemption, unless a shorter period is
specified in the Pricing Supplement relating to the Notes to be
redeemed. Notices of redemption will contain, among other things, the
date fixed for redemption, the redemption price and the particular Notes
to be redeemed (if less than all of the outstanding Notes of a
particular series are to be redeemed).
The Pricing Supplement relating to each Note also will specify any
sinking fund or other mandatory redemption provisions applicable to such
Note, and any provisions for the repayment or purchase by the Company of
such Note at the option of the Holder.
Book-Entry Notes
The Notes will be issued in the form of one or more Global Notes that
will be deposited with, or on behalf of, DTC, or another Depository and
registered in the name of the Depository or its nominee.<PAGE>
Upon issuance, all the Notes having the same original issue date,
interest rate, redemption provisions, if any, and Stated Maturity will
be represented by one or more Global Notes. Except under limited
circumstances described below, Book-Entry Notes represented by a Global
Note will not be exchangeable for Certificated Notes and will not
otherwise be issuable as Certificated Notes.
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 ("Direct Participants")
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to
others such as securities brokers and dealers, banks and trust companies
that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants").
The rules applicable to DTC and its Participants are on file with the
Securities and Exchange Commission (the "SEC").
Purchases of beneficial interests in a Global Note 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 purchases, but Beneficial Owners
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the
Direct or Indirect Participant through which the Beneficial Owners
entered into the transaction. Transfers of ownership interests in the
Global 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
Notes, except in the event that use of the book-entry system for the
Notes is discontinued. The laws of some states require that certain
purchasers of securities take physical delivery of such securities.
Such limits and such laws may impair the ability to transfer beneficial
interests in a Global Note.
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 beneficial interest in the Global Notes are
credited, which may or may not be the Beneficial Owners. The<PAGE>
Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Payments of any principal of, premium, if any, and interest, if any,
on individual Book-Entry Notes represented by a Global Note will be made
to the Depository or its nominee, as the case may be, as the holder of
such Global Note. 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 payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is now 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 the Depository, the Company, the Agents or any
Paying Agent subject to any statutory or regulatory requirements as may
be in effect from time to time. Payments to the Depository are the
responsibility of the Company or any Paying Agent, disbursement of such
payments to the Direct Participants will be the responsibility of the
Depository and disbursement of such payments to the Beneficial Owners
will be the responsibility of the Direct and Indirect Participants.
So long as the Depository, or its nominee, is the registered owner of
a Global Note, such Depository or such nominee, as the case may be, will
be considered the sole holder of the individual Book-Entry Notes
represented by such Global Note for all purposes under the Indenture.
Except as set forth below, owners of beneficial interests in a Global
Note will not be entitled to have any of the individual Book-Entry Notes
represented by such Global Note registered in their names, will not
receive or be entitled to receive physical delivery of such Book-Entry
Notes and will not be considered the holders thereof under the
Indenture, including for purposes of consenting to any amendment thereof
or supplement thereto.
Conveyance of notices and other communications by the Depository 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, if any, will be sent to the Depository, or its
nominee. If less than all of a series of Notes are being redeemed,
DTC's practice is to determine by lot the amount of the interest of each
Participant in such series to be redeemed.
Neither DTC nor any nominee will consent or vote with respect to the
Notes. Under its usual procedures, DTC will mail an Omnibus Proxy to
the Company as soon as possible after the appropriate record date. Such
Omnibus Proxy assigns the rights of DTC or its nominee to vote or
consent to those Direct Participants to whose accounts the Book-Entry
Notes are credited on such record date, identified in a listing attached
to such Omnibus Proxy.<PAGE>
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed, the Company will
issue individual Certificated Notes in exchange for the Global Note or
Notes representing the corresponding Book-Entry Notes. In addition, the
Company may at any time and in its sole discretion determine not to have
any Notes of a series represented by one or more Global Notes and, in
such event, will issue individual Certificated Notes in exchange for the
Global Notes of such series representing the corresponding Book-Entry
Notes. In any such instance, an owner of a Book-Entry Note represented
by such a Global Note will be entitled to physical delivery of
individual Certificated Notes equal in principal amount to such Book--
Entry Note and to have such Certificated Notes registered in its name.
Individual Certificated Notes so issued will be issued as registered
Notes in denominations, unless otherwise specified by the Company, of
$1,000 and integral multiples thereof.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources (including DTC) that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
None of the Company, the Trustee, the Agents or any agent for payment
on or registration of transfer or exchange of any Global Note will have
any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial interests in any Global
Note or for maintaining, supervising or reviewing any records relating
to such beneficial interests.
CERTAIN TAX CONSIDERATIONS
General
The following is a summary of certain United States federal income tax
considerations that may be relevant to the beneficial owner of a Note
that is a United States Person subject to United States income taxation
on a net income basis in respect of a Note (an "Owner"). For this
purpose, "United States Person" means a citizen or resident of the
United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political
subdivision thereof, or an estate or trust the income of which is
subject to United States federal income taxation. This summary deals
only with Owners who will hold Notes as capital assets, and does not
address tax considerations applicable to (i) Owners that may be subject
to special tax rules, such as financial institutions, insurance
companies, tax-exempt organizations, employee stock ownership plans or
individual retirement and other tax deferred accounts, (ii) Owners whose
"functional currency" is not the U.S. dollar, (iii) dealers in
securities or (iv) persons that own Notes as a hedge against currency or
other risk or as a position in a "straddle" for tax purposes.
This summary is based on laws, existing and proposed regulations,
administrative rulings and judicial decisions as of the date hereof, all
of which are subject to change so as to result in federal income tax<PAGE>
consequences different from those discussed below. Prospective Owners
should consult their own tax advisors in determining the tax
consequences to them of purchasing, holding or disposing of Notes,
including the application to their particular situation of the tax
considerations discussed below, as well as the application of foreign,
state, local or other tax laws and prospects for enactment of future tax
legislation or regulations.
Interest and Original Issue Discount
As a general rule, payments of interest on a Note (other than a Short-
Term Note, as defined below) will be taxable to the Owner as ordinary
interest income at the time that such payments are accrued or are
received (in accordance with the Owner's method of tax accounting).
However, if Notes are issued with "original issue discount" ("OID")
special rules may apply.
Notes issued for an amount that is less than the stated redemption
price at maturity (as defined below) may possess OID. The excess of the
stated redemption price at maturity over the issue price of a Note will
constitute OID unless such excess is de minimis. (A Note issued with
OID and having a term in excess of one year is hereinafter sometimes
referred to as an "OID Note.") Such excess is de minimis if it is less
than 0.25 percent (0.0025) of the stated redemption price at maturity
multiplied by the number of full years to maturity. "Stated redemption
price at maturity" means the sum of all payments in respect of a Note
other than qualified stated interest payments, and "issue price" means
the first price at which a substantial amount of Notes of the issue have
been sold. Notice (together with all required information) will be
given in the appropriate Pricing Supplement when the Company determines
a particular Note will be an OID Note.
In general, interest on Fixed Rate Notes and interest on Floating Rate
Notes which is determined under the methodologies prescribed under the
heading "Floating Rate Notes" should constitute qualified stated
interest. If the interest on the Notes constitutes qualified stated
interest, then the Notes will have OID generally only if either the
Notes are issued for an amount which is less than their stated
redemption price at maturity or provide for principal payments which are
contingent within the meaning of the applicable regulations or proposed
regulations.
However, interest on Floating Rate Notes may not be characterized as
qualified stated interest if: i) the Spread Multiplier were not to
constitute a constant which is greater than zero but not more than 1.35;
ii) the issue price of the Floating Rate Notes were to exceed the total
noncontingent principal payments thereon by an amount which exceeds the
lesser of (A) .015 multiplied by the product of the total noncontingent
payments and the number of complete years to maturity from the issue
date or (B) 15 percent of the total noncontingent principal payments; or
iii) the Floating Rate were to contain a cap, floor or governor that
does not apply for the entire term of the Note and such device is
expected as of the issue date to significantly affect the expected yield
on the Note (determined without regard to such device).<PAGE>
If any portion of the interest payable on the Notes (other than Short-
Term Notes) were not to constitute qualified stated interest or if any
portion of the principal payments thereon were contingent within the
meaning of the applicable regulations (including proposed regulations),
the applicable Pricing Supplement will provide additional information,
if material, to the calculation of any OID on such Notes.
Owners of OID Notes should be aware that they must, in general,
include OID in income in advance of the receipt of some or all of the
related cash payments. The OID will generally be included in income
currently as interest as it accrues over the term of the Note under a
formula based upon the compounding of interest at a rate that provides
for a constant yield to maturity. Accrued OID must be included in
income by subsequent as well as original Owners. (See "Premium and
Market Discount" below.)
For Notes having a term of one year or less ("Short-Term Notes"), all
payments, including qualified stated interest, are treated as part of
the stated redemption price at maturity. The excess of the sum of such
payments over the issue price constitutes original issue discount which
is included in income currently either on a straight-line basis or, if
the Owner so elects, under the constant yield method used generally for
the OID Notes. However, certain categories of Owners (generally
individuals or other cash method taxpayers) are not required to include
accrued OID on Short-Term Notes in their income currently unless they so
elect. If such an Owner that does not so elect recognizes a gain upon
the disposition of the Short-Term Note, such gain may be treated as
ordinary interest income to the extent of the accrued OID. Furthermore,
such Owner may be required to defer deductions for a portion of the
Owner's interest expenses with respect to any indebtedness incurred or
maintained to purchase or carry the Note. In the case of Owners that
are required to include OID on Short-Term Notes in income currently, the
amount of accrued OID included in income will be added to the Owner's
tax basis in the Note.
In addition, Owners of Short-Term Notes, including those that purchase
the Notes after original issue or not at the issue price, may elect to
treat their purchase price as the issue price. In that event, OID, or
acquisition discount, accrues as described hereinabove but by reference
to the purchase price. Such an election applies to all obligations of a
term not exceeding one year that are acquired on or after the first day
of the taxable year to which the election applies. The election also
applies to all subsequent years unless the taxpayer receives IRS consent
to its revocation.
Certain of the Notes may be redeemable at the option of the Company
prior to their Stated Maturity. The treatment of such Notes may differ
from the treatment discussed above and the treatment of Notes with
premium, as discussed below, and investors intending to purchase such
Notes should consult their tax advisors.
Since the Notes are registered with the SEC the Notes are treated as
publicly offered for certain federal income tax purposes. As a result,
the Company is not obligated to provide information on the face of debt<PAGE>
instruments with respect to OID. The Company will provide annual
information statements to Owners (other than to corporations and certain
other Owners) of OID Notes and to the IRS regarding the amount of OID
determined to be attributable to such Notes; however, the amount
reported by the Company may not equal the amount of OID required to be
included in income by an Owner that is not an initial purchaser of the
Notes. In addition, the Company will provide such other required
information to enable an Owner to report the amount of OID. Prospective
investors are advised to consult their tax advisors with respect to the
particular OID characteristics of any OID Note.
Basis and Sale, Exchange or Retirement
An Owner's tax basis in a Note generally will equal the cost of such
Note to such Owner, increased by any amounts includable in income by the
Owner as OID or market discount (as described below) and reduced by any
premium or acquisition premium that has been amortized (as described
below) and by any payments other than qualified stated interest made on
such Note. Upon the sale, exchange or retirement of a Note, an Owner
generally will recognize gain or loss equal to the difference between
the amount realized (less any accrued interest, which will be taxable as
such) and the Owner's tax basis in the Note.
Special rules apply to the treatment of gain realized with respect to
certain Short-Term Notes. See "Interest and Original Issue Discount"
above.
Except as discussed below with respect to market discount, gain or
loss recognized by an Owner on the sale, exchange or retirement of a
Note generally will be long-term capital gain or loss if the Note had
been held for more than one year at the time of disposition. Under
current law, individuals are subject to a maximum federal income tax
rate of 28% on net long-term capital gains, which is lower than the
maximum rate of tax on ordinary income. The distinction between capital
gain or loss and ordinary income or loss is also important, for example,
for purposes of the limitations on an Owner's ability to offset long-
term capital losses against short-term capital gains, as well as an
Owner's ability to offset capital losses against ordinary income and for
determining the allowance for charitable deductions.
Premium and Market Discount
An Owner who purchases an OID Note for an amount that exceeds its
"adjusted issue price" (defined as the sum of the issue price of the
Note and the aggregate amount of the OID includable, determined without
regard to any premium or acquisition premium of previous owners
discussed below, in the income of any previous Owner of the Note, less
any previous payment on the Note other than a payment of qualified
stated interest) as of the purchase date but less than the sum of all
amounts payable on the OID Note after the purchase date other than
qualified stated interest, will be considered to have purchased such
Note at an "acquisition premium." The amount of OID that such Owner
must include in income with respect to such Note for any taxable year is
generally reduced by the portion of such acquisition premium properly<PAGE>
allocable to such year. If an Owner purchases an OID Note for an amount
that is greater than its stated redemption price at maturity, such Note
will have no OID with respect to the Owner. The Owner may elect to
amortize such premium, using a constant interest method, generally over
the remaining term of the Note. Such premium will be deemed to be an
offset to interest on a Note otherwise includable in income. For Owners
not making such an election, amortizable bond premium remains part of
the Owner's basis thereby decreasing the gain or increasing the loss
otherwise recognized on disposition of the Note. Other rules may apply
if the Owner made an election to treat all interest received on OID
Notes as OID.
If the Owner purchases either a Note that is not an OID Note for less
than its stated redemption price at maturity or an OID Note for less
than its revised issue price as of the purchase date, the difference
generally will be treated as "market discount" unless such difference is
less than a specified de minimis amount. For this purpose, the
difference is less than a de minimis amount if it does not exceed .0025
multiplied by the product of the stated redemption price at maturity of
the Note and the number of complete years from the date of purchase to
the maturity of the Note. In addition, the market discount rules also
do not apply to Short-Term Notes.
For purposes of determining market discount, "revised issue price"
means the sum of the issue price of the OID Note and the aggregate
amount of OID includable in the income of previous Owners of the OID
Note (disregarding any reduction on account of premium or acquisition
premium), reduced by any cash payment (other than qualified stated
interest) previously made on the Note.
An Owner of a Note with market discount will be required to treat any
principal repayment on, or any gain on, the sale, exchange, retirement
or other disposition of, Notes as ordinary income to the extent of the
market discount that had not previously been included in income but is
treated as having accrued by the time of such payment or disposition.
In addition, the Owner may be required to defer, until the Stated
Maturity of the Note or earlier disposition in a taxable transaction,
the deduction of all or a portion of the interest expense on any
indebtedness incurred or continued to purchase or carry such Note.
Market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless
the Owner elects to accrue such market discount using a constant
interest method. An Owner of a Note may elect to include market
discount in income currently as it accrues (under either the ratable or
constant interest method), in which case the rule described above
regarding deferral of interest deductions will not apply. This election
to include market discount in income currently, once made, applies to
all market discount obligations acquired in or after the first taxable
year to which the election applies and may not be revoked without the
consent of the IRS. Other rules may apply if the Owner made an election
to treat all interest received on OID Notes as OID. If an Owner
purchases a Note which would be subject to the foregoing rules on<PAGE>
premiums and discounts, such Owner should consult his or her own tax
advisor.
Backup Withholding and Information Reporting
In general, if a non-corporate Owner fails to furnish a correct
taxpayer identification number or certification of foreign or other
exempt status, fails to report dividend and interest income in full or
fails to certify that such Owner has provided a correct taxpayer
identification number and is not subject to backup withholding, 31%
federal backup withholding tax may be withheld on amounts of interest
payable to the Owner. An individual's taxpayer identification number is
his or her social security number. 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 (i) the broker determines that the seller
is a corporation or other exempt Owner or (ii) the seller provides, in
the required manner, certain identifying information. Such a sale must
also be reported by the broker to the IRS, unless the broker determines
that the seller is an exempt Owner. The backup withholding tax is not
an additional tax and may be credited against an Owner's regular federal
income tax liability or refunded by the IRS where applicable.
PLAN OF DISTRIBUTION
The Company may sell the Notes on a continuing basis through the
Agents, which have agreed to use their reasonable best efforts to
solicit offers to purchase the Notes for the period of their
appointment. Initial purchasers may propose certain terms of the Notes,
but the Company will have the right to accept orders to purchase Notes
and may reject proposed purchases in whole or in part. The Agents will
have the right, in their discretion reasonably exercised and without
notice to the Company, to reject any proposed purchase of Notes in whole
or in part. The Company will pay each Agent a commission ranging from
.125% to .750% of the aggregate principal amount of Notes sold through
it, depending upon Stated Maturity. Commissions with respect to Notes
with Stated Maturities in excess of thirty years which are sold through
an Agent will be negotiated between the Company and such Agent at the
time of sale, and such commissions will be set forth in the applicable
Pricing Supplement. The Company may arrange for Notes to be sold to any
Agent acting as principal or may sell Notes directly to one or more
institutional purchasers. In the case of sales made directly by the
Company, no commission or discount will be paid or allowed. The Company
also may sell Notes to any Agent as principal for its own account at a
price to be agreed upon at the time of sale. Unless otherwise indicated
in the applicable Pricing Supplement, any Note sold to an Agent as
principal will be purchased by such Agent at a price equal to 100% of
the principal amount thereof less a discount equal to the commission
applicable to an agency sale of a Note of identical maturity and may be
resold by such Agent. In connection with the purchase by any Agent as
principal, such Agent may use a selling group and may reallow any
portion of such discount to other dealers or purchasers. Such Notes
may be resold at prevailing market prices, or at prices related thereto,
at the time of such resale, as determined by such Agent or, if so<PAGE>
specified in an applicable Pricing Supplement, at a fixed public
offering price. After the initial public offering of Notes, the public
offering price (in the case of Notes to be resold at a fixed public
offering price), the commission and the discount may be changed.
No Note will have an established trading market when issued. The
Notes will not be listed on any securities exchange. The Agents may
make a market in the Notes, but the Agents are not obligated to do so
and may discontinue any market-making at any time without notice. There
can be no assurance of a secondary market for any Notes or the liquidity
in the secondary market, if one develops, or that any or all of the
Notes will be sold.
The Agents, whether acting as agent or principal, may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933. The
Company has agreed to indemnify the Agents against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribute
to payments that the Agents may be required to make in respect thereof.
USE OF PROCEEDS
The net proceeds from the offering of Notes made hereby shall be used
to retire short-term indebtedness incurred principally to finance
temporary capital expenditures, for working capital purposes and for
other general corporate purposes. At December 31, 1994, the Company had
outstanding short-term borrowings amounting to $110.35 million with a
weighted average interest cost of 6.16%.<PAGE>
