PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED DECEMBER 21, 1995
$200,000,000
Southern California Edison Company
5-7/8% Notes, Due 2001
Interest on the Notes is payable on January 15 and July 15 of each
year, commencing July 15, 1996. The Notes will not be redeemable prior to
maturity. The Notes will be issued only in registered form in
denominations of $1,000 and integral multiples thereof.
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 OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public(1) Discount(2) Company(1)(3)
<S> <C> <C> <C>
Per Note: 99.779% 0.240% 99.539%
Total $199,558,000 $480,000 $199,078,000
</TABLE>
(1) Plus accrued interest from January 15, 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $200,000 payable by the
Company.
The Notes are offered severally by the Underwriters, as specified
herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that the
Notes will be ready for delivery in New York, New York, on or about
January 19, 1996.
Goldman, Sachs & Co.
First Union Capital Markets Corp.
PaineWebber Incorporated
ABN AMRO Securities (USA) Inc.
Citicorp Securities, Inc.
J.P. Morgan Securities Inc.
BA Securities, Inc.
McDonald & Company Securities, Inc.
Morgan Stanley & Co.
Incorporated
Prudential Securities Incorporated
The date of this Prospectus Supplement is January 16, 1996
PAGE
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
USE OF PROCEEDS
The net proceeds from the sale of the Company's 5-7/8% Notes, Due
2001 (the "Notes") will be used to reimburse the Company for a portion of
its previously incurred construction expenditures, for redemption,
repayment, retirement or refunding of outstanding indebtedness or other
securities, or for other general corporate purposes. The Company
currently intends to redeem, on or about February 21, 1996, $200,000,000
principal amount of its 8 5/8% First and Refunding Mortgage Bonds, Series
86C, Due 2019 at 105.33% of their principal amount, plus accrued interest
to the redemption date.
For information concerning the Company's continuing construction
program and requirements for funds to finance such programs, see
"Construction Program and Capital Expenditures" under Part I, Item 2 of
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, which is incorporated by reference in the accompanying
Prospectus.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges was 3.48 for the 12-month
period ended September 30, 1995 and 3.38 for the 12-month period ended
September 30, 1994.
CERTAIN TERMS OF THE NOTES
The following description of the particular terms of the Notes
supplements the description of the general terms and provisions of the
Debt Securities set forth in the accompanying Prospectus.
The Notes will be unsecured and will rank on a parity with all other
unsecured and unsubordinated indebtedness of the Company. The Notes will
be limited to $200,000,000 aggregate principal amount.
The Notes will be due January 15, 2001 and will bear interest at the
rate specified on the cover of this Prospectus Supplement from January 15,
1996 or from the most recent Interest Payment Date to which interest has
been paid or provided for, payable semiannually on January 15 and July 15
to the holders of record on the preceding January 1 and July 1,
respectively, commencing July 15, 1996.
The Notes will not be redeemable prior to maturity. The Notes will
not be entitled to the benefits of any sinking fund.
The Notes will be issued only in definitive fully registered form
without coupons. The Notes may be presented for registration of transfer
or exchange at the offices or agencies of Harris Trust and Savings Bank in
the City of Chicago, Illinois.
S-2
PAGE
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement (the "Underwriting Agreement"), the Company has agreed to sell
to each of the Underwriters named below, and each of the Underwriters has
severally agreed to purchase the principal amount of the Notes set forth
opposite its name below. In the Underwriting Agreement, the several
Underwriters have agreed, subject to the terms and conditions set forth
therein, to purchase all the Notes offered hereby if any of the Notes are
purchased. In the event of a default by an Underwriter, the Underwriting
Agreement provides that, in certain circumstances, less than all of the
Notes may be purchased.
Principal
Underwriter Amount
----------- ---------
Goldman, Sachs & Co. $ 33,400,000
First Union Capital Markets Corp. 33,300,000
PaineWebber Incorporated 33,300,000
ABN AMRO Securities (USA) Inc. 20,000,000
Citicorp Securities, Inc. 20,000,000
J.P. Morgan Securities Inc. 20,000,000
BA Securities, Inc. 10,000,000
McDonald & Company Securities, Inc. 10,000,000
Morgan Stanley & Co. Incorporated 10,000,000
Prudential Securities Incorporated 10,000,000
------------
Total $200,000,000
============
The Underwriters have advised the Company that they propose
initially to offer the Notes to the public at the public offering price
set forth on the cover page of this Prospectus Supplement and to certain
dealers at such price less a concession not in excess of 0.200% of the
principal amount of the Notes. The Underwriters may allow, and such
dealers may reallow, a discount not in excess of 0.1250% of the principal
amount of the Notes to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be
changed.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933.
S-3
PAGE
<PAGE>
No person has been authorized to give any $200,000,000
information or to make any representations,
other than those contained in this
Prospectus Supplement or the Prospectus in
connection with the offer contained in this
Prospectus Supplement and the Prospectus,
and, if given or made, such other
information or representations must not be
relied upon as having been authorized by
the Company or by any of the Underwriters.
Neither the delivery of this Prospectus Southern California
Supplement and the Prospectus nor any sale Edison Company
made hereunder shall, under any
circumstances, create any implication that
there has been no change in the affairs of
the Company since the date of this
Prospectus Supplement. This Prospectus
Supplement and the Prospectus do not
constitute an offer or solicitation by anyone
in any state in which such offer or
solicitation is not authorized or in which the
person making such offer or solicitation is 5-7/8% Notes,
not qualified to do so or to anyone to whom Due 2001
it is unlawful to make such offer or
solicitation.
------------
Table of Contents
Page
----
Prospectus Supplement
Use of Proceeds S-2
Ratio of Earnings to Fixed Charges S-2
Certain Terms of the Notes S-2
Underwriting S-3 Goldman, Sachs & Co.
First Union Capital
Prospectus Markets Corp.
PaineWebber Incorporated
Available Information 2 ABN AMRO Securities
Incorporation of Certain (USA) Inc.
Documents by Reference 2 Citicorp Securities, Inc.
Selected Information 3 J.P. Morgan Securities Inc.
The Company 4 BA Securities, Inc.
Use of Proceeds 4 McDonald & Company
Description of Debt Securities 4 Securities, Inc.
Limitations on Issuance of Bearer Morgan Stanley & Co.
Securities 12 Incorporated
Experts 12 Prudential Securities
Validity of Debt Securities 13 Incorporated
Plan of Disbribution 13
Prospectus Supplement
Dated January 16, 1996
PAGE
<PAGE>
- -----------------------------------------------------------------------
P R O S P E C T U S
- -----------------------------------------------------------------------
SOUTHERN CALIFORNIA EDISON COMPANY
Debt Securities
---------------
Southern California Edison Company (the "Company") from time to time
may offer, in one or more series, its unsecured debt securities (the "Debt
Securities") on terms to be determined at the time of sale, from which the
Company will receive up to an aggregate of $705,000,000 in proceeds or,
if the principal of the Debt Securities is payable in a foreign or
composite currency, the equivalent thereof at the time of offering. The
specific designation, aggregate principal amount, designated currency or
composite currency, authorized denominations, purchase price, maturity,
rate (which may be fixed or variable) and time of payment of any interest,
any redemption terms, terms for sinking fund payments, terms of
subordination and other specific terms in connection with the offering and
sale of Debt Securities, and any listing on a securities exchange of the
Debt Securities in respect of which this Prospectus is being delivered
("Offered Debt Securities") are set forth in the accompanying prospectus
supplement ("Prospectus Supplement").
At December 31, 1994, the Company had approximately $4.5 billion of
indebtedness that would rank senior to the Senior Debt Securities
(including the first mortgage bonds referred to below) and approximately
$5.9 billion of indebtedness that would rank senior to the Subordinated
Debt Securities (including the first mortgage bonds referred to below).
Substantially all properties of the Company are currently subject to the
lien of a trust indenture securing first mortgage bonds of the Company,
of which approximately $4.5 billion principal amount were outstanding at
December 31, 1994, and, accordingly, the Company's obligations under such
first mortgage bonds will effectively rank senior to the Debt Securities
to the extent of such properties.
The Company may sell Debt Securities to or through underwriters or
dealers, and also may sell Debt Securities directly to other purchasers
or through agents. See "Plan of Distribution". The accompanying
Prospectus Supplement sets forth the names of any underwriters or agents
involved in the sale of the Offered Debt Securities in respect of which
this Prospectus is being delivered, the principal amounts, if any, to be
purchased by underwriters and the compensation, if any, of such
underwriters or agents.
---------------
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. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is December 21, 1995
PAGE
<PAGE>
No person is authorized to give any information or to make any
representations other than those contained or incorporated by reference
in this Prospectus or the Prospectus Supplement and, if given or made,
such information or representations must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the registered
securities to which it relates or an offer to sell or a solicitation of
an offer to buy such securities in any jurisdiction to any person to whom
it is unlawful to make such offer or solicitation in such jurisdiction.
Neither the delivery of this Prospectus or the Prospectus Supplement nor
any sale made hereunder or thereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company since the date hereof or thereof or that the information
contained or incorporated by reference herein or therein is correct as of
any time subsequent to its date.
AVAILABLE INFORMATION
The Company is subject to informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information may be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices at 7 World Trade Center, Suite 1300, New York, New York
10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material may be obtained by mail
from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. In addition, reports,
proxy statements and other information concerning the Company may be
inspected at the offices of the New York, American and Pacific Stock
Exchanges.
The Company has filed with the Commission a registration statement on
Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the
Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File
No. 1-2313) under the Exchange Act are incorporated in this Prospectus by
reference:
1. Annual Report on Form 10-K for the year ended December 31, 1994.
2. Quarterly Reports on Form 10-Q for the periods ended March 31, June
30, and September 30, 1995.
3. Current Reports on Form 8-K dated March 31, May 24, June 1, June
9, August 15, and September 20, 1995.
4. All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of the
Debt Securities. Any documents incorporated by reference do not
form part of the listing particulars of the Council of the
International Stock Exchange of the United Kingdom and the Republic
of Ireland Limited.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
request of such person, a copy of any or all of the documents which are
incorporated by reference herein, other than exhibits to such documents
(unless such exhibits are specifically incorporated by reference therein).
Written or telephone requests should be directed to Southern California
Edison Company, P.O. Box 800, Rosemead, California 91770, Attention:
Corporate Finance Division, telephone (818) 302-2662.
PAGE
<PAGE>
SELECTED INFORMATION
The following material is qualified in its entirety by the detailed
information and financial statements appearing elsewhere in this
Prospectus, including the documents incorporated by reference in this
Prospectus.
THE COMPANY
<TABLE>
<CAPTION>
<S> <C>
Customers (December 31, 1994) . . . . . . . . . . . . . . . . . . . . 4,150,863
Area Generation Capacity at Peak (Megawatts) (December 31, 1994) . . 20,615
Kilowatt-Hour Sales (12 Months Ended December 31, 1994) . . . . . . . 77,985,856,000
Funds Required for Construction Expenditures (1995-1999). . . . . . . $4,740,000,000
Energy Sources (12 Months Ended December 31, 1994). . . . . . . . . . Purchased Power 37%; Natural Gas
26%; Nuclear 20%; Coal 13%;
Hydroelectric 4%.
</TABLE>
CONSOLIDATED FINANCIAL INFORMATION
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1990 1991 1992 1993 1994
--------- ---------- ---------- ---------- ----------
Income Statement Data:
<S> <C> <C> <C> <C> <C>
Total Operating Revenue . . . . . $6,986,460 $7,297,759 $7,721,613 $7,396,599 $7,798,601
Operating Income. . . . . . . . . 1,147,132 1,117,034 1,230,084 1,164,443 1,093,929
Total Interest Expense(1) . . . . 552,567 542,732 517,142 449,230 443,219
Net Income. . . . . . . . . . . . 736,753 629,553 672,909 678,045 638,581
Ratios of Earnings to
Fixed Charges(1)(2). . . . . . 3.17 2.92 3.16 3.39 3.43
</TABLE>
<TABLE>
<CAPTION>
December 31, 1994
--------------------------
Capitalization(3):
<S> <C> <C>
Common Shareholder's Equity . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,028,973 47.2%
Preferred Stock without Mandatory Redemption Requirements . . . . . . . . . . 358,755 3.4
Preferred Stock with Mandatory Redemption Requirements. . . . . . . . . . . . 275,000 2.6
Long-Term Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,987,978 46.8
----------- -----
Total Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,650,706 100.0%
=========== =====
</TABLE>
(1) Net of capitalized interest related to nuclear fuel. Such amounts have
been included in the computation of the ratios of earnings to fixed
charges.
(2) For purposes of computing the ratios of earnings to fixed charges,
"earnings" are defined as income before fixed charges and taxes on income,
excluding the cumulative effect of a change in accounting principle for
unbilled revenues. Income includes the allowance for funds used during
construction and subsidiary earnings. Fixed charges consist of interest
(including interest on affiliate indebtedness) and an allocable portion of
rentals and long-term contracts for the purchase of power.
(3) Excludes long-term debt due within one year.
PAGE
<PAGE>
THE COMPANY
The Company, incorporated in 1909 under California law, is a public
utility primarily engaged in the business of supplying electric energy in
portions of Central and Southern California, excluding the City of Los
Angeles and certain other cities. The mailing address and telephone
number of the Company's principal executive offices are P.O. Box 800,
Rosemead, California 91770 and (818) 302-1212.
USE OF PROCEEDS
Except as otherwise described in the Prospectus Supplement, the net
proceeds of the Debt Securities will be applied to the redemption,
repayment or retirement of outstanding indebtedness or other securities,
the financing of construction expenditures or other general corporate
purposes.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture dated as of
January 15, 1993, (the "Senior Indenture") between the Company and Harris
Trust and Savings Bank, as Trustee (the "Senior Trustee"), or under an
Indenture dated as of May 1, 1995 (the "Subordinated Indenture") between
the Company and The First National Bank of Chicago (the "Subordinated
Trustee"), a copy of each of which is filed as an exhibit to the
Registration Statement. The Senior Indenture and the Subordinated
Indenture are each sometimes referred to herein as the "Indenture", the
Senior Trustee and the Subordinated Trustee are each sometimes referred
to herein as the "Trustee", and the Debt Securities to be issued under the
Senior Indenture and the Subordinated Indenture are sometimes referred to
herein as the "Subordinated Debt Securities" and the "Senior Debt
Securities," respectively.
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject to, and are qualified in their
entirety by reference to, all provisions of the Indenture, including the
definitions therein of certain terms. Wherever particular provisions or
defined terms of the Indenture are referred to herein or in the Prospectus
Supplement, such provisions or defined terms are incorporated herein or
therein by reference.
The Debt Securities may be issued from time to time in one or more
series. The following description sets forth certain general terms and
provisions of the Debt Securities to which any Prospectus Supplement will
relate. The particular terms of the Offered Debt Securities offered by
any Prospectus Supplement will be described in such Prospectus Supplement.
General
The Indenture does not limit the amount of Debt Securities which may
be issued thereunder and provides that Debt Securities may be issued
thereunder up to the aggregate principal amount which may be authorized
from time to time by the Company. The Senior Debt Securities will be
unsecured and will rank on a parity with all other unsecured and
unsubordinated indebtedness of the Company. The Subordinated Debt
Securities will be subordinated to all senior indebtedness of the Company.
Reference is hereby made to the Prospectus Supplement relating to the
Offered Debt Securities for the terms of such Debt Securities, including,
where applicable: (i) the title of such Debt Securities; (ii) any limit
on the aggregate principal amount of such Debt Securities; (iii) the price
or prices at which such Debt Securities will be issued; (iv) the date or
dates on which the principal of such Debt Securities will be payable; (v)
if other than United States Dollars, the currency, currencies or composite
currencies in which such Debt Securities are being sold and in which the
principal of and any interest on such Debt Securities will be payable and
<PAGE>
whether the holder of any such Debt Securities may elect the currency in
which payments thereon are to be made, and if so, the manner of such
election; (vi) the rate or rates (which may be fixed or variable) per
annum, or the method or methods of calculating such rates, at which such
Debt Securities will bear interest, if any; (vii) each office or agency
where, subject to the terms of the Indenture as described below under
"Payment and Paying Agents," the principal of and any premium and interest
on such Debt Securities will be payable and each office or agency where,
subject to the terms of the Indenture as described below under "Form,
Exchange Registration and Transfer," such Debt Securities may be presented
for registration of transfer or exchange, (viii) the date from which such
interest on such Debt Securities will accrue, the dates on which such
interest will be payable and the date on which payment of such interest
will commence; (ix) the dates on which and the price or prices at which
such Debt Securities will, pursuant to any mandatory sinking fund
provision, or may, pursuant to any optional redemption or required
repayment provisions, be redeemed or repaid and the other terms and
provisions of any such mandatory sinking fund, optional redemption or
required repayment; (x) whether such Debt Securities are to be issuable
as Registered Securities, Bearer Securities or both and the terms upon
which any Bearer Securities of such series may be exchanged for Registered
Securities of such series; (xi) whether such Debt Securities are to be
issued in whole or in part in the form of one or more Global Securities
and, if so, the identity of the Depositary or Depositaries for such Global
Security or Securities; (xii) any special provisions for the payment of
additional amounts with respect to such Debt Securities; (xiii) if a
temporary Global Security is to be issued with respect to such series, the
requirements for certification of ownership by non-United States persons
that will apply prior to (a) the issuance of a definitive Bearer Security
or (b) the payment of interest on an Interest Payment Date that occurs
before the issuance of a definitive Bearer Security; (xiv) if a temporary
Global Security is to be issued with respect to such series, the terms
upon which interests in such temporary Global Security may be exchanged
for interests in a definitive Global Security or for definitive Debt
Securities of the series and the terms upon which interests in a
definitive Global Security, if any, may be exchanged for definitive Debt
Securities of the series; (xv) the denominations in which such Debt
Securities which are Registered Securities will be issuable if other than
denominations of $1,000 and any integral multiples thereof, and the
denomination or denominations in which any such Debt Securities which are
Bearer Securities will be issued if other than denominations of $1,000,
$10,000 and $100,000; (xvi) if such Debt Securities are Original Issue
Discount Securities, the amount of principal payable upon acceleration of
such Debt Securities following an Event of Default; (xvii) any index used
to determine the amount of payments of principal of and any premium and
interest on such Debt Securities (xviii) any deletions, modifications or
additions to the covenants or Events of Default provided with respect to
such Debt Securities; (xix) whether the Debt Securities of such series are
subject to discharge and defeasance at the option of the Company; and (xx)
any other terms and conditions of the Offered Debt Securities. In
addition, the Prospectus Supplement relating to any offering of Debt
Securities under the Subordinated Indenture will provide, if applicable:
(i) any right to extend the interest payment periods and the duration of
such extension; (ii) whether any one or more series of Debt Securities
shall be junior in right of payment to any other one or more series of
Debt Securities; and (iii) any deletions, modifications or additions to
the subordination provisions of Article Sixteen with respect to any series
of Debt Securities. (Section 301 of Senior Indenture, and Section 3.1 of
Subordinated Indenture)
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount below
their stated principal amount. Federal income tax consequences and other
special considerations applicable to any such Original Issue Discount
Securities will be described in the Prospectus Supplement relating
thereto. "Original Issue Discount Security" means (i) any Debt Security
that provides for an amount less than the principal amount thereof to be
<PAGE>
due and payable upon a declaration of acceleration of the Maturity thereof
upon the occurrence of an Event of Default and the continuation thereof
and (ii) any Debt Security issued with original issue discount for United
States Federal income tax purposes. (Section 101 of Senior Indenture, and
Section 1.1 of Subordinated Indenture)
Form, Exchange, Registration and Transfer
The Debt Securities may be issuable as Registered Securities, Bearer
Securities or both. Debt Securities of a series may be issuable in whole
or in part in the form of one or more Global Securities, as described
below under "Global Securities". Unless the Prospectus Supplement
relating thereto specifies otherwise, Registered Securities denominated
in United States dollars will be issued only in the denominations of
$1,000 and any integral multiple thereof and Bearer Securities denominated
in United States dollars will be issued only in denominations of $1,000,
$10,000, and $100,000. All Debt Securities of any one series shall be
substantially identical except as to denomination and except as may
otherwise be provided in or pursuant to a Board Resolution and set forth
in an Officer's Certificate or in any indenture supplemental thereto.
See, however, "Limitations on Issuance of Bearer Securities" below. The
Prospectus Supplement relating to a series of Debt Securities denominated
in foreign or composite currency will specify the denomination thereof and
any special United States Federal income tax and other considerations
relating thereto. No service charge will be made for any transfer or
exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith. (Sections 302 and 305 of Senior Indenture, and
Sections 3.2 and 3.5 of Subordinated Indenture)
At the option of the Holder, subject to the terms of the Indenture,
Bearer Securities (with all unmatured coupons, except as provided below)
of any series will be exchangeable into an equal aggregate principal
amount of Registered Securities (if the Debt Securities of such series are
issuable as Registered Securities) or Bearer Securities of the same series
(with the same interest rate and maturity date), however, delivery of a
Bearer Security shall occur only outside the United States, and Registered
Securities of any series (other than a Global Security, except as set
forth below) will be exchangeable into an equal aggregate principal amount
of Registered Securities of the same series (with the same interest rate
and maturity date) of different authorized denominations. If a Holder
surrenders Bearer Securities in exchange for Registered Securities between
a Regular Record Date or, in certain circumstances, a Special Record Date,
and the relevant interest payment date, such Holder will not be required
to surrender the coupon relating to such interest payment date.
Registered Securities may not be exchanged for Bearer Securities.
(Section 305 of Senior Indenture, and Section 3.5 of Subordinated
Indenture)
Debt Securities may be presented for exchange, and Registered
Securities (other than a Global Security) may be presented for transfer,
at the office of the Security Registrar or at the office of any transfer
agent designated by the Company for such purpose with respect to the Debt
Securities of a series and referred to in an applicable Prospectus
Supplement, without service charge and upon payment of any taxes and other
governmental charges as described in the Indenture. Such transfer or
exchange will be effected upon the Security Registrar or such transfer
agent, as the case may be. The Company has initially appointed the
Trustee to act as Security Registrar. Bearer Securities will be
transferable by delivery. (Section 305 of Senior Indenture,and Section
3.5 of Subordinated Indenture)
If a Prospectus Supplement refers to any transfer agents (in addition
to the Security Registrar) initially designated by the Company with
respect to any series of Debt Securities, the Company may at any time
rescind the designation of any such transfer agent or approve a change in
the location through which any such transfer agent acts, except that if
<PAGE>
Debt Securities of a series are issuable solely as Registered Securities,
the Company will be required to maintain a transfer agent in each place
where principal and any premium and interest in respect of such series
shall be payable and, if Debt Securities of a series are issuable as
Bearer Securities, the Company will be required to maintain, subject to
any laws or regulation applicable thereto, a transfer agent in a place
outside of the United States where principal and any premium and interest
in respect of such series shall be payable. The Company may at any time
designate additional transfer agents with respect to any series of Debt
Securities. (Section 1002 of Senior Indenture, and Section 10.2 of
Subordinated Indenture)
In the event of any redemption, the Company shall not be required (i)
to issue, register the transfer of or exchange Debt Securities of any
particular series during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Debt
Securities of such series selected for redemption and ending at the close
of business on (a) the day of mailing the relevant notice of redemption,
if Debt Securities of the series are issuable only as Registered
Securities and (b) the day of the first publication of the relevant notice
of redemption, if the Debt Securities of the series are issuable as
Bearer Securities, or the mailing of the relevant notice of redemption,
if the Debt Securities of the series are also issuable as Registered
Securities and there is no publication; (ii) to register the transfer of
or exchange any Registered Security so selected for redemption in whole
or in part, except the unredeemed portion of any Registered Security being
redeemed in part; (iii) to exchange any Bearer Security so selected for
redemption except that such a Bearer Security may be exchanged for a
Registered Security of that series (if the Debt Securities of such series
are issuable as Registered Securities); or (iv) to register the transfer
of or exchange any Debt Security if the Holder thereof has expressed his
right, if any, to require the Company to repurchase such Debt Security,
in whole or in part, except that portion of such Debt Security not
required to be repurchased, provided that such Registered Security shall
be immediately surrendered for redemption with written instructions for
payment consistent with the provisions of the Indenture. (Section 305 of
Senior Indenture, and Section 3.5 of Subordinated Indenture)
Global Securities
The Debt Securities of a series may be issued in whole or in part in
the form of one or more Global Securities that will be deposited with, or
on behalf of, a Depositary (the "Depositary"). Global Securities may be
issued in either registered or bearer form and in either temporary or
definitive form. One or more Global Securities will be issued in a
denomination or aggregate denominations equal to the aggregate principal
amount of Outstanding Debt Securities of the series to be represented by
such Global Security or Securities. Unless and until it is exchanged in
whole or in part for Debt Securities in definitive form, a Global Security
may not be transferred except as a whole by the Depositary for such Global
Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor of such Depositary or
a nominee of such successor Depositary. (Sections 303 and 305 of Senior
Indenture, and Sections 3.3 and 3.5 of Subordinated Indenture)
The specific terms of the depositary arrangement with respect to any
Debt Securities of a series will be described in the Prospectus Supplement
relating to such series if other than or in addition to the description
below. The Company anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system,
the respective principal amounts of the Debt Securities represented by
such Global Security to the accounts of institutions that have accounts
with such Depositary ("participants"). The accounts to be credited shall
<PAGE>
be designated by the underwriters of such Debt Securities, by certain
agents of the Company or by the Company, if such Debt Securities are
offered and sold directly by the Company. Ownership of beneficial
interests in a Global Security will be limited to participants or persons
that may hold interests through participants. Ownership of beneficial
interests in such Global Security will be shown on, and the transfer of
that ownership will be effected only through, records maintained by the
Depositary for such Global Security or by participants or persons that
hold through participants. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to
transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is
the holder of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Except as set forth below, owners of beneficial interests in
a Global Security will not be entitled to have Debt Securities of the
series represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of Debt Securities
of such series in definitive form and will not be considered the owners
or holders thereof under the Indenture. Accordingly, each person owning
a beneficial interest in a Global Security must rely on the procedures of
the Depositary and, if such person is not a participant, on the procedures
of the participant and, if applicable, the indirect participant, through
which such person owns its interest, to exercise any rights of a holder
under the Indenture. Nothing in the Indenture will prevent the Company,
the Trustee, or any agent of the Company or the Trustee, from giving any
effect to any written certification, proxy or other authorization
furnished by a Depositary or impair, as between a Depositary and holders
of beneficial interests in a Global Security, the operation of customary
practices governing the exercise of rights of the Depositary (or its
nominee) as Holder of such Global Security. (Section 308 of Senior
Indenture, and Section 3.8 of Subordinated Indenture)
Subject to the restrictions discussed under "Limitations on Issuance
of Bearer Securities" below, principal, premium, if any, and interest
payments on Debt Securities registered in the name of or held by a
Depositary or its nominee will be made to the Depositary or its nominee,
as the case may be, as the registered owner or the holder of the Global
Security representing such Debt Securities. The Company expects that the
Depositary for Debt Securities of a series, upon receipt of any payment
of principal, premium or interest in respect of a definitive Global
Security, immediately will credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the
principal amount of such Global Security as shown on the records of such
Depositary. The Company also expects that payments by participants to
owners of beneficial interests in such Global Security held through such
participants 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. Receipt by owners of beneficial
interests in a temporary Global Security of payments in respect of such
temporary Global Security will be subject to the restrictions discussed
under "Limitations on Issuance of Bearer Securities" below.
If a Depositary for Debt Securities of a series is at any time
unwilling or unable to continue as Depositary and a successor Depositary
is not appointed by the Company within 90 days, the Company will issue
Debt Securities of such series in definitive form in exchange for the
Global Security or Securities representing the Debt Securities of such
series. In addition, the Company may at any time and in its sole
discretion determine not to have any Debt Securities of a series
represented by one or more Global Securities and, in such event, will
issue Debt Securities of such series in definitive form in exchange for
the Global Security or Securities representing such Debt Securities.
<PAGE>
Further, if specified by the Company with respect to a particular series
of Debt Securities, which is represented by Global Securities, the
Depositary for Debt Securities of such series may, on terms acceptable to
the Company and the Depositary for such Global Security, receive Debt
Securities of such series in definitive form. In any such instance, an
owner of a beneficial interest in a Global Security will be entitled to
physical delivery in definitive form of Debt Securities of the series
represented by such Global Security equal in principal amount to such
beneficial interest and to have such Debt Securities registered in its
name (if the Debt Securities of such series are issuable as Registered
Securities). (Section 305 of Senior Indenture, and Section 3.5 of
Subordinated Indenture) See, however, "Limitations on Issuance of Bearer
Securities" below for a description of certain restrictions on the
issuance of a Bearer Security in definitive form in exchange for an
interest in a Global Security.
Payment and Paying Agents
Payment of principal of and premium, if any, and interest on Bearer
Securities will be payable in the currency designated in the Prospectus
Supplement, subject to any applicable laws and regulations, at such paying
agencies outside the United States as the Company may appoint from time
to time. Any such payment may be made, at the option of a Holder, by a
check in the designated currency or by transfer to an account in the
designated currency maintained by the payee with a bank located outside
the United States. Unless otherwise indicated in an applicable Prospectus
Supplement, payment of any interest due on Bearer Securities will be made
only against surrender of the coupon for such interest instalment.
(Section 1001 of Senior Indenture, and Section 10.1 of Subordinated
Indenture) No payment with respect to any Bearer Security will be made
at the Corporate Trust Office of the Trustee or any other paying agency
maintained by the Company in the United States nor will any such payment
be made by transfer to an account, or by mail to an address, in the United
States. Notwithstanding the foregoing, payments of principal of and
premium, if any, and interest on Bearer Securities may be made in United
States dollars at the Corporate Trust Office of the Trustee in the City
of Chicago, Illinois, if payment of the full amount thereof at all paying
agencies outside the United States is illegal or effectively precluded by
exchange controls or other similar restrictions. (Section 1002 of Senior
Indenture, and Section 10.2 of Subordinated Indenture)
Unless otherwise indicated in the Prospectus Supplement, payment of
principal of and premium, if any, on Registered Securities will be made
in the designated currency against surrender of such Registered Securities
at the Corporate Trust Office of the Trustee in the City of Chicago,
Illinois. Unless otherwise indicated in the Prospectus Supplement,
payment of any instalment of interest on Registered Securities will be
made to the person in whose name such Debt Security is registered at the
close of business on the Regular Record Date for such interest. Unless
otherwise indicated in the Prospectus Supplement, at the option of the
Company, payments of such interest may be made by check in the designated
currency mailed to each Holder at such Holder's registered address or by
wire transfer to an account designated by such person pursuant to an
arrangement that is satisfactory to the Trustee and the Company.
(Sections 307 and 1001 of Senior Indenture, and Sections 3.7 and 10.1 of
Subordinated Indenture)
Any paying agents outside the United States and any other paying
agents in the United States initially appointed by the Company for a
series of Debt Securities will be named in the Prospectus Supplement. The
Company may terminate the appointment of any of the paying agents from
time to time, except that the Company will maintain at least one paying
agent in the City of Chicago for payments with respect to Registered
Securities and at least one paying agent in a city outside the United
States so long as any Bearer Securities are outstanding where Bearer
Securities may be presented for payment and may be surrendered for
exchange, provided that so long as any series of Debt Securities is listed
<PAGE>
on The International Stock Exchange of the United Kingdom and the Republic
of Ireland Limited or the Luxembourg Stock Exchange or any other stock
exchange located outside the United States and such stock exchange shall
so require, the Company will maintain a paying agent in London or
Luxembourg or any other required city located outside the United States,
as the case may be, for such series of Debt Securities. (Section 1002 of
Senior Indenture, and Section 10.2 of Subordinated Indenture)
All moneys paid by the Company to a paying agent for the payment of
principal of or premium, if any, or interest on any Debt Security that
remains unclaimed at the end of two years after such principal, premium
or interest shall have become due and payable will be repaid to the
Company and the Holder of such Debt Security or any coupon appertaining
thereto will thereafter look only to the Company for payment thereof.
(Section 1003 of Senior Indenture, and Section 10.3 of Subordinated
Indenture)
Modification of the Indenture
The Indenture permits the Company and the Trustee, with the consent of
the holders of not less than a majority in principal amount of the Debt
Securities at the time outstanding thereunder and affected thereby, to
execute a supplemental indenture modifying the Indenture or the rights of
the holders of such Debt Securities and any related coupons, provided
that no such modification shall, without the consent of the holder of each
Debt Security affected thereby, (i) change the maturity of any Debt
Security or coupon, or reduce the principal amount thereof, or reduce the
rate or change the method of computation of the rate of interest, or
reduce any premium payable upon redemption, or change any obligation of
the Company to pay additional amounts, or reduce the amount of principal
of an Original Issue Discount Security payable upon acceleration thereof,
or change the time of payment of interest thereon, or change any place of
payment or change the coin or currency in which a Debt Security or coupon
is payable or impair the right of any holder to institute suit for the
enforcement of payment in accordance with the foregoing, or (ii) reduce
the aforesaid percentage of Debt Securities, the consent of the holders
of which is required for any such modification. (Section 902 of Senior
Indenture, and Section 9.2 of Subordinated Indenture)
The Indenture contains provisions for convening meetings of the
Holders of Debt Securities of a series. (Section 1401 of Senior
Indenture, and Section 14.1 of Subordinated Indenture) A meeting may be
called at any time by the Trustee or upon the request of the Company or
the Holders of at least 10% in principal amount of the Outstanding Debt
Securities of such series, in any such case upon notice given in
accordance with the Indenture. (Section 1402 of Senior Indenture, and
Section 14.2 of Subordinated Indenture) Except as limited by the proviso
in the preceding paragraph, any resolution presented at a meeting or
adjourned meeting at which a quorum is present may be adopted by the
affirmative vote of the Holders of not less than a majority in principal
amount of the Outstanding Debt Securities of that series; provided,
however, that, except as limited by the proviso in the preceding
paragraph, any resolution with respect to any demand, consent, waiver or
other action that may be made, given or taken by the Holders of a
specified percentage, which is less than a majority in principal amount
of outstanding Debt Securities of a series, may be adopted at a meeting
or adjourned meeting at which a quorum is present by the affirmative vote
of the Holders of such specified percentage in principal amount of the
outstanding Debt Securities of that series. (Section 1404 of Senior
Indenture, and Section 14.4 of Subordinated Indenture)
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or are present at a meeting of Holders of Debt Securities for
quorum purposes, (1) the principal amount of an Original Issue Discount
Security that shall be deemed to be Outstanding will be the amount of the
<PAGE>
principal thereof that would be due and payable as of the date of such
determination upon acceleration of the Maturity thereof, and (2) the
principal amount of a Debt Security denominated in a foreign currency or
composite currency shall be the United States dollar equivalent of the
principal amount (or, in the case of an Original Issue Discount Security,
the United States dollar equivalent of the amount determined as provided
in (1) above) of such Debt Security. (Section 101 of Senior Indenture,
and Section 1.1 of Subordinated Indenture)
Any resolution passed or decision taken at any meeting of Holders of
Debt Securities of any series duly held in accordance with the Indenture
will be binding on all Holders of Debt Securities of that series and the
related coupons. The quorum at any meeting called to adopt a resolution,
and at any reconvened meeting, will be persons holding or representing not
less than a majority in principal amount of the outstanding Debt
Securities of a series. (Section 1404 of Senior Indenture, and Section
14.4 of Subordinated Indenture)
Events of Default
The Indenture defines an Event of Default with respect to any series
of Debt Securities as being any one of the following events and such other
event as may be established for the Debt Securities of a particular
series: (a) default for 30 days in any payment of interest on such
series; (b) default in any payment of principal, and premium, if any, on
such series; (c) default in the payment of any sinking fund instalment on
such series; (d) default for 60 days after appropriate notice in
performance of any other covenant in the Indenture; (e) failure to pay any
obligation for borrowed money of, or guaranteed by, the Company when due
by reason of acceleration or otherwise, the grace period, if any, provided
with respect thereto shall have elapsed or any security therefor shall
have become enforceable, and, the aggregate due but unpaid amount of all
such obligations shall be in excess of $10,000,000, and within 30 days
after receipt of notice by the Company from the Trustee or by the Company
and the Trustee from the Holders of 25% in principal amount of all the
Debt Securities at the time Outstanding of any such acceleration or
failure to pay or accrual of such right of enforcement, such acceleration
or failure to pay shall not have been rescinded, annulled or cured or such
right of enforcement shall not have been terminated; or (f) certain events
involving bankruptcy, insolvency or reorganization. No Event of Default
with respect to a particular series of Debt Securities issued under the
Indenture necessarily constitutes an Event of Default with respect to any
other series of Debt Securities issued thereunder. (Section 501 of Senior
Indenture, and Section 5.1 of Subordinated Indenture) The Company is
required to file with the Trustee annually an Officer's Certificate
indicating whether the Company is in default under the Indenture.
(Section 1008 of Senior Indenture, and Section 10.8 of Subordinated
Indenture)
The Indenture provides that if an Event of Default specified therein
or established for the Debt Securities of any particular series shall
occur and be continuing with respect to any series of Debt Securities,
either the Trustee or the Holders of 25% in principal amount of the Debt
Securities of such series (in the case of defaults under clauses (d), (e)
and (f) above, the Holders of 25% in principal amount of all the Debt
Securities) then outstanding may declare the principal (or in the case of
Original Issue Discount Securities, such portion of the principal amount
thereof as may be specified in the terms thereof) of and all accrued but
unpaid interest on the Debt Securities of such series (or of all the Debt
Securities, as the case may be) to be due and payable. At any time after
a declaration of acceleration with respect to Debt Securities of any
series (or all of the Debt Securities, in case of a default described in
clauses (d), (e) or (f) above) has been made, but before a judgment or
decree based on acceleration has been obtained, the Holders of a majority
in aggregate principal amount of Outstanding Debt Securities of that
series (or Holders of a majority in aggregate principal amount of all of
the Outstanding Debt Securities, in case of a default described in clauses
<PAGE>
(d), (e) or (f) above) may, under certain circumstances, rescind and annul
such acceleration. (Section 502 of Senior Indenture, and Section 5.2 of
Subordinated Indenture) In certain cases, the Holders of a majority in
principal amount of the outstanding Debt Securities of any series (or in
the case of defaults under clauses (d), (e) and (f) above, the Holders of
a majority in principal amount of all the Debt Securities) may on behalf
of the Holders of all the Debt Securities of any such series (or of all
the Debt Securities, as the case may be) and any related coupons waive
any past default or event of default except a default not theretofore
cured in payment of the principal of or premium, if any, or interest on
any of the Debt Securities of such series (or of all the Debt Securities,
as the case may be) and any related coupons. (Section 513 of Senior
Indenture, and Section 5.13 of Subordinated Indenture)
The Indenture contains a provision entitling the Trustee, subject to
the duty of the Trustee during default to act with the required standard
of care, to be indemnified by the Holders of the Debt Securities of any
series or any related coupons before proceeding to exercise any right or
power under the Indenture with respect to such series at the request of
such Holders. (Section 603 of Senior Indenture, and Section 6.3 of
Subordinated Indenture) The Indenture provides that no Holder of any Debt
Securities of any series or any related coupons may institute any
proceeding, judicial or otherwise, to enforce such Indenture, except among
other things, where the Trustee has, for 60 days after it is given notice
of default, failed to act, and where there has been both a request to
enforce such Indenture by the Holders of not less than 25% in aggregate
principal amount of the then outstanding Debt Securities of such series
and an offer of reasonable indemnity to the Trustee. (Section 507 of
Senior Indenture, and Section 5.7 of Subordinated Indenture) This
provision will not prevent any Holder of Debt Securities or any related
coupons from enforcing payment of the principal thereof and premium, if
any, and interest thereon at the respective due dates thereof. (Section
508 of Senior Indenture, and Section 5.8 of Subordinated Indenture) The
Holders of a majority in aggregate principal amount of the Debt Securities
of any series then outstanding may direct the time, method and place of
conducting any proceedings for any remedy available to the Trustee or
exercising any trust or power conferred on it with respect to the Debt
Securities of such series. (Section 512 of Senior Indenture, and Section
5.12 of Subordinated Indenture)
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default with respect to any series of Debt Securities
known to it, give to the Holders of Debt Securities of such series notice
of such default if not cured or waived, but, except in the case of a
default in the payment of principal of (or premium, if any), or interest
on, any Debt Securities, the Trustee shall be protected in withholding
such notice if it determines in good faith that the withholding of such
notice is in the interests of the Holders of such Debt Securities.
(Section 602 of Senior Indenture, and Section 6.2 of Subordinated
Indenture)
Consolidation, Merger and Sale of Assets
The Company, without the consent of the Holders of any of the
Outstanding Debt Securities under the Indenture, may consolidate with or
merge into, or transfer or lease its assets substantially as an entirety
to, any Person which is a corporation, partnership or trust organized and
validly existing under the laws of any domestic jurisdiction, or may
permit any such Person to consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an
entirety to the Company, provided that any successor Person assumes the
Company's obligations on the Debt Securities and under the Indenture, that
after giving effect to the transaction no Event of Default, and no event
which, after notice or lapse of time, would become an Event of Default,
shall have occurred and be continuing, and that certain other conditions
are met. (Section 801 of Senior Indenture, and Section 8.1 of
Subordinated Indenture)
<PAGE>
There are no provisions of the Indenture which afford holders of the
Debt Securities protection in the event of a highly leveraged transaction
involving the Company. However, such a transaction would require
regulatory approval and management of the Company believes that such
approval would be unlikely in a highly leveraged context.
Discharge and Defeasance
The Indenture provides that the Company may specify that, with respect
to the Debt Securities of a certain series, it will be discharged from any
and all obligations in respect of such Debt Securities (except for certain
obligations to register the transfer or exchange of Debt Securities, to
replace stolen, lost or mutilated Debt Securities, to maintain paying
agencies and hold monies for payment in trust and, if so specified with
respect to the Debt Securities of a certain series, to pay the principal
of (and premium, if any) and interest, if any, on such specified Debt
Securities) upon the irrevocable deposit with the Trustee, in trust, of
money and/or Government Obligations which through the payment of interest
and principal thereof in accordance with their terms will provide money
in an amount sufficient to pay any instalment of principal (and premium,
if any) and interest, if any, on and any mandatory sinking fund payments
in respect of such Debt Securities on the stated maturity of such payments
in accordance with the terms of the Indenture and such Debt Securities.
If so specified with respect to the Debt Securities of a series, such a
trust may only be established if establishment of the trust would not
cause the Debt Securities of any such series listed on any nationally
recognized securities exchange to be de-listed as a result thereof. Also,
if so specified with respect to a series of Debt Securities, such
establishment of such a trust may be conditioned on the delivery by the
Company to the Trustee of an Opinion of Counsel (who may be counsel to the
Company) to the effect that, based upon applicable United States Federal
income tax law or a ruling published by the United States Internal Revenue
Service, such a defeasance and discharge will not be deemed, or result
in, a taxable event with respect to Holders of such Debt Securities.
(Section 1301 of Senior Indenture, and Section 13.1 of Subordinated
Indenture)
Subordination
Unless otherwise provided in the Prospectus Supplement (and indicated
in a Board Resolution, Officer's Certificate or any supplemental indenture
with respect to Offered Debt Securities under the Subordinated Indenture),
the Debt Securities issued pursuant to the Subordinated Indenture will
have the subordination provisions as set forth under this caption
"Subordination". The Subordinated Debt Securities are subordinate and
junior in right of payment to all Senior Indebtedness (as defined below)
of the Company as provided in the Indenture. No payment of principal of
(including redemption and sinking fund payments), or premium, if any, or
interest on, the Subordinated Debt Securities may be made if any Senior
Indebtedness is not paid when due, any applicable grace period with
respect to such default has ended and such default has not been cured or
waived, or if the maturity of any Senior Indebtedness has been accelerated
because of a default. Upon any payment by the Company or any distribution
of assets of the Company to creditors upon any dissolution, winding-up,
liquidation or reorganization, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all principal
of and premium, if any, and interest due on or to become due on, all
Senior Indebtedness must be paid in full before the holders of the
Subordinated Debt Securities are entitled to receive or retain any
payment. The rights of the holders of the Subordinated Debt Securities
will be subrogated to the rights of the holders of Senior Indebtedness to
receive payments or distributions applicable to Senior Indebtedness until
all amounts owing on the Subordinated Debt Securities are paid in full.
(Sections 16.1 to 16.4 of the Subordinated Indenture)
PAGE
<PAGE>
The term "Senior Indebtedness" shall mean the principal of and
premium, if any, interest on and any other payment due pursuant to any of
the following, whether outstanding at the date of execution of the
Subordinated Indenture or thereafter incurred, created or assumed: (a)
all indebtedness of the Company evidenced by notes, debentures, bonds or
other securities sold by the Company for money; (b) all indebtedness of
others of the kinds described in the preceding clause (a) assumed by or
guaranteed in any manner by the Company or in effect guaranteed by the
Company; and (c) all renewals, extensions or refundings of indebtedness
of the kinds described in any of the preceding clause (a) and (b) unless,
in the case of any particular indebtedness, renewal, extension or
refunding, the instrument creating or evidencing the same or the
assumption or guarantee of the same expressly provides that such
indebtedness, renewal, extension or refunding is not superior in right of
payment to or is pari passu with the Subordinated Debt Securities.
(Section 1.1 of the Subordinated Indenture)
Concerning the Trustees
Harris Trust and Savings Bank acts as Trustee for the Company's First
and Refunding Mortgage Bonds. The Company maintains bank deposits with
Harris Trust and Savings Bank and intends to borrow money from such bank
from time to time.
The First National Bank of Chicago acts as Trustee for certain of the
Company's Pollution Control Bonds. The Company maintains bank deposits
with The First National Bank of Chicago and intends to borrow money from
such bank from time to time.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States Federal tax laws and regulations, in
general Bearer Securities may not be offered or sold during a restricted
period to a person within the United States or its possessions or to or
for the account or benefit of a United States person. However, subject
to certain restrictions and limitations, offers or sales may be made to
(i) the United States office of an international organization (as defined
in Section 7701(a) (18) of the United States Internal Revenue Code of
1986, as amended (the "Code") and the regulations thereunder), (ii) the
United States office of a foreign central bank (as defined in Section 895
of the Code and the regulations thereunder) and (iii) United States
persons that are (a) foreign branches of United States financial
institutions (as defined in United States Treasury Regulation Section
1.165-12(c)(1)(v) ("financial institutions")), which are purchasing for
their own account or for resale, or (b) persons that acquire and hold
Bearer Securities through a foreign branch of a U.S. financial
institution, and in either case, such financial institution agrees to
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the
Code. Definitive Bearer Securities will not be delivered during the same
restricted period within the United States and will not be delivered in
any event unless the beneficial owner of the Bearer Securities provides
the required certification as to non-United States beneficial ownership.
The restricted period for these purposes is the period beginning upon the
earlier of the issue date of any Bearer Securities or the date on which
such Bearer Securities are first offered and ending 40 days after such
issue date or later date in the case of any unsold original allotment or
subscription.
Bearer Securities will bear the following legend on their face and on
any interest coupons which may be detached therefrom or, if the obligation
is evidenced by a book entry, in the book of record in which the book
entry is made: "Any United States person who holds this obligation will
be subject to limitations under the United States income tax laws,
including the limitations provided in Sections 165(j) and 1287(a) of the
United States Internal Revenue Code". The Sections referred to in such
legend provide that a United States person who holds a Bearer Security
will not be allowed to deduct any loss realized on the sale, exchange or
<PAGE>
redemption of such Bearer Security and any gain (which might otherwise be
characterized as capital gain) recognized on such sale, exchange or
redemption will be treated as ordinary income.
As used herein, "United States person" means an individual who is 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 any estate or trust the
income of which is subject to United States Federal income taxation
regardless of its source.
EXPERTS
The consolidated financial statements and related schedules of the
Company incorporated by reference in this Prospectus have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving
said reports.
VALIDITY OF DEBT SECURITIES
The validity of the Debt Securities will be passed upon for the
Company by Bryant C. Danner, Executive Vice President and General Counsel,
or Kenneth S. Stewart, Assistant General Counsel, of the Company, and for
any underwriters by Gibson, Dunn & Crutcher, 333 South Grand Avenue, Los
Angeles, California 90071. As to matters governed by Arizona, Nevada and
New Mexico law, such counsel may rely, as necessary, upon opinions of
Snell & Wilmer, One Arizona Center, Phoenix, Arizona 85004, Jeppson & Lee,
a Nevada professional corporation, 100 West Liberty Street, Suite 990,
Reno, Nevada 89501, and Rodey, Dickason, Sloan, Akin & Robb, P.A., a New
Mexico professional corporation, 20 First Plaza, Suite 700, Albuquerque,
New Mexico 87103, respectively. As to all matters governed by New York
law, Mr. Danner or Mr. Stewart will rely upon the opinion of Gibson, Dunn
& Crutcher.
The statements of law and legal conclusions under the caption
"Regulation" in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, which is incorporated by reference in this
Prospectus, have been reviewed by Mr. Danner and Mr. Stewart and have been
incorporated by reference in this Prospectus upon the authority of such
counsel.
Mr. Danner and Mr. Stewart are salaried employees of the Company and
share in the benefits accruing to such employees. As of December 31,
1994, Mr. Danner and Mr. Stewart had a direct or indirect interest in
97,618 and 12,972 shares of SCEcorp's Common Stock, respectively. These
shares include those credited and conditionally credited to their accounts
as of such date with the trustees of the Company's Employee Stock
Ownership and Stock Savings Plus Plans and with the agent for the
Company's Dividend Reinvestment and Stock Purchase Plan.
From time to time, Gibson, Dunn & Crutcher performs legal services for
the Company and its affiliates relating to special matters.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through underwriters or
dealers and also may sell Debt Securities directly to other purchasers or
through agents.
The distribution of the Debt Securities may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
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In connection with the sale of Debt Securities, underwriters may
receive compensation from the Company or from purchasers of Debt
Securities for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters, dealers and agents that
participate in the distribution of Debt Securities may be deemed to be
underwriters, and any discounts or commissions received by them from the
Company and any profit on the resale of Debt Securities by them may be
deemed to be underwriting discounts and commissions under the Act. Any
such person who may be deemed to be an underwriter will be identified, and
any such compensation received from the Company will be described, in the
Prospectus Supplement.
The Debt Securities may or may not be listed on a national securities
exchange. There can be no assurance that there will be a market for the
Debt Securities.
Under agreements which may be entered into by the Company,
underwriters, dealers and agents who participate in the distribution of
Debt Securities may be entitled to indemnification by the Company against
certain liabilities, including liabilities under the Act.
Each underwriter, dealer and agent participating in the distribution
of any Offered Debt Securities which are issuable in bearer form will
agree that it will not offer, sell or deliver Offered Debt Securities in
bearer form within the United States or to, or for the account or benefit
of, United States persons (other than qualifying financial institutions,
(i) until 40 days after the settlement date or (ii) at any time if the
obligation is held as part of an unsold allotment or subscription (the
"Restricted Period").
If so indicated in the Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Debt Securities from
the Company pursuant to contracts providing for payment and delivery on
a future date. Institutions with which such contracts may be made include
commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and others,
but in all cases such institutions must be approved by the Company. The
obligations of any purchaser under any such contract will be subject to
the condition that the purchase of the Offered Debt Securities shall not
at the time of delivery be prohibited under the laws of the jurisdiction
to which such purchaser is subject. The underwriters and such other
agents will not have any responsibility in respect of the validity or
performance of such contracts.
