AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 14, 1994
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SOUTHERN CALIFORNIA GAS COMPANY
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-1240705
(STATE OF INCORPORATION) (I.R.S. Employer
Identification Number)
555 WEST FIFTH STREET
LOS ANGELES, CALIFORNIA 90013
(213) 244-1200
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
RALPH TODARO
VICE PRESIDENT--FINANCE AND CONTROLLER
SOUTHERN CALIFORNIA GAS COMPANY
555 WEST FIFTH STREET
LOS ANGELES, CALIFORNIA 90013
(213) 244-3300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES TO:
GARY W. KYLE PAUL C. PRINGLE
Chief Financial Counsel Brown & Wood
Pacific Enterprises 10900 Wilshire Boulevard
633 West Fifth Street Los Angeles, California 90024
Los Angeles, California 90071 (310) 443-0200
(213) 895-5110
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT (1) PRICE (1) REGISTRATION FEE
Debt Securities................... $250,000,000 100%(2) $250,000,000(3) $86,208
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Unless otherwise specified in a Prospectus Supplement.
(3) Exclusive of accrued interest, if any.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED MARCH 14, 1994
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH , 1994)
$250,000,000
SOUTHERN CALIFORNIA GAS COMPANY
MEDIUM-TERM NOTES
DUE 9 MONTHS OR MORE FROM DATE OF ISSUE
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Southern California Gas Company (the "Company") may offer from time to time
up to $250,000,000 aggregate principal amount of its Medium-Term Notes (the
"Notes"). The Notes will have maturities of 9 months or more from the date of
issue, as selected by the purchaser and agreed to by the Company, and may be
subject to redemption by the Company and to repayment at the option of the
Holder, in whole or in part, prior to Stated Maturity, as set forth on the face
thereof and specified in a Pricing Supplement hereto (each, a "Pricing
Supplement").
The Notes will bear interest at fixed or variable rates ("Fixed Rate Notes"
and "Floating Rate Notes", respectively). The interest rate on each Note will be
established by the Company at the time of issuance of such Note. Interest rates,
the method of determining interest rates and the interest rate formulas on which
the interest rates may be based are subject to change by the Company, but no
such change will affect any Notes already issued or as to which an offer to
purchase has been accepted by the Company. Each Note will be issued in fully
registered book-entry form (a "Book-Entry Note") or definitive form (a
"Definitive Note"), as set forth in the applicable Pricing Supplement, in
denominations of $100,000 or any amount in excess thereof which is a multiple of
$1,000, unless otherwise specified in the applicable Pricing Supplement. Each
Book-Entry Note will be represented by a global security deposited with or on
behalf of The Depository Trust Company (or such other depositary as is
identified in an applicable Pricing Supplement)(the "Depositary") and registered
in the name of the Depositary's nominee. Interests in Book-Entry Notes will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depositary (with respect to its participants) and the
Depositary's participants (with respect to beneficial owners). See "Description
of the Notes--Book-Entry Notes".
Unless otherwise specified in the applicable Pricing Supplement, interest on
each Fixed Rate Note will accrue from its date of issue and will be payable
semiannually on each March 1 and September 1 and at Stated Maturity and, if
applicable, upon redemption or optional repayment.
The interest rate on Floating Rate Notes may be determined by reference to
the "CD Rate", the "Commercial Paper Rate", the "Federal Funds Rate", "LIBOR",
the "Prime Rate", the "Treasury Rate", the "J.J. Kenny Rate" or the "CMT Rate",
the lower of two or more of the foregoing base rates, or any other interest rate
formula and may be adjusted by a "Spread" and/or "Spread Multiplier" applicable
to such Notes. See "Description of the Notes" herein and "Description of the
Debt Securities" in the accompanying Prospectus. Interest on each Floating Rate
Note will accrue from its date of issue and will be payable monthly, quarterly,
semiannually or annually as set forth in the applicable Pricing Supplement, and
at Stated Maturity and, if applicable, upon redemption or optional repayment.
Notes may also be issued at original issue discount and such Notes may or
may not bear interest.
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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, THE
PROSPECTUS OR ANY SUPPLEMENT HERETO. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
PRICE TO AGENTS' DISCOUNTS AND PROCEEDS
PUBLIC(1) COMMISSIONS(2)(3) TO COMPANY(4)
Per Note............. 100% .125%-.750% 99.875%-99.250%
Total................ $250,000,000 $312,500-$1,875,000 $249,687,500-$248,125,000
(1) Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be issued at 100% of their principal amount.
(2) The Company will pay a commission, ranging from .125% to .750% (or with
respect to Notes for which the Stated Maturity is in excess of 30 years,
such commission as shall be agreed upon by the Company and the related Agent
at the time of sale) of the principal amount of a Note, depending upon its
Stated Maturity, to the Agent through which such Note was sold and may sell
Notes to one or more of the Agents, as principal, for resale to investors
and other purchasers from time to time in one or more transactions,
including negotiated transactions at fixed public offering prices or at
varying prices related to prevailing market prices at the time of resale, as
determined by such Agent or Agents. No commission will be payable on any
sale made directly by the Company.
(3) The Company has agreed to indemnify the Agents against, and to provide
contribution with respect to, certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Plan of Distribution".
(4) Before deducting expenses payable by the Company estimated to be $250,000.
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The Notes are being offered on a continuing basis by the Company through
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, CS
First Boston Corporation and Lehman Brothers, Lehman Brothers Inc. (including
its affiliate, Lehman Special Securities Inc.) (the "Agents"), who have agreed
to use their reasonable efforts to solicit offers to purchase the Notes. The
Company has reserved the right to sell Notes directly to investors on its own
behalf and Notes may also be sold to the Agents, as principal, for resale to
investors and other purchasers. The Notes will not be listed on any securities
exchange and there can be no assurance that the Notes offered by this Prospectus
Supplement will be sold or that there will be a secondary market for the Notes.
The Company reserves the right to cancel or modify the offer to purchase Notes
made hereby without notice. The Company or an Agent, if it solicits the offer,
may reject any offer to purchase Notes in whole or in part. See "Plan of
Distribution".
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MERRILL LYNCH & CO.
CS FIRST BOSTON
LEHMAN BROTHERS
The date of this Prospectus Supplement is March , 1994.
DESCRIPTION OF THE NOTES
The following summaries of certain provisions of the Indenture (as defined
below) and the Notes do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all provisions of the Indenture and
the Notes (copies of which have been filed as exhibits to the Registration
Statement of which this Prospectus Supplement is a part), including, in each
case, the definition therein of certain terms. The following summaries
supplement and, to the extent inconsistent therewith, replace the summary set
forth in the accompanying Prospectus under the caption "Description of the Debt
Securities." Whenever particular provisions or defined terms of the Indenture
and the Notes are referred to, such provisions or defined terms are incorporated
herein by such reference.
GENERAL
The Notes are to be issued as part of an existing series of Debt Securities
(as defined in the accompanying Prospectus) designated as Medium-Term Notes,
unlimited as to aggregate principal amount, under an Indenture between the
Company and Citibank, N.A., as trustee (the "Trustee"), dated as of May 1, 1989,
as supplemented by a First Supplemental Indenture dated as of October 1, 1992
(the "Indenture"). As of the date of this Prospectus Supplement, $
aggregate principal amount of such Medium-Term Notes are outstanding. All Debt
Securities, including the Notes, issued and to be issued under the Indenture
will be unsecured and will rank PARI PASSU in priority of payment with all other
unsecured and unsubordinated indebtedness of the Company. The Notes are not, by
their terms, subordinate in right of payment to any other indebtedness of the
Company. However, substantially all of the Company's properties are subject to
liens securing the Company's First Mortgage Bonds of which $ in aggregate
principal amount were issued and outstanding as of the date of this Prospectus
Supplement. The Company expects that it will from time to time issue additional
First Mortgage Bonds which also will be secured by such properties. The
following description will apply to each Note unless otherwise described in the
applicable Pricing Supplement.
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provides that the Debt Securities
may be issued in one or more series up to the aggregate principal amount which
may be authorized from time to time by the Company. The Company may, from time
to time, without the consent of the holders of the Notes, provide for the
issuance of Notes or other Debt Securities under the Indenture in addition to
the $250,000,000 principal amount of Notes authorized as of the date of this
Prospectus Supplement.
The Notes will be offered on a continuing basis and will have maturities no
less than 9 months from the date of issue, as selected by the purchaser and
agreed to by the Company. Each interest-bearing Note will bear interest at
either (i) a fixed rate of interest (the "Fixed Rate Notes") or (ii) a rate
determined by reference to one or more Base Rates, which may be adjusted by a
Spread and/or Spread Multiplier (as defined herein) (the "Floating Rate Notes").
Notes may be issued at significant discounts from their principal amount payable
at maturity ("Original Issue Discount Notes") and such Notes may or may not bear
interest.
As used herein, a "Business Day" means any day that is not a Saturday or
Sunday and that, in New York, New York or Los Angeles, California is not a day
on which banking institutions are authorized or obligated by law to close (and,
with respect to LIBOR Notes and Floating Rate Notes for which LIBOR is a Base
Rate, a London Business Day). "London Business Day" means any day on which
dealings in deposits in United States dollars are transacted in the London
interbank market.
Each Note will be issued in fully registered form as a book-entry note (a
"Book-Entry Note") or as a definitive note (a "Definitive Note"), as set forth
in the applicable Pricing Supplement, in denominations of $100,000 or any amount
in excess thereof which is a multiple of $1,000, unless otherwise specified in
the applicable Pricing Supplement. Book-Entry Notes may be transferred or
exchanged only through a participating member of The Depository Trust Company
(or such other depositary as is identified in the applicable Pricing Supplement
(the "Depositary"). See "Book-Entry Notes". Registration of transfer or exchange
of Definitive Notes will be made at the office or agency maintained by the
Company for that purpose in New
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York, New York (initially the Corporate Trust Office of the Trustee). No service
charge will be made by the Company or the Trustee for any such registration of
transfer or exchange of Definitive Notes, but the Company may require payment of
a sum sufficient to cover any tax or governmental charge payable in connection
therewith.
Principal of, and premium and interest, if any, on, Book-Entry Notes will be
paid by the Company through the Trustee to the Depositary or its nominee. In the
case of Definitive Notes, principal, and premium and interest, if any, will be
payable at the office or agency maintained by the Company for that purpose in
New York, New York (initially the Corporate Trust Office of the Trustee) or at
such other place as the Company may designate; provided, however, that payment
of interest, other than interest payable at Stated Maturity of a Note (or on the
date of redemption or repayment, if a Note is redeemed or repaid prior to its
Stated Maturity, or on a date fixed for payment following a declaration of
acceleration) (each such date being hereinafter referred to as a "Maturity" with
respect to principal payable on such date), may be made at the option of the
Company by check mailed to the address of the person entitled thereto as shown
on the security register maintained by the Trustee. Notwithstanding the
foregoing, a Holder of $10,000,000 or more in aggregate principal amount of
Definitive Notes which pay interest on the same Interest Payment Date will be
entitled to receive payments of interest (other than at Maturity) by wire
transfer of immediately available funds to a depository institution in the
United States if appropriate wire transfer instructions have been received by
the Trustee on or before the Regular Record Date immediately preceding such
Interest Payment Date. In addition, the principal of, and premium and interest,
if any, on, Definitive Notes due at any Maturity will be paid against
presentation and surrender of such Notes at the office or agency maintained by
the Company for that purpose, and will be paid by wire transfer of immediately
available funds if the Trustee shall have received appropriate wire transfer
instructions not later than the close of business at least two Business Days
prior to the related Maturity.
REDEMPTION AND REPAYMENT
REDEMPTION AT THE OPTION OF THE COMPANY
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. If provided in the applicable Pricing
Supplement, the Notes may be subject to redemption, in whole or in part, prior
to their Stated Maturity at the option of the Company. Such Pricing Supplement
will set forth the terms of such redemption, including, but not limited to, the
dates on which redemption may be effected, the price (including premium, if any)
at which such Notes may be redeemed, and required notice provisions.
REDEMPTION AT THE OPTION OF THE HOLDERS
If provided in the applicable Pricing Supplement, the Notes may be subject
to repayment, in whole or in part, on a given day or days prior to their Stated
Maturity at the option of the holders thereof. Such Pricing Supplement will set
forth the terms of such repayment, including, but not limited to, the Optional
Repayment Dates, the prices at which such Notes may be repaid and required
notice provisions.
While the Book-Entry Notes are represented by the Global Securities (as
defined under "Book-Entry Notes" below), held by or on behalf of the Depositary
and registered in the name of the Depositary or the Depositary's nominee, the
option for repayment may be exercised by the applicable Participant (as defined
under "Book-Entry Notes" below), that has an account with the Depositary, on
behalf of the Beneficial Owners (as defined under "Book-Entry Notes" below), of
the Global Security or Securities representing such Book-Entry Notes, by
delivering a duly completed written notice in the form required by the Indenture
to the Trustee at its Corporate Trust Office (or such other address of which the
Company shall from time to time notify the Holders), not more than 60 nor less
than 30 days prior to the date of repayment. Notices of elections from
Participants on behalf of Beneficial Owners of the Global Security or Securities
representing such Book-Entry Notes to exercise their option to have such
Book-Entry Notes repaid must be received by the Trustee by 5:00 P.M., New York
City time, on the last day for giving such notice. In order to ensure that a
notice is received by the Trustee on a particular day, the Beneficial Owner of
the Global Security or Securities representing such Book-Entry Notes must so
direct the applicable Participant before such Participant's deadline for
accepting instructions for that day. Different firms may have different
deadlines for
S-3
accepting instructions from their customers. Accordingly, Beneficial Owners of
the Global Security or Securities representing Book-Entry Notes should consult
the Participants through which they own their interest therein for the
respective deadlines for such Participants. All notices shall be executed by a
duly authorized officer of such Participant (with signature guaranteed) and
shall be irrevocable. In addition, Beneficial Owners of the Global Security or
Securities representing Book-Entry Notes shall effect delivery at the time such
notices of election are given to the Depositary by causing the Participant to
transfer such Beneficial Owner's interest in the Global Security or Securities
representing such Book-Entry Notes, on the Depositary's records, to the Trustee.
See "Book-Entry Notes" below.
If applicable, the Company will comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended, and any other securities
laws or regulations in connection with any such repayment.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may be held or
resold or, at the discretion of the Company, may be surrendered to the Trustee
for cancellation.
INTEREST
GENERAL
Each Note will bear interest from the date of issue at the rate per annum
or, in the case of a Floating Rate Note, pursuant to the interest rate formula
stated therein until the principal thereof is paid or made available for
payment. Interest payments shall be the amount of interest accrued from and
including the next preceding Interest Payment Date in respect of which interest
has been paid or duly provided for (or from and including the date of issue if
no interest has been paid or duly provided for with respect to such Note), to
but excluding the Interest Payment Date. However, in the case of Floating Rate
Notes for which the interest rate is reset daily or weekly, as more fully
described below, interest payments shall include interest accrued only from but
excluding the Regular Record Date to which interest has been paid or duly
provided for (or from and including the date of issue if no interest has been
paid or duly provided for with respect to such Note) through and including the
Regular Record Date next preceding the applicable Interest Payment Date, except
that the interest payment at Maturity will include interest accrued to but
excluding such date.
Interest will be payable on each date specified in the Note on which an
installment of interest is due and payable (an "Interest Payment Date") and at
Maturity. Interest will be payable to the person in whose name a Note is
registered at the close of business on the Regular Record Date next preceding
each Interest Payment Date; provided, however, that interest payable at Maturity
will be payable to the person to whom principal will be payable. If the original
issue date of a Note is between a Regular Record Date and the related Interest
Payment Date, the initial interest payment will be made on the Interest Payment
Date following the next succeeding Regular Record Date to the registered Holder
at the close of business on such next succeeding Regular Record Date. Unless
otherwise specified in the applicable Pricing Supplement, the "Regular Record
Dates" for Fixed Rate Notes shall be February 15 and August 15 next preceding
each March 1 or September 1 Interest Payment Date, respectively, and the
"Regular Record Dates" for Floating Rate Notes shall be the fifteenth day
(whether or not a Business Day) immediately preceding the related Interest
Payment Date.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or .09876545) will be rounded upward to 9.87655% (or .0987655)), and
all dollar amounts used in or resulting from such calculation on Floating Rate
Notes will be rounded to the nearest cent (with one-half cent being rounded
upward).
Interest rates and interest rate formulae are subject to change by the
Company from time to time, but no such change will affect any Note already
issued or as to which an offer to purchase has been accepted by the Company.
S-4
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from the date of issue at the rate
per annum stated on the face thereof until the principal amount thereof is paid
or made available for payment. Unless otherwise specified in the applicable
Pricing Supplement, interest on Fixed Rate Notes will be payable semiannually on
each March 1 and September 1 Interest Payment Date and at Maturity. If any
Interest Payment Date or Maturity of a Fixed Rate Note falls on a day that is
not a Business Day, the related payment of principal, and premium and interest,
if any, will be made on the next succeeding Business Day as if it were made on
the date such payment was due and no interest shall accrue on the amount so
payable for the period from and after such Interest Payment Date or Maturity, as
the case may be. Unless otherwise specified in the applicable Pricing
Supplement, interest on each Fixed Rate Note will be calculated on the basis of
a 360-day year of twelve 30-day months.
FLOATING RATE NOTES
Unless otherwise specifed in the applicable Pricing Supplement, interest on
Floating Rate Notes will be determined as described below. Interest on Floating
Rate Notes will be determined by reference to a "Base Rate", which may be (i)
the CD Rate, in which case such Note will be a "CD Rate Note"; (ii) the
Commercial Paper Rate, in which case such Note will be a "Commercial Paper Rate
Note"; (iii) the Federal Funds Rate, in which case such Note will be a "Federal
Funds Rate Note"; (iv) the Prime Rate, in which case such Note will be a "Prime
Rate Note"; (v) LIBOR, in which case such Note will be a "LIBOR Note"; (vi) the
Treasury Rate, in which case such Note will be a "Treasury Rate Note"; (vii) the
CMT Rate, in which case such Note will be a "CMT Rate Note"; (viii) the J.J.
Kenny Rate, in which case such Note will be a "J.J. Kenny Rate Note"; and (ix)
such other interest rate formula as may be set forth in the applicable Pricing
Supplement. In addition, a Floating Rate Note may bear interest at the lowest of
two or more Base Rates determined in the same manner as the Base Rates are
determined for the types of Notes described above.
The applicable Pricing Supplement and the related Note will specify the Base
Rate or Rates and the Spread and/or Spread Multiplier, if any, and the maximum
or minimum interest rate limitation, if any, applicable to each Floating Rate
Note. In addition, such Pricing Supplement and the applicable Note will define
or particularize for each Floating Rate Note the following terms, if applicable:
Initial Interest Rate, Index Maturity, Interest Payment Dates, Interest Rate
Reset Period, Calculation Agent (if other than the Trustee) and Interest Reset
Dates.
The interest rate on each Floating Rate Note will be calculated by reference
to the specified Base Rate or the lowest of two or more specified Base Rates, in
either case plus or minus the Spread, if any, or multiplied by the Spread
Multiplier, if any. The "Spread" is the number of basis points specified in the
applicable Pricing Supplement to be added to or subtracted from the related Base
Rate or Rates applicable to a Floating Rate Note. The "Spread Multiplier", if
specified for a Floating Rate Note, is the percentage of the related Base Rate
or Rates as specified in the applicable Pricing Supplement by which such Base
Rate or Rates will be multiplied to determine the applicable interest rate on
such Floating Rate Note. "Index Maturity" means, if applicable with respect to a
Floating Rate Note, the period to maturity of the instrument or obligation with
respect to which the related Base Rate is calculated, as specified in the
applicable Pricing Supplement. The Spread, the Spread Multiplier, the Index
Maturity and other variable terms are subject to change by the Company from time
to time, but no such change will affect any Floating Rate Note theretofore
issued or as to which an offer has been accepted by the Company.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (each, an "Interest Rate Reset
Period"), as specified in the applicable Pricing Supplement. The "Interest Reset
Date" will be, in the case of Floating Rate Notes which reset (i) daily, each
Business Day; (ii) weekly, the Wednesday of each week (with the exception of
weekly reset Treasury Rate Notes which reset the Tuesday of each week, except as
specified below); (iii) monthly, the third Wednesday of each month; (iv)
quarterly, the third Wednesday of March, June, September and December of each
year; (v) semiannually, the third Wednesday of each of the two months specified
in such Pricing Supplement; and (vi) annually, the third Wednesday of the month
specified in such Pricing Supplement. If any Interest Reset Date for any
Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Reset
S-5
Date will be postponed to the next succeeding day that is a Business Day, except
that in the case of a LIBOR Note (or a Floating Rate Note for which LIBOR is a
Base Rate), if such Business Day is in the next succeeding calendar month, such
Interest Reset Date shall be the immediately preceding day that is a Business
Day.
The interest rate that will take effect with respect to a Floating Rate Note
on an Interest Reset Date will be the rate determined on the "Interest
Determination Date." The Interest Determination Date with respect to the CD
Rate, Commercial Paper Rate, Federal Funds Rate, the Prime Rate, the CMT Rate
and the J.J. Kenny Rate will be the second Business Day preceding each Interest
Reset Date. The Interest Determination Date with respect to LIBOR will be the
second London Business Day preceding each Interest Reset Date. With respect to
the Treasury Rate, the Interest Determination Date will be the day of the week
in which the Interest Reset Date falls on which Treasury bills normally would be
auctioned (Treasury bills normally are sold at auction on Monday of each week,
unless that day is a legal holiday, in which case the auction is normally held
on the following Tuesday, except that such auction may be held on the preceding
Friday); provided, however, that if as a result of a legal holiday an auction is
held on the Friday of the week preceding an Interest Reset Date, the related
Interest Determination Date shall be such preceding Friday; and provided,
further, that if an auction shall fall on any Interest Reset Date, then the
Interest Reset Date shall instead be the first Business Day following such
auction. The Interest Determination Date pertaining to a Floating Rate Note for
which the interest rate is determined with reference to the lowest of two or
more Base Rates will be the first Business Day which is at least two Business
Days prior to the Interest Reset Date for such a Note on which each Base Rate
shall be determinable. Each Base Rate shall be determined and compared on such
date, and the applicable interest rate shall take effect on the related Interest
Reset Date.
A Floating Rate Note also may have either or both of the following: (i) a
maximum limit, or ceiling, on the per annum interest rate in effect with respect
to such Floating Rate Note from time to time and (ii) a minimum limit, or floor,
on the per annum interest rate in effect with respect to such Floating Rate Note
from time to time. Notwithstanding the foregoing, the interest rate on Floating
Rate Notes will in no event be higher than the maximum rate permitted by New
York law, as the same may be modified by United States law of general
application. Under present New York law, the maximum rate of interest is 25% per
annum on a simple interest basis. The limit does not apply to Floating Rate
Notes in which $2,500,000 or more has been invested.
Each Floating Rate Note will bear interest from its date of issue at the
rate determined as described below until the principal thereof is paid or
otherwise made available for payment. Except as provided below, interest will be
payable, in the case of Floating Rate Notes which reset (i) daily, weekly or
monthly, on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year, as specified in the applicable
Pricing Supplement; (ii) quarterly, on the third Wednesday of March, June,
September and December of each year, (iii) semiannually, on the third Wednesday
of each of the two months of each year specified in the applicable Pricing
Supplement; and (iv) annually, on the third Wednesday of the month specified in
the applicable Pricing Supplement and, in each case, at Maturity.
If any Interest Payment Date for a Floating Rate Note falls on a day that is
not a Business Day with respect to such Note, such Interest Payment Date will be
the following day that is a Business Day with respect to such Note, except that,
in the case of a LIBOR Note (or a Floating Rate for which LIBOR is a Base Rate
Note), if such Business Day is in the next succeeding calendar month, such
Interest Payment Date shall be the immediately preceding day that is a Business
Day with respect to such Note. If the Maturity of a Floating Rate Note falls on
a day that is not a Business Day, the payment of principal, and premium and
interest, if any, may be made on the next succeeding Business Day, and no
interest on such payment shall accrue for the period from and after the
Maturity.
The interest rate in effect with respect to a Floating Rate Note on each day
that is not an Interest Reset Date will be the interest rate determined as of
the Interest Determination Date pertaining to the immediately preceding Interest
Reset Date and the interest rate in effect on any day that is an Interest Reset
Date will be the interest rate determined as of the Interest Determination Date
pertaining to such Interest Reset
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Date, subject in either case to any maximum or minimum interest rate limitation
referred to above; provided, however, that the interest rate in effect with
respect to a Floating Rate Note for the period from the date of issue to the
first Interest Reset Date will be the Initial Interest Rate (as defined below)
specified in the applicable Pricing Supplement and the related Note and the
interest rate in effect for the ten calendar days immediately prior to Maturity
will, as to the principal amount due at Maturity, be the interest rate in effect
on the tenth calendar day preceding such Maturity.
Except as otherwise specified in the applicable Pricing Supplement, each
Floating Rate Note will accrue interest on an "Actual/360" basis, an
"Actual/Actual" basis, or a "30/360" basis, in each case as specified in the
applicable Pricing Supplement. For Floating Rate Notes calculated on an
Actual/360 basis and Actual/ Actual basis, accrued interest for each Interest
Calculation Period (as defined below) will be calculated by multiplying (i) the
face amount of such Floating Rate Note, (ii) the applicable interest rate, and
(iii) the actual number of days in the related Interest Calculation Period, and
dividing the resulting product by 360 or 365, as applicable (or, with respect to
an Actual/Actual basis Floating Rate Note, if any portion of the related
Interest Calculation Period falls in a leap year, the product of (i) and (ii)
above will be multiplied by the sum of (X) the actual number of days in that
portion of the related Interest Calculation Period falling in a leap year
divided by 366 and (Y) the actual number of days in that portion of such
Interest Calculation Period falling in a non-leap year divided by 365). For
Floating Rate Notes calculated on a 30/360 basis, accrued interest for an
Interest Calculation Period will be computed on the basis of a 360-day year of
twelve 30-day months, irrespective of how many days are actually in such
Interest Calculation Period. Unless otherwise specified in the related Pricing
Supplement, with respect to any Floating Rate Note that accrues interest on a
30/360 basis, if any Interest Payment Date or the date of Maturity falls on a
day that is not a Business Day, the related payment of principal or interest
will be made on the next succeeding Business Day as if made on the date such
payment was due, and no interest will accrue on the amount so payable for the
period from and after such Interest Payment Date or Maturity, as the case may
be. As used herein, "Interest Calculation Period" means the period between
Interest Reset Dates for which accrued interest is being calculated (i.e., a
day, a week, a month, etc.). Unless otherwise specified in the applicable
Pricing Supplement, the interest factor for Notes for which the interest rate is
calculated with reference to two or more Base Rates will be calculated in each
period in the same manner as if only the lowest of the applicable Base Rates
applied.
Unless otherwise specified in the applicable Pricing Supplement, the Trustee
will be the "Calculation Agent." Upon the request of the Holder of any Floating
Rate Note, the Calculation Agent will provide the interest rate then in effect
and, if determined, the interest rate that will become effective as a result of
a determination made for the next Interest Reset Date with respect to such
Floating Rate Note. The Company will notify the Trustee of each determination of
the interest rate applicable to any such Floating Rate Note promptly after such
determination is made. The "Calculation Date", where applicable, pertaining to
any Interest Determination Date will be the earlier of (i) the tenth calendar
day after such Interest Determination Date, or, if any such day is not a
Business Day, the next succeeding Business Day and (ii) the Business Day
preceding the applicable Interest Payment Date or Maturity, as the case may be.
The interest rate in effect with respect to a Floating Rate Note from the
date of issue to the first Interest Reset Date (the "Initial Interest Rate")
will be specified in the applicable Pricing Supplement. The interest rate for
each subsequent Interest Reset Date will be determined by the Calculation Agent
as follows:
CD RATE
CD Rate Notes will bear interest at the interest rates (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any) specified
in such CD Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date relating to a CD Rate
Note or any Interest Determination Date for a Note for which the interest rate
is determined with reference to the CD Rate (a "CD Interest Determination
Date"), the rate on such date for negotiable certificates of deposit having the
Index Maturity specified in the applicable Pricing Supplement as published in
"Statistical Release H.15(519), Selected Interest Rates" or any successor
publication ("H.15(519)") under the heading "CDs (Secondary Market)", or, if not
so
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published by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such CD Interest Determination Date, the CD Rate will be the rate on such CD
Interest Determination Date for negotiable certificates of deposit of the Index
Maturity specified in the applicable Pricing Supplement as published by the
Federal Reserve Bank of New York in its daily statistical release "Composite
3:30 P.M. Quotations for U.S. Government Securities" or any successor
publication ("Composite Quotations") under the heading "Certificates of
Deposit." If such rate is not published in either H.15(519) or the Composite
Quotations by 3:00 P.M., New York City time, on the Calculation Date, then the
CD Rate on such CD Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean 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 New York, New York (which may include the Agents)
selected by the Calculation Agent (after consultation with the Company) for
negotiable certificates of deposit of major United States money market banks of
the highest credit standing in the market for negotiable certificates of deposit
with a remaining maturity closest to the Index Maturity specified in the
applicable Pricing Supplement in the denomination of $5,000,000; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as described above, the CD Rate in effect for the applicable period
will be the CD Rate in effect on such CD Interest Determination Date.
COMMERCIAL PAPER RATE
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any) specified in such Commercial Paper Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Interest Determination Date relating to a
Commercial Paper Rate Note or any Interest Determination Date for a Note for
which the interest rate is determined with reference to the Commercial Paper
Rate (a "Commercial Paper Interest Determination Date"), the Money Market Yield
(as defined below) on such date of the rate for commercial paper having the
Index Maturity specified in the applicable Pricing Supplement, as such rate
shall be published in H.15(519) under the heading "Commercial Paper." In the
event that such rate is not published prior to 3:00 P.M., New York City time, on
the Calculation Date pertaining to such Commercial Paper Interest Determination
Date, then the Commercial Paper Rate will be the Money Market Yield on such
Commercial Paper Interest Determination Date of the rate for commercial paper of
the Index Maturity specified in the applicable Pricing Supplement as published
in Composite Quotations under the heading "Commercial Paper." If by 3:00 P.M.,
New York City time, on such Calculation Date such rate is not published in
either H.15(519) or Composite Quotations, then the Commercial Paper Rate will be
calculated by the Calculation Agent and will be the Money Market Yield of the
arithmetic mean of the offered rates, as of 11:00 A.M., New York City time, on
such Commercial Paper Interest Determination Date, of three leading dealers of
commercial paper in New York, New York (which may include the Agents) selected
by the Calculation Agent (after consultation with the Company) for commercial
paper of the specified Index Maturity placed for an industrial issuer whose bond
rating is "AA", or the equivalent, from a nationally recognized statistical
rating agency; provided, however, that if the dealers selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, the
Commercial Paper Rate in effect for the applicable period will be the Commercial
Paper Rate in effect on such Commercial Paper Interest Determination Date.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
Money Market Yield = D X 360
------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the period for which interest is being calculated.
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FEDERAL FUNDS RATE
Federal Funds Rate Notes will bear interest at the interest rates
(calculated with reference to the Federal Funds Rate and the Spread or Spread
Multiplier, if any) specified in such Federal Funds Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date relating to a
Federal Funds Rate Note or any Interest Determination Date for a Note for which
the interest rate is determined with reference to the Federal Funds Rate (a
"Federal Funds Rate Interest Determination Date"), the rate of interest on that
day for Federal Funds as published in H.15(519) under the heading "Federal Funds
(Effective)" or, if not so published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Federal Funds Rate Interest Determination
Date, the Federal Funds Rate will be the rate on such Federal Funds Rate
Interest Determination Date as published in Composite Quotations under the
heading "Federal Funds/Effective Rate." If such rate is not published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on such
Calculation Date, the Federal Funds Rate for such Federal Funds Rate Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight Federal Funds
arranged by three leading dealers of Federal Funds transactions in New York, New
York (which may include the Agents) selected by the Calculation Agent (after
consultation with the Company) as of 9:00 A.M., New York City time, on such
Federal Funds Rate Interest Determination Date; provided, however, that if the
brokers selected as aforesaid by the Calculation Agent are not quoting as
described above, the Federal Funds Rate in effect for the applicable period will
be the Federal Funds Rate in effect on such Federal Funds Rate Interest
Determination Date.
LIBOR
LIBOR Notes will bear interest at the interest rates (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any) specified in
such LIBOR Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
means the rate determined by the Calculation Agent in accordance with the
following provisions:
(i) With respect to an Interest Determination Date relating to a LIBOR
Note or any Floating Rate Note for which the interest rate is determined
with reference to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will
be either: (a) if "LIBOR Reuters" is specified in the applicable Pricing
Supplement, the arithmetic mean of the offered rates (unless the specified
Designated LIBOR Page (as defined below) by its terms provides only for a
single rate, in which case such single rate shall be used) for deposits in
the Index Currency (as defined below) having the Index Maturity designated
in the applicable Pricing Supplement, commencing on the second London
Business Day immediately following that LIBOR Interest Determination Date,
that appear on the Designated LIBOR Page specified in the applicable Pricing
Supplement as of 11:00 A.M. London time, on that LIBOR Interest
Determination Date, if at least two such offered rates appear (unless, as
aforesaid, only a single rate is required) on such Designated LIBOR Page, or
(b) if "LIBOR Telerate" is specified in the applicable Pricing Supplement,
the rate for deposits in the Index Currency having the Index Maturity
designated in the applicable Pricing Supplement commencing on the second
London Business Day immediately following that LIBOR Interest Determination
Date that appears on the Designated LIBOR Page specified in the applicable
Pricing Supplement as of 11:00 A.M. London time, on that LIBOR Interest
Determination Date. If fewer than two offered rates appear, or no rate
appears, as applicable, LIBOR in respect of the related LIBOR Interest
Determination Date will be determined as if the parties had specified the
rate described in clause (ii) below.
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(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be, on
the applicable Designated LIBOR Page as specified in clause (i) above, the
Calculation Agent will request the principal London offices of each of four
major reference banks in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in the Index Currency for the period of the Index
Maturity designated in the applicable Pricing Supplement, commencing on the
second London Business Day immediately following such LIBOR Interest
Determination Date, to prime banks in the London interbank market at
approximately 11:00 A.M., London time, on such LIBOR Interest Determination
Date and in a principal amount that is representative for a single
transaction in such Index Currency in such market at such time. If at least
two such quotations are provided, LIBOR determined on such LIBOR Interest
Determination Date will be the arithmetic mean of such quotations. If fewer
than two quotations are provided, LIBOR determined on such LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M. (or such other time specified in the applicable
Pricing Supplement), in the applicable Principal Financial Center (as
defined below), on such LIBOR Interest Determination Date by three major
banks in such Principal Financial Center selected by the Calculation Agent
for loans in the Index Currency to leading European banks, having the Index
Maturity designated in the applicable Pricing Supplement and in a principal
amount that is representative for a single transaction in such Index
Currency in such market at such time; provided, however, that if the banks
so selected by the Calculation Agent are not quoting as mentioned in this
sentence, LIBOR determined on such LIBOR Interest Determination Date will be
LIBOR in effect on such LIBOR Interest Determination Date.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be U.S. Dollars.
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated in
the applicable Pricing Supplement, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is
designated in the applicable Pricing Supplement, the display on the Dow Jones
Telerate Service for the purpose of displaying the London interbank rates of
major banks for the applicable Index Currency. If neither LIBOR Reuters nor
LIBOR Telerate is specified in the applicable Pricing Supplement, LIBOR for the
applicable Index Currency will be determined as if LIBOR Telerate (and, if the
U.S. dollar is the Index Currency, LIBO Page) had been specified.
"Principal Financial Center" will generally be the capital city of the
country of the specified Index Currency, except that with respect to U.S.
dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs and ECUs,
the Principal Financial Center shall be The City of New York, Frankfurt,
Amsterdam, Milan, Zurich and Luxembourg, respectively.
PRIME RATE
Prime Rate Notes will bear interest at the rates (calculated with reference
to the Prime Rate and the Spread and/or Spread Multiplier, if any) specified in
such Prime Rate Notes and any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date relating to a Prime
Rate Note or any Interest Determination Date for a Note for which the interest
rate is determined with reference to the Prime Rate (a "Prime Rate Interest
Determination Date"), the rate set forth on such date in H.15(519) under the
heading "Bank Prime Loan." In the event that such rate is not published prior to
9:00 A.M., New York City time, on the Calculation Date pertaining to such Prime
Rate Interest Determination Date, then the Prime Rate will be determined by the
Calculation Agent and will be the arithmetic mean of the rates of interest
publicly announced by each bank that appears on the Reuters Screen NYMF Page (as
defined below) as such bank's prime rate or base lending rate as in effect for
that Prime Rate Interest Determination Date. If fewer than four such rates
appear on the Reuters Screen NYMF Page for such Prime Rate Interest
Determination Date, the Prime Rate will be
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determined by the Calculation Agent and will be the arithmetic mean of the prime
rates quoted on the basis of the actual number of days in such year divided by a
360-day year as of the close of business on such Prime Rate Interest
Determination Date by three major money center banks in The City of New York as
selected by the Calculation Agent (after consultation with the Company). If
fewer than three quotations are provided by such major money center banks, the
Prime Rate shall be calculated by the Calculation Agent and shall be determined
as the arithmetic mean of the prime rates so quoted in The City of New York on
such date by the three substitute banks or trust companies organized and doing
business under the laws of the United States, or any State thereof, having total
equity capital of at least $500,000,000 and being subject to supervision or
examination by a Federal or State authority, selected by the Calculation Agent
(after consultation with the Company); PROVIDED, HOWEVER, that if the substitute
banks selected as aforesaid by the Calculation Agent are not quoting rates as
set forth in this sentence, the Prime Rate in effect for the applicable period
will be the Prime Rate determined on the immediately preceding Prime Rate
Interest Determination Date. "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 the NYMF Page on that service for the purpose of
displaying prime rates or base lending rates of major United States banks).
TREASURY RATE
Treasury Rate Notes will bear interest at the interest rates (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if any)
specified in such Treasury Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Rate Note or any Interest Determination Date for a Note for which the
interest rate is determined with reference to the Treasury Rate (a "Treasury
Rate Interest Determination Date"), the rate applicable to the most recent
auction of direct obligations of the United States ("Treasury bills") having the
Index Maturity specified in the applicable Pricing Supplement, as such rate is
published in H.15(519) under the heading "Treasury Bills--auction average
(investment)" or, if not so published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Treasury Rate Interest Determination Date,
the auction average rate (expressed as a bond equivalent on the basis of a year
of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise
announced by the United States Department of the Treasury. 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. In the event that
the results of the auction of Treasury bills having the specified Index Maturity
are not reported as provided by 3:00 P.M., New York City time, on such
Calculation Date, or if no such auction is held in a particular week, then the
Treasury Rate shall be calculated by the Calculation Agent and shall be a yield
to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City time,
on such Treasury Rate Interest Determination Date, of three leading primary
United States government securities dealers (which may include the Agents)
selected by the Calculation Agent (after consultation with the Company) for the
issue of Treasury bills with a remaining maturity closest to the applicable
Index Maturity; provided, however, that if the dealers selected as aforesaid by
the Calculation Agent are not quoting as described above, the Treasury Rate in
effect for the applicable period will be the Treasury Rate in effect on such
Treasury Rate Interest Determination Date.
CMT RATE NOTES
CMT Rate Notes will bear interest at the rates (calculated with reference to
the CMT Rate and the Spread and/or Spread Multiplier, if any) specified in such
CMT Rate Notes and any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date relating to a CMT Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CMT Rate (a "CMT Rate Interest Determination Date"), the rate
displayed on Telerate Page 7059 for "Daily Treasury Constant Maturities and
Money Markets ...
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Federal Reserve Board Release H.15 ... Mondays approximately 3:45 P.M. EDT,"
under the heading "10 Year" for the last New York Business Day in the "Current
Week" section as of the applicable CMT Rate Interest Determination Date or such
other page as may replace that page on such service for the purpose of
displaying rates or prices comparable to the CMT Rate, as determined by
Calculation Agent. If such rate is no longer displayed, then the CMT Rate for
such Interest Reset Date will be such 10-year Treasury Constant Maturity rate
(or other 10-year United States Treasury rate) for the CMT Rate Interest
Determination Date with respect to such Interest Reset 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 Telerate Page 7059 and
published in H.15(519). If such information is not provided, then the CMT Rate
for the Interest Reset Date will be calculated by the Calculation Agent and will
be a yield to maturity, based on the arithmetic mean of the secondary market
closing bid side prices as of approximately 3:30 P.M. (New York City time) on
the CMT Rate 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, for the most recently issued direct noncallable fixed rate obligations of
the United States ("Treasury Note") with an original maturity of approximately
ten years and a remaining term to maturity of not less than nine years. If the
Calculation Agent cannot obtain three such Treasury Note quotations, the CMT
Rate for such Interest Reset Date will be calculated by the Calculation Agent
and will be a yield to maturity based on the arithmetic mean of the secondary
market bid side prices as of approximately 3:30 P.M. (New York City time) on the
CMT Rate 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 approximately thirty
years and a remaining term to maturity closest to ten years. If three or four
(and not five) of such Reference Dealers are quoting as described herein, then
the CMT Rate will be based on the arithmetic mean of the bid prices obtained and
neither the highest nor lowest of such quotes will be eliminated. If fewer than
three Reference Dealers selected by the Calculation Agent are quoting as
described herein, the CMT Rate will be the CMT Rate in effect on such CMT Rate
Interest Determination Date. If two Treasury Notes with an original maturity of
approximately thirty years have remaining terms to maturity equally close to ten
years, the quotes for the CMT Rate Note with the shorter remaining term to
maturity will be used.
The term "New York Business Day" means any other day other than a Saturday
or Sunday or a day on which banking institutions in The City of New York are
authorized or required by law or executive order to close.
J.J. KENNY RATE NOTES
J.J. Kenny Rate Notes will bear interest at the rates (calculated with
reference to J.J. Kenny Rate and the Spread and/or Spread Multiplier, if any)
specified in such J.J. Kenny Rate Notes and any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "J.J. Kenny
Rate" means, with respect to any Interest Determination Date relating to a J.J.
Kenny Rate Note or any Floating Rate Note for which the interest rate is
determined with reference to the J.J. Kenny Rate (a "J.J. Kenny Rate Interest
Determination Date"), the rate in the high grade weekly index (the "Weekly
Index") on such date made available by Kenny Information Systems ("Kenny") to
the Calculation Agent. The Weekly Index is, and shall be, based upon 30-day
yield evaluations at par of bonds, the interest of which is exempt from federal
income taxation under the Internal Revenue Code of 1986, as amended (the
"Code"), of not less than five high grade component issuers selected by Kenny
which shall 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 shall not include any bonds on which the interest is subject to a minimum
tax or similar tax under the 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
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of issuers most closely resembling the high grade component issuers selected by
Kenny for its Weekly Index, the interest on which is (A) variable on a weekly
basis, (B) exempt from federal income taxation under the Code, and (C) not
subject to a minimum tax or similar tax under the Code, unless all tax-exempt
bonds are subject to such tax. If such successor indexing agent is not
available, the rate for any J.J. Kenny Rate Interest Determination Date shall be
67% of the rate determined as if the Treasury Rate option had been originally
selected.
ORIGINAL ISSUE DISCOUNT NOTES
Notes may be issued as discounted securities (bearing no interest or
interest at a rate which at the time of issuance is below market rates) to be
sold at an issue price below their stated principal amount and which provide
that upon redemption or repurchase at the option of the Holders prior to
maturity or acceleration of the maturity thereof an amount less than the
principal amount thereof shall become due and payable, or which for federal
income tax purposes would be considered original issue discount notes. See
"United States Taxation."
INDEXED NOTES
Notes also may be issued with the principal amount payable at Maturity
and/or interest to be paid thereon to be determined with reference to the price
or prices of specified commodities or stocks, interest rate indices, the
exchange rate of one or more specified currencies (including a composite
currency such as the European Currency Unit) relative to an indexed currency, or
such other price or exchange rate as may be specified in such Note ("Indexed
Notes"), as set forth in an Indexed Note Supplement. Holders of such Notes may
receive a principal amount at Maturity that is greater than or less than the
face amount of the Notes depending upon the relative value at Maturity of the
specified indexed item. Information as to the method for determining the
principal amount payable at Maturity and, where applicable, certain historical
information with respect to the specified indexed item and tax considerations
associated with investment in Indexed Notes, will be set forth in the applicable
Indexed Note Supplement.
An investment in Notes indexed, as to principal or interest or both, to one
or more values of currencies (including exchange rates between currencies),
commodities or interest rate indices entails significant risks that are not
associated with similar investments in a conventional fixed-rate debt security.
If the interest rate of such a Note is so indexed, it may result in an interest
rate that is less than that payable on a conventional fixed-rate debt security
issued at the same time, including the possibility that no interest will be
paid, and, if the principal amount of such a Note is so indexed, the principal
amount payable at Maturity may be less than the original purchase price of such
Note if allowed pursuant to the terms of such Note, including the possibility
that no principal will be paid. The secondary market for such Notes will be
affected by a number of factors, independent of the creditworthiness of the
Company and the value of the applicable currency, commodity or interest rate
index, including the volatility of the applicable currency, commodity or
interest rate index, the time remaining to the maturity of such Notes, the
amount outstanding of such Notes and market interest rates. The value of the
applicable currency, commodity or interest rate index depends on a number of
interrelated factors, including economic, financial and political events, over
which the Company has no control. Additionally, if the formula used to determine
the principal amount or interest payable with respect to such Notes contains a
multiple or leverage factor, the effect of any change in the applicable
currency, commodity or interest rate index may be increased. The historical
experience of the relevant currencies, commodities or interest rate indices
should not be taken as an indication of future performance of such currencies,
commodities of interest rate indices during the term of any Note. Accordingly,
prospective investors should consult their own financial and legal advisors as
to the risks entailed by an investment in such Notes and the suitability of such
Notes in light of their particular circumstances.
Notwithstanding anything to the contrary contained herein or in the
Prospectus, for purposes of determining the rights of a Holder of an Indexed
Note in respect of voting for or against amendments to the Indenture and
modifications and the waiver of rights thereunder, the principal amount of such
Indexed Note shall be deemed to be equal to the face amount thereof upon
issuance. The amount of principal payable at Maturity will be specified in the
applicable Pricing Supplement.
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OTHER PROVISIONS; ADDENDA
Any provisions with respect to the determination of Base Rates, the
specification of Base Rates, calculation of the interest rate applicable to a
Floating Rate Note, its Interest Payment Dates or any other provisions of, or
matters relating to, a Fixed Rate Note or Floating Rate Note may be modified by
such terms as may be specified under "Other Provisions" on the face of such Note
or in an Addendum thereto, if so specified in the applicable Pricing Supplement.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes having the same Original Issue Date,
Stated Maturity and otherwise having identical terms and provisions will be
represented by a single global security (each, a "Global Security"). Each Global
Security representing Book-Entry Notes will be deposited with, or on behalf of,
the Depositary. Except as set forth below, a Global Security may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any nominee of the Depositary or a nominee of
such successor.
So long as the Depositary or its nominee is the registered owner of a Global
Security, the Depositary or its nominee, as the case may be, will be the sole
Holder of the Book-Entry Notes represented thereby for all purposes under the
Indenture. Except as otherwise provided below, the Beneficial Owners (as defined
below) of the Global Security or Securities representing Book-Entry Notes will
not be entitled to receive physical delivery of Definitive Notes and will not be
considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing Book-Entry Notes shall be exchangeable or
transferrable. 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 through which such
person owns its interest in order to exercise any rights of a Holder under the
Indenture. The laws of some jurisdictions 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 representing Book-Entry Notes.
The Depository Trust Company ("DTC"), New York, New York will be the initial
Depositary with respect to the Notes. The following is based on information
furnished by DTC as Depositary:
The Depositary will act as securities depository for the Book-Entry
Notes. The Book-Entry Notes will be issued as fully registered securities
registered in the name of Cede & Co. (the Depositary's partnership nominee).
One fully registered Global Security will be issued for each issue of
Book-Entry Notes, each in the aggregate principal amount of such issue, and
will be deposited with the Depositary. If, however, the aggregate principal
amount of any issue exceeds $150,000,000, one Global Security will be issued
with respect to each $150,000,000 of principal amount and an additional
Global Security will be issued with respect to any remaining principal
amount of such issue.
The Depositary 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
Securities Exchange Act of 1934, as amended. The Depositary holds securities
that its participants ("Participants") deposit with the Depositary. The
Depositary 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 include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other
organizations. The Depositary 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 Depositary's system is also available to others such as
securities brokers and dealers, banks and trust companies that
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clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participant"). The
rules applicable to the Depositary and its Participants are on file with the
Securities and Exchange Commission.
Purchases of Book-Entry Notes under the Depositary's system must be made
by or through Direct Participants, which will receive a credit for such
Book-Entry Notes on the Depositary's records. The ownership interest of each
actual purchaser of each Book-Entry Note represented by a Global Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written
confirmation from the Depositary of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the
Direct or Indirect Participants through which such Beneficial Owner entered
into the transaction. Transfers of ownership interests in a Global Security
representing Book-Entry Notes are to be accomplished by entries made on the
books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners of a Global Security representing Book-Entry Notes will not receive
Definitive Notes representing their ownership interests therein, except in
the event that use of the book-entry system for such Book-Entry Notes is
discontinued.
To facilitate subsequent transfers, all Global Securities representing
Book-Entry Notes which are deposited with the Depositary are registered in
the name of the Depositary's nominee, Cede & Co. The deposit of Global
Securities with the Depositary and their registration in the name of Cede
&Co. effect no change in beneficial ownership. The Depositary has no
knowledge of the actual Beneficial Owners of the Global Securities
representing the Book-Entry Notes; the Depositary's records reflect only the
identity of the Direct Participants to whose accounts such Book-Entry Notes
are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings
on behalf of their customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners will by governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Book-Entry Notes within an issue are being redeemed, the Depositary's
practice is to determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.
Neither the Depositary nor Cede & Co. will consent or vote with respect
to the Global Securities representing the Book-Entry Notes. Under its usual
procedures, the Depositary mails an Omnibus Proxy to the Company as soon as
possible after the applicable record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Book-Entry Notes are credited on the applicable record date
(identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the Global
Securities representing the Book-Entry Notes will be made to the Depositary.
The Depositary's practice is to credit Direct Participants' accounts on the
applicable payment date in accordance with their respective holdings shown
on the Depositary's records unless the Depositary has reason to believe that
it will not receive payment on such date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers
in bearer form or registered in "street name", and will be the
responsibility of such Participant and not of the Depositary, the Trustee or
the Company, subject to any statutory or regulatory requirements as may be
in effect from time to time. Payment of principal, premium, if any, and
interest to the Depositary is the responsibility of the Company or the
Trustee, disbursement of such payments to Direct Participants shall be the
responsibility of the Depositary, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Direct and Indirect
Participants.
A Beneficial Owner shall give notice to elect to have its Book-Entry
Notes repaid by the Company, through its Participant, to the Trustee, and
shall effect delivery of such Book-Entry Notes by causing the
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Direct Participant to transfer the Participant's interest in the Global
Security or Securities representing such Book-Entry Notes, on the
Depositary's records, to the Trustee. The requirement for physical delivery
of Book-Entry Notes in connection with a demand for repayment will be deemed
satisfied when the ownership rights in the Global Security or Securities
representing such Book-Entry Notes are transferred by Direct Participants on
the Depositary's records.
The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes at any time by giving
reasonable notice to the Company or the Trustee. Under such circumstances,
in the event that a successor securities depository is not obtained,
Definitive Notes are required to be printed and delivered.
If the Depositary 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 Definitive Notes in exchange for the Notes
represented by such Global Security or Securities. In addition, the Company may
at any time and in its sole discretion determine to discontinue use of the
Global Security or Securities and, in such event, will issue Definitive Notes in
exchange for the Notes represented by such Global Security or Securities.
Definitive Notes so issued will be issued in denominations of $100,000 or any
amount in excess thereof which is a multiple of $1,000 and will be issued in
registered form only, without coupons.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with Notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, persons holding Notes as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the United States dollar. It also does not deal with
holders other than original purchasers (except where otherwise specifically
noted). Persons considering the purchase of the Notes should consult their own
tax advisors concerning the application of United States Federal income tax laws
to their particular situations as well as any consequences of the purchase,
ownership and disposition of the Notes arising under the laws of any other
taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof, (iii) an estate or trust the income of which is subject to
United States Federal income taxation regardless of its source or (iv) any other
person whose income or gain in respect of a Note is effectively connected with
the conduct of a United States trade or business. As used herein, the term
"non-U.S. Holder" means a holder of a Note that is not a U.S. Holder.
U.S. HOLDERS
PAYMENTS OF INTEREST. Payments of interest on a Note generally will be
taxable to a U.S. Holder as ordinary interest income at the time such payments
are accrued or are received (in accordance with the U.S. Holder's regular method
of tax accounting).
ORIGINAL ISSUE DISCOUNT. The following summary is a general discussion of
the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of Notes issued with original issue discount
("Discount Notes"). The following summary is based upon final Treasury
regulations issued by the Internal Revenue Service ("IRS") on January 27, 1994
under the original issue discount provisions of the Code (the "OID
Regulations"). The OID Regulations, which replaced certain proposed original
issue discount regulations that were issued on December 21, 1992, apply to debt
instruments issued on or after April 4, 1994. In addition, taxpayers may rely on
the OID Regulations for debt instruments issued after December 21, 1992.
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For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a Note over its issue
price, if such excess equals or exceeds a DE MINIMIS amount (generally 1/4 of 1%
of the Note's stated redemption price at maturity multiplied by the number of
complete years to its maturity from its issue date). The issue price of an issue
of Notes equals the first price at which a substantial amount of such Notes has
been sold. The stated redemption price at maturity of a Note is the sum of all
payments provided by the Note other than "qualified stated interest" payments.
The term "qualified stated interest" generally means stated interest that is
unconditionally payable in cash or property (other than debt instruments of the
issuer) at least annually at a single fixed rate. In addition, under the OID
Regulations, if a Note bears interest for one or more accrual periods at a rate
below the rate applicable for the remaining term of such Note (E.G., Notes with
teaser rates or interest holidays), and if the greater of either the resulting
foregone interest on such Note or any "true" discount on such Note (I.E., the
excess of the Note's stated principal amount over its issue price) equals or
exceeds a specified DE MINIMIS amount, then the stated interest on the Note
would be treated as original issue discount rather than qualified stated
interest.
Payments of qualified stated interest on a Note are taxable to a U.S. Holder
as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Discount Note must include original issue
discount in income as ordinary interest for United States Federal income tax
purposes as it accrues under a constant yield method in advance of receipt of
the cash payments attributable to such income, regardless of such U.S. Holder's
regular method of tax accounting. In general, the amount of original issue
discount included in income by the initial U.S. Holder of a Discount Note is the
sum of the daily portions of original issue discount with respect to such
Discount Note for each day during the taxable year (or portion of the taxable
year) on which such U.S. Holder held such Discount Note. The "daily portion" of
original issue discount on any Discount Note is determined by allocating to each
day in any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An "accrual period" may be of any length and
the accrual periods may vary in length over the term of the Discount Note,
provided that each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the final day of an accrual
period or on the first day of an accrual period. The amount of original issue
discount allocable to each accrual period is generally equal to the difference
between (i) the product of the Discount Note's adjusted issue price at the
beginning of such accrual period and its yield to maturity (determined on the
basis of compounding at the close of each accrual period and appropriately
adjusted to take into account the length of the particular accrual period) and
(ii) the amount of any qualified stated interest payments allocable to such
accrual period. The "adjusted issue price" of a Discount Note at the beginning
of any accrual period is the sum of the issue price of the Discount Note plus
the amount of original issue discount allocable to all prior accrual periods
minus the amount of any prior payments on the Discount Note that were not
qualified stated interest payments. Under these rules, U.S. Holders generally
will have to include in income increasingly greater amounts of original issue
discount in successive accrual periods.
A U.S. Holder who purchases a Discount Note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal to
its stated redemption price at maturity will be considered to have purchased the
Discount Note at an "acquisition premium." Under the acquisition premium rules,
the amount of original issue discount which such U.S. Holder must include in its
gross income with respect to such Discount Note for any taxable year (or portion
thereof in which the U.S. Holder holds the Discount Note) will be reduced (but
not below zero) by the portion of the acquisition premium properly allocable to
the period.
Under the OID Regulations, Floating Rate Notes are subject to special rules
whereby a Floating Rate Note will qualify as a "variable rate debt instrument"
if (a) its issue price does not exceed the total noncontingent principal
payments due under the Floating Rate Note by more than a specified DE MINIMIS
amount and (b) it provides for stated interest, paid or compounded at least
annually, at current values of (i) one or more qualified floating rates, (ii) a
single fixed rate and one or more qualified floating rates, (iii) a single
objective rate, or (iv) a single fixed rate and a single objective rate that is
a qualified inverse floating rate.
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A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Floating Rate Note is denominated. Although a multiple of a qualified floating
rate will generally not itself constitute a qualified floating rate, a variable
rate equal to the product of a qualified floating rate and a fixed multiple that
is greater than zero but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than zero but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, under the OID Regulations, two or more qualified floating rates that
can reasonably be expected to have approximately the same values throughout the
term of the Floating Rate Note (E.G., two or more qualified floating rates with
values within 25 basis points of each other as determined on the Floating Rate
Note's issue date) will be treated as a single qualified floating rate.
Notwithstanding the foregoing, a variable rate that would otherwise constitute a
qualified floating rate but which is subject to one or more restrictions such as
a maximum numerical limitation (I.E., a cap) or a minimum numerical limitation
(I.E., a floor) may, under certain circumstances, fail to be treated as a
qualified floating rate under the OID Regulations. An "objective rate" is a rate
that is not itself a qualified floating rate but which is determined using a
single fixed formula and which is based upon (i) one or more qualified floating
rates, (ii) one or more rates where each rate would be a qualified floating rate
for a debt instrument denominated in a currency other than the currency in which
the Floating Rate Note is denominated, (iii) either the yield or changes in the
price of one or more items of actively traded personal property or (iv) a
combination of objective rates. The OID Regulations also provide that other
variable interest rates may be treated as objective rates if so designated by
the IRS in the future. Despite the foregoing, a variable rate of interest on a
Floating Rate Note will not constitute an objective rate if it is reasonably
expected that the average value of such rate during the first half of the
Floating Rate Note's term will be either significantly less than or
significantly greater than the average value of the rate during the final half
of the Floating Rate Note's term. A "qualified inverse floating rate" is any
objective rate where such rate is equal to a fixed rate minus a qualified
floating rate, as long as variations in the rate can be reasonably be expected
to inversely reflect contemporaneous variations in the cost of newly borrowed
funds. The OID Regulations also provide that if a Floating Rate Note provides
for stated interest at a fixed rate for an initial period of less than one year
followed by a variable rate that is either a qualified floating rate or an
objective rate and if the variable rate on the Floating Rate Note's issue date
is intended to approximate the fixed rate (E.G., the value of the variable rate
on the issue date does not differ from the value of the fixed rate by more than
25 basis points), then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or objective rate, as the
case may be.
If a Floating Rate Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument" under the OID Regulations, then
any stated interest on such Note which is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually will
constitute qualified stated interest and will be taxed accordingly. Thus, a
Floating Rate Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
and that qualifies as a "variable rate debt instrument" under the OID
Regulations will generally not be treated as having been issued with original
issue discount unless the Floating Rate Note is issued at a "true" discount
(I.E., at a price below the Note's stated principal amount) in excess of a
specified DE MINIMIS amount. Original issue discount on such a Floating Rate
Note arising from "true" discount is allocated to an accrual period using the
constant yield method described above.
In general, any other Floating Rate Note that qualifies as a "variable rate
debt instrument" will be converted into an "equivalent" fixed rate debt
instrument for purposes of determining the amount and accrual of original issue
discount and qualified stated interest on the Floating Rate Note. The OID
Regulations generally require that such a Floating Rate Note be converted into
an "equivalent" fixed rate debt instrument by substituting any qualified
floating rate or qualified inverse floating rate provided for under the terms of
the Floating Rate Note with a fixed rate equal to the value of the qualified
floating rate or qualified inverse floating rate, as the case may be, as of the
Floating Rate Note's issue date. Any objective rate (other than a qualified
inverse floating rate) provided for under the terms of the Floating Rate Note is
converted into a fixed rate that reflects the yield that is reasonably expected
for the Floating Rate Note. In
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the case of a Floating Rate Note that qualifies as a "variable rate debt
instrument" and provides for stated interest at a fixed rate in addition to
either one or more qualified floating rates or a qualified inverse floating
rate, the fixed rate is initially converted into a qualified floating rate (or a
qualified inverse floating rate, if the Floating Rate Note provides for a
qualified inverse floating rate). Under such circumstances, the qualified
floating rate or qualified inverse floating rate that replaces the fixed rate
must be such that the fair market value of the Floating Rate Note as of the
Floating Rate Note's issue date is approximately the same as the fair market
value of an otherwise identical debt instrument that provides for either the
qualified floating rate or qualified inverse floating rate rather than the fixed
rate. Subsequent to converting the fixed rate into either a qualified floating
rate or a qualified inverse floating rate, the Floating Rate Note is then
converted into an "equivalent" fixed rate debt instrument in the manner
described above.
Once the Floating Rate Note is converted into an "equivalent" fixed rate
debt instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. Holder
of the Floating Rate Note will account for such original issue discount and
qualified stated interest as if the U.S. Holder held the "equivalent" fixed rate
debt instrument. Each accrual period appropriate adjustments will be made to the
amount of qualified stated interest or original issue discount assumed to have
been accrued or paid with respect to the "equivalent" fixed rate debt instrument
in the event that such amounts differ from the actual amount of interest accrued
or paid on the Floating Rate Note during the accrual period.
If a Floating Rate Note does not qualify as a "variable rate debt
instrument" under the OID Regulations, then the Floating Rate Note would be
treated as a contingent payment debt obligation. It is not entirely clear under
current law how a Floating Rate Note would be taxed if such Note were treated as
a contingent payment debt obligation. The proper United States Federal income
tax treatment of Floating Rate Notes that are treated as contingent payment debt
obligations will be more fully described in the applicable Pricing Supplement.
Certain of the Notes (i) may be redeemable at the option of the Company
prior to their stated maturity (a "call option") and/or (ii) may be repayable at
the option of the holder prior to their stated maturity (a "put option"). Notes
containing such features may be subject to rules that differ from the general
rules discussed above. Investors intending to purchase Notes with such features
should consult their own tax advisors, since the original issue discount
consequences will depend, in part, on the particular terms and features of the
purchased Notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, DE
MINIMIS original issue discount, market discount, DE MINIMIS market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions. This election is only available for debt instruments
issued on or after April 4, 1994.
SHORT-TERM NOTES. Notes that have a fixed maturity of one year or less
("Short-Term Notes") will be treated as having been issued with original issue
discount. In general, an individual or other cash method U.S. Holder is not
required to accrue such original issue discount unless the U.S. Holder elects to
do so. If such an election is not made, any gain recognized by the U.S. Holder
on the sale, exchange or maturity of the Short-Term Note will be ordinary income
to the extent of the original issue discount accrued on a straight-line basis,
or upon election under the constant yield method (based on daily compounding),
through the date of sale or maturity, and a portion of the deductions otherwise
allowable to the U.S. Holder for interest on borrowings allocable to the
Short-Term Note will be deferred until a corresponding amount of income is
realized. U.S. Holders who report income for United States Federal income tax
purposes under the accrual method, and certain other holders including banks and
dealers in securities, are required to accrue original issue discount on a
Short-Term Note on a straight-line basis unless an election is made to accrue
the original issue discount under a constant yield method (based on daily
compounding).
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MARKET DISCOUNT. If a U.S. Holder purchases a Note, other than a Discount
Note, for an amount that is less than its issue price (or, in the case of a
subsequent purchaser, its stated redemption price at maturity) or, in the case
of a Discount Note, for an amount that is less than its adjusted issue price as
of the purchase date, the amount of the difference will be treated as "market
discount," unless such difference is less than a specified DE MINIMIS amount.
Under the market discount rules, a U.S. Holder will be required to treat any
partial principal payment (or, in the case of a Discount Note, any payment that
does not constitute qualified stated interest) on, or any gain realized on the
sale, exchange, retirement or other disposition of, a Note as ordinary income to
the extent of the lesser of (i) the amount of such payment or realized gain or
(ii) the market discount which has not previously been included in income and is
treated as having accrued on such Note at the time of such payment or
disposition. 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
U.S. Holder elects to accrue market discount on the basis of semiannual
compounding.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the maturity of the Note or
its earlier disposition in a taxable transaction, because a current deduction is
only allowed to the extent the interest expense exceeds an allocable portion of
market discount. A U.S. Holder may elect to include market discount in income
currently as it accrues (on either a ratable or semiannual compounding basis),
in which case the rules described above regarding the treatment as ordinary
income of gain upon the disposition of the Note and upon the receipt of certain
cash payments and regarding the deferral of interest deductions will not apply.
Generally, such currently included market discount is treated as ordinary
interest for United States Federal income tax purposes.
PREMIUM. If a U.S. Holder purchases a Note for an amount that is greater
than its stated redemption price at maturity, such U.S. Holder will be
considered to have purchased the Note with "amortizable bond premium" equal in
amount to such excess. A U.S. Holder may elect to amortize such premium using a
constant yield method over the remaining term of the Note and may offset
interest otherwise required to be included in respect of the Note during any
taxable year by the amortized amount of such excess for the taxable year.
However, if the Note may be optionally redeemed after the U.S. Holder acquires
it at a price in excess of its stated redemption price at maturity, special
rules would apply which could result in a deferral of the amortization of some
bond premium until later in the term of the Note.
DISPOSITION OF A NOTE. Except as discussed above, upon the sale, exchange
or retirement of a Note, a U.S. Holder generally will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement and such U.S. Holder's adjusted tax basis in the Note. A U.S.
Holder's adjusted tax basis in a Note generally will equal such U.S. Holder's
initial investment in the Note increased by any original issue discount included
in income (and accrued market discount, if any, if the U.S. Holder has included
such market discount in income) and decreased by the amount of any payments,
other than qualified stated interest payments, received and amortizable bond
premium taken with respect to such Note. Such gain or loss generally will be
long-term capital gain or loss if the Note were held for more than one year.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original issue
discount, if any) on a Note, unless such non-U.S. Holder is a direct or indirect
10% or greater shareholder of the Company, a controlled foreign corporation
related to the Company or a bank receiving interest described in section
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended ("Code"). To
qualify for the exemption from taxation, the last United States payor in the
chain of payment prior to payment to a non-U.S. Holder (the "Withholding Agent")
must have received in the year in which a payment of interest or principal
occurs, or in either of the two preceding calendar years, a statement that (i)
is signed by the beneficial owner of the Note under penalties of perjury, (ii)
certifies that such owner is not a U.S. Holder and (iii) provides the name and
address of the beneficial owner. The statement may be made on an IRS Form W-8 or
a substantially similar form, and the beneficial owner must inform the
Withholding Agent of any change in the information on the statement within 30
days
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of such change. If a Note is held through a securities clearing organization or
certain other financial institutions, the organization or institution may
provide a signed statement to the Withholding Agent. However, in such case, the
signed statement must be accompanied by a copy of the IRS Form W-8 or the
substitute form provided by the beneficial owner to the organization or
institution. The Treasury Department is considering implementation of further
certification requirements aimed at determining whether the issuer of a debt
obligation is related to holders thereof.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a trade
or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the Company
or, at the time of such individual's death, payments in respect of the Notes
would have been effectively connected with the conduct by such individual of a
trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
exempt recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-U.S.
Holder (and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS, unless either (i) the broker determines that the
seller is an exempt recipient or (ii) the seller certifies its non-U.S. status
(and certain other conditions are met). Certification of the registered owner's
non-U.S. status would be made normally on an IRS Form W-8 under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by the Company
through the Agents, who have agreed to use their reasonable efforts to solicit
offers to purchase the Notes, and may also be sold to one or more of the Agents,
as principal, for resale to investors and other purchasers at varying prices
related to prevailing market prices at the time of resale, as determined by such
Agent or Agents or, if so agreed, at a fixed initial offering price. The Company
reserves the right to sell Notes directly on its own behalf. The Company
reserves the right to withdraw, cancel or modify the offer made hereby without
notice and may reject orders in whole or in part whether placed directly with
the Company or through one of the Agents. The Agents will have the right, in
their discretion reasonably exercised, to reject in whole or in part any offer
to purchase Notes received by them. The Company will pay the Agents, in the form
of a discount or otherwise, a commission, ranging from .125% to .75% (or, with
respect to Notes for which the Stated
S-21
Maturity is in excess of 30 years, such commission as shall be agreed upon by
the Company and the related Agent at the time of sale), depending on the Stated
Maturity of the Note, of the principal amount of any Note sold through the
Agents.
In addition, the Agents may offer the Notes they have purchased as principal
to other dealers for resale to investors and other purchasers, and may allow any
portion of the discount received in connection with such purchase from the
Company to such dealers. Unless otherwise indicated in the applicable Pricing
Supplement, any Note sold to an Agent as principal will be purchased by such
Agent at a price equal to 100% of the principal amount thereof less a percentage
equal to the commission applicable to an agency sale of a Note of identical
maturity, and may be resold by the Agent to investors and other purchasers from
time to time in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices determined at the time of
sale or may be resold to certain dealers as described above. After the initial
public offering of Notes to be resold to investors and other purchasers on a
fixed public offering price basis, the public offering price, concession and
discount may be changed.
Unless otherwise specified in an applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in New York City on the date of settlement.
Each Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
agreed to indemnify the Agents against certain liabilities under the Securities
Act, or to contribute to payments the Agents may be required to make in response
thereof.
No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. Each of the Agents may from time to
time purchase and sell Notes in the secondary market, but no Agent is obligated
to do so, and there can be no assurance that there will be a secondary market
for the Notes or liquidity in the secondary market if one develops. From time to
time, each of the Agents may make a market in the Notes.
S-22
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED MARCH 14, 1994
PROSPECTUS
SOUTHERN CALIFORNIA GAS COMPANY
DEBT SECURITIES
------------------
Southern California Gas Company (the "Company") may offer from time to time
its unsecured debt securities (the "Debt Securities") on terms to be determined
in light of market conditions at the time of sale. The specific aggregate
principal amount, denominations, maturity, interest rate (or manner in which
interest is to be determined) and time of payment of interest, if any, terms for
redemption, if any, at the option of the Company or the Holder, terms for
sinking fund payments, if any, purchase price, any other special terms and the
names of the underwriters or agents, if any, the compensation of such
underwriters or agents and other terms in connection with the sale of Debt
Securities in respect of which this Prospectus is being delivered (the "Offered
Debt Securities") will be set forth in an accompanying Prospectus Supplement
(the "Prospectus Supplement") and/or a related Pricing Supplement (the "Pricing
Supplement").
No Debt Securities may be sold without delivery of a Prospectus Supplement
describing such issue of Debt Securities and the method and terms of offering
thereof.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES 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 March , 1994.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, information statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, information
statements and other information filed by the Company can 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 following
Regional Offices of the Commission: Chicago Regional Office, 500 West Madison
Street, Suite 1400, Chicago, Illinois, 60661 and New York Regional Office, Seven
World Trade Center, 13th Floor, New York, New York, 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Certain
securities of the Company are listed on the New York and Pacific Stock Exchanges
and reports, information statements and other information concerning the Company
can be inspected at such exchanges.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus and the accompanying Prospectus Supplement do 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, which may
be examined without charge at the public reference facilities maintained by the
Commission at the Public Reference Room of the Commission, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies thereof may be obtained from the
Commission upon payment of prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report of the Company on Form 10-K for the fiscal year ended
December 31, 1992, its Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1993, June 30, 1993 and September 30, 1993 and its Current Reports on
Form 8-K dated February 26, 1993, March 12, 1993, April 30, 1993, July 13, 1993,
September 24, 1993, October 29, 1993, November 3, 1993, December 3, 1993,
December 17, 1993 and January 3, 1994, as filed with the Commission are hereby
incorporated by reference into this Prospectus and made a part hereof.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act prior to the termination of the offering of the Debt
Securities shall be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein, or contained in this Prospectus or in a supplement hereto, shall be
deemed to be modified or superseded for purposes of this Prospecuts and/or any
supplement hereto to the extent that a statement contained herein or in a
supplement hereto or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus or
any supplement hereto.
The Company will provide without charge to each person to whom this
Prospectus is delivered upon written or oral request of such person, a copy
(without exhibits) of any or all documents incorporated by reference in this
Prospectus. Requests for such copies should be directed to Office of the
Secretary, Southern California Gas Company, 555 West Fifth Street, Los Angeles,
California 90013; telephone number (213) 244-1200.
SOUTHERN CALIFORNIA GAS COMPANY
The Company is a public utility owning and operating a natural gas
transmission, storage and distribution system that supplies natural gas
throughout most of southern California and parts of central California. The
Company is subject to regulation by the California Public Utilities Commission
which, among other things, establishes the rates the Company may charge,
including an authorized rate of return on investment. The Company is the largest
subsidiary of Pacific Enterprises (the "Parent"). The Debt Securities are not
obligations of, and are not guaranteed by, the Parent.
The Company was incorporated in California in 1910. Its principal executive
offices are located at 555 West Fifth Street, Los Angeles, California 90013
where its telephone number is (213) 244-1200.
2
SUMMARY FINANCIAL INFORMATION
The following table sets forth certain financial information for the Company
for the five years ended December 31, 1993.
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1989 1990 1991 1992 1993
------------ ------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS)
Operating Revenues......................... $ 3,275,350 $ 3,212,625 $ 2,930,306 $ 2,839,925 $ 2,811,074
Operating Expenses......................... 3,006,579 2,936,515 2,638,973 2,540,541 2,526,576
------------ ------------ ------------ ------------ ------------
Net Operating Revenue.................. 268,771 276,110 291,333 299,384 284,498
Other Income (Deductions)(3)............... (2,737) 5,611 23,869 (1,455) 11,423
Interest Charges(3)........................ 85,131 103,977 103,410 103,213 102,245
------------ ------------ ------------ ------------ ------------
Net Income(1).......................... $ 180,903 $ 177,744 $ 211,792 $ 194,716 $ 193,676
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Ratios of Earnings to Fixed Charges(2)(3):
Actual................................... 3.95 3.81 4.29 4.08 3.76
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Actual Excluding Interest Related to
Supplier Refunds and Regulatory
Accounts................................ 4.32 3.95 4.46 4.16 3.82
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
- ------------------------
(1) Net income for the year ended December 31, 1991 includes a net after-tax
gain of $15 million related to the sale of the Company's headquarters office
property.
(2) Earnings represent income before income taxes plus fixed charges, and fixed
charges represent interest charges (including amortization of bond premium,
discount and expense) plus a portion of rental expense approximating
interest charges.
The ratios of earnings to fixed charges are influenced by the accrual of
interest expense relating to supplier refunds payable to customer and
regulatory accounts. Ratios which exclude interest related to supplier
refunds and regulatory accounts are calculated as described above but
exclude from fixed charges related interest expense during the relevant
period to the extent of related interest income.
(3) Effective for 1991, the methodology for calculating fixed charges was
changed to reflect the net interest expense related to regulatory accounts.
Prior years' interest amounts have been reclassified to conform to the 1991
presentation.
3
USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus Supplement, the
net proceeds to be received by the Company from the sale of the Debt Securities
will become a part of the general treasury funds of the Company and will be
applied to the expansion and betterment of utility plant, to refund and retire
indebtedness and/or equity securities and to replenish funds previously expended
for such purposes.
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities are to be issued under an indenture dated as of May 1,
1989 between the Company and Citibank, N.A., as trustee (the "Trustee"), as
supplemented by a First Supplemental Indenture dated as of October 1, 1992 (the
"Indenture"). 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 of the provisions of the Indenture, including the
definitions therein of certain terms. Whenever particular sections or defined
terms of the Indenture are referred to, it is intended that such sections or
defined terms shall be incorporated herein by reference. Copies of the Indenture
are available for inspection during normal business hours at the principal
executive offices of the Company, 555 West Fifth Street, Los Angeles, California
90013 or at the Corporate Trust Office of the Trustee, 120 Wall Street, 13th
Floor, New York, New York 10043.
The following sets forth certain general terms and provisions of the Debt
Securities offered hereby. Further terms of the Offered Debt Securities are set
forth in the Prospectus Supplement and/or an applicable Pricing Supplement.
GENERAL
The Indenture does not limit the aggregate principal amount of the Debt
Securities which may be issued thereunder and provides that the Debt Securities
may be issued from time to time in series. All securities issued under the
Indenture will rank PARI PASSU in priority of payment with all other securities
issued under such Indenture.
The Debt Securities will be unsecured and will rank PARI PASSU in priority
of payment with all other unsecured and unsubordinated indebtedness of the
Company. The Debt Securities are not, by their terms, subordinate in right of
payment to any other indebtedness of the Company. However, substantially all of
the Company's properties are subject to liens securing the Company's First
Mortgage Bonds of which $ in aggregate principal amount were issued and
outstanding as of the date of this Prospectus. The Company expects that it will
from time to time issue additional First Mortgage Bonds which also will be
secured by such properties. The Debt Securities are not obligations of and are
not guaranteed by the Parent.
The Prospectus Supplement and any related Pricing Supplement will describe
certain terms of the Offered Debt Securities, including (i) the title of the
Offered Debt Securities; (ii) any limit on the aggregate principal amount of the
Offered Debt Securities; (iii) the date or dates on which the Offered Debt
Securities will mature; (iv) the rate or rates per annum (or manner in which
such rates are to be determined) at which the Offered Debt Securities will bear
interest, if any, and the date from which such interest, if any, will accrue;
(v) the dates on which such interest, if any, on the Offered Debt Securities
will be payable and the Regular Record Dates for such Interest Payment Dates;
(vi) any mandatory or optional sinking fund or analogous provisions; (vii)
additional provisions, if any, for the defeasance of the Offered Debt
Securities; (viii) the date, if any, after which and the price or prices at
which the Offered Debt Securities may, pursuant to any optional or mandatory
redemption or repayment provisions, be redeemed or repaid and the other detailed
terms and provisions of any such optional or mandatory redemption or repayment
provisions; and (ix) any additional events of default or other terms with
respect to the Offered Debt Securities.
Unless otherwise provided in the Prospectus Supplement or a Pricing
Supplement, principal of and premium and interest, if any, on the Debt
Securities will be payable, and the transfer of the Debt Securities will be
registrable, at the office of the Trustee designated for such purpose; provided,
however, that except as
4
otherwise provided in the Prospectus Supplement or a Pricing Supplement, at the
option of the Company, interest, if any, may be paid by mailing a check to the
address of the person entitled thereto as it appears in the Debt Securities
Register.
Unless otherwise provided in the Prospectus Supplement or a Pricing
Supplement, the Debt Securities will be issued only in fully registered form
without coupons, and in denominations of $100,000 or any multiple of $1,000 in
excess of $100,000. No service charge will be made for any registration of
transfer or exchange of the Debt Securities, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
One or more series of Debt Securities may be issued as discounted Debt
Securities which bear no interest or which bear interest at a rate which at the
time of issuance is below market rates ("Original Issue Discount Debt
Securities") to be sold at a substantial discount below their stated principal
amount. Special federal income tax and other considerations applicable thereto
will be described in the Prospectus Supplement or Pricing Supplement relating
thereto.
The Indenture provides that all Debt Securities of any one series need not
be issued at the same time and that the Company may, from time to time, issue
additional Debt Securities of a previously issued series. In addition, the
Indenture permits the Company to issue series Debt Securities with terms
different from those of any other series of Debt Securities and, within a series
of Debt Securities, any terms (including, without limitation, interest rate,
manner in which interest is calculated, original issue date, maturity date, and
provisions, if any, for redemption and repayment) may differ.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in global
form. A Debt Security in global form will be deposited with, or on behalf of, a
Depositary, which will be identified in an applicable Prospectus Supplement. A
global Debt Security may be issued in either registered or bearer form and in
either temporary or permanent form. A Debt Security in global form may not be
transferred except as a whole by the Depositary for such Debt 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. If any Debt
Securities of a series are issuable in global form, the applicable Prospectus
Supplement will describe the circumstances, if any, under which beneficial
owners of interests in any such global Debt Security may exchange such interests
for definitive Debt Securities of such series and of like tenor and principal
amount in any authorized form and denomination and the manner of payment of
principal of, and premium and interest, if any, on any such Global Debt
Security.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to Debt
Securities of any series: (a) failure to pay principal of or any premium on any
Debt Security of that series when due; (b) failure to pay any interest on any
Debt Security of that series when due, continued for 30 days; (c) failure to
deposit any sinking fund payment, when due, in respect of any Debt Security of
that series; (d) failure to perform any other covenant or warranty of the
Company in the Indenture (other than a covenant or warranty included in the
Indenture solely for the benefit of one or more series of Debt Securities other
than that series), continued for 60 days after written notice by the Trustee to
the Company or by the Holders of at least 25% in principal amount of the
Outstanding Debt Securities of that series to the Company and the Trustee as
provided in the Indenture; (e) certain events in bankruptcy, insolvency or
receivership with respect to the Company; (f) a default under any mortgage,
indenture or instrument evidencing any indebtedness for money borrowed by the
Company resulting in an aggregate principal amount exceeding $10,000,000
becoming due and payable prior to its maturity date or constituting a failure to
pay when due (after expiration of any applicable grace period) an aggregate
principal amount exceeding $10,000,000, unless such acceleration has been
rescinded or annulled or such indebtedness has been discharged within 60 days
after written notice to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the Outstanding
Debt Securities of such series, provided, however, that any such default shall
not
5
be deemed to have occurred so long as the Company is contesting the validity
thereof in good faith by appropriate proceedings; and (g) any other Event of
Default provided with respect to the Debt Securities of that series.
If an Event of Default with respect to the Outstanding Debt Securities of
any series occurs and is continuing, either the Trustee or the Holders of at
least 25% in aggregate principal amount of the Outstanding Debt Securities of
that series may declare the principal amount of all the Outstanding Debt
Securities of that series to be due and payable immediately. At any time after
the declaration of acceleration with respect to the Debt Securities of any
series 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 the
Outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration.
The Indenture provides that, subject to the duty of the Trustee during the
continuance of an Event of Default to act with the required standard of care,
the Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable indemnity. Subject to
such provisions for the indemnification of the Trustee and subject to certain
other limitations, the Holders of a majority in aggregate principal amount of
the Outstanding Debt Securities of any series will have the right to 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 the Trustee, with
respect to the Debt Securities of that series, provided that such direction is
not in conflict with any rule of law or with the Indenture and is not unduly
prejudicial to the rights of other Holders of Debt Securities of such series.
The Company is required to furnish to the Trustee annually a statement as to
the performance by the Company of certain of its obligations under the Indenture
and as to any default in such performance.
MODIFICATION, WAIVER AND AMENDMENT
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of not less than 66 2/3% in
aggregate principal amount of the Outstanding Debt Securities of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby, (a) change the Stated Maturity of
the principal of, or any installment of principal of or interest, if any, on,
any Debt Security or change the date or dates of repayment of any Debt Security
at the option of the Holders thereof; (b) reduce the principal amount of, or
premium or interest, if any, on, any Debt Security; (c) reduce the amount of
principal of an Original Issue Discount Debt Security payable upon acceleration
of the Maturity thereof; (d) change the place or currency of payment of the
principal of, or premium or interest, if any, on, any Debt Security; (e) impair
the right to institute suit for the enforcement of any payment on or with
respect to any Debt Security after the Stated Maturity thereof; or (f) reduce
the percentage in principal amount of the Outstanding Debt Securities of any
series, the consent of whose Holders is required for modification or amendment
of the Indenture or for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults.
The Holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of each series may, on behalf of all Holders of the Debt
Securities of that series, waive any past default under the Indenture with
respect to the Debt Securities of that series, except a default in the payment
of principal or premium or interest, if any, or in respect of a provision of the
Indenture which cannot be amended or modified without the consent of the Holder
of each Outstanding Debt Security of the series affected.
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 merge into, consolidate with, or sell,
lease or convey all or substantially all of its assets to any other Person,
provided that either the Company shall be the continuing corporation or such
successor Person shall be organized under the laws of the United States or any
state thereof and shall expressly assume
6
the Company's obligations under the Debt Securities and under the Indenture and
immediately after giving effect to the transaction the Company or such successor
Person, as the case may be, shall not be in default in performance of any such
obligation.
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture, with respect to all series of Debt Securities (except for
certain specified surviving obligations), will be discharged and cancelled upon
the satisfaction of certain conditions, including all the Outstanding Debt
Securities (subject to certain exceptions) having been delivered to the Trustee
for cancellation or having been defeased or, if all outstanding Debt Securities
not theretofore delivered to the Trustee for cancellation or defeased have
become due or payable or will become due or payable or are called for redemption
within one year, the deposit with the Trustee of an amount in cash sufficient
for such payment or redemption, in accordance with the Indenture.
DEFEASANCE
The Company shall be deemed to have paid and discharged all Debt Securities
of any series and shall be discharged from its obligations under the Indenture
(except for certain specified surviving obligations) with respect to Debt
Securities of such series on the terms and subject to the conditions contained
in the Indenture, by depositing in trust with the Trustee cash or U.S.
Government Obligations (or a combination thereof) sufficient to pay the
principal of, and premium and interest, if any, on, the Debt Securities of such
series to their maturity, redemption or repayment dates in accordance with the
terms of the Indenture and such Debt Securities. Such a trust may be established
only if, among other things, the Company has delivered to the Trustee an Opinion
of Counsel to the effect that the Holders of such Debt Securities will not
recognize income, gain or loss for United States federal income tax purposes as
a result of such defeasance and will be subject to United States federal income
tax in the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred.
GOVERNING LAW
The Notes and the Indenture will be governed by and construed in accordance
with the laws of the State of New York.
CONCERNING THE TRUSTEE
The Trustee is a national banking association. Although, as of the date of
this Prospectus Supplement, the Trustee has no banking relationships with the
Company other than acting as Trustee under the Indenture, the Trustee will be
permitted to make loans to, engage in other transactions with, or perform other
services for, the Company from time to time. However, under the provisions of
the Trust Indenture Act of 1939, as amended, upon the occurrence and continuance
of a default under an indenture, if a trustee has a conflicting interest (as
defined in the Trust Indenture Act) the trustee must, within 90 days, either
eliminate such conflicting interest or resign. Under the provisions of the Trust
Indenture Act, an indenture trustee shall be deemed to have a conflicting
interest if (among other things), upon the occurrence of a default under the
indenture, the trustee is a creditor of the obligor.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities through underwriters or agents or
directly to purchasers. A Prospectus Supplement and/or Pricing Supplement will
set forth the names of such underwriters or agents, if any, and the specific
designation, aggregate principal amount, maturity date, rate of interest, if
any, and time of redemption and/or repayment, if any, and other terms, and any
listing on a securities exchange of the Debt Securities in respect of which this
Prospectus is delivered.
The Debt Securities may be sold to underwriters for their own account and
may be resold to the public from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. A Prospectus Supplement and/or
Pricing Supplement will set forth any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers.
7
The Debt Securities may be sold directly by the Company, or through agents
designated by the Company from time to time. A Prospectus Supplement and/or
Pricing Supplement will set forth any commission payable by the Company to any
such agent. Unless otherwise indicated in the Prospectus Supplement, any such
agent will be acting on a reasonable efforts basis for the period of its
appointment.
The net proceeds to the Company from the sale of the Debt Securities will be
the purchase price of the Debt Securities less any such discounts or commissions
and the other attributable expenses of issuance and distribution.
The Company will agree to indemnify underwriters and agents against certain
civil liabilities, including liabilities under the Securities Act, or to
contribute to payments underwriters or agents may be required to make in respect
thereof.
LEGAL MATTERS
Certain matters with respect to the validity of the Offered Debt Securities
will be passed upon for the Company by Gary W. Kyle, Chief Financial Counsel to
Pacific Enterprises and counsel to the Company. Brown & Wood, Los Angeles,
California, will act as counsel for any underwriters or agents.
EXPERTS
The consolidated financial statements and related consolidated financial
statement schedules of the Company as of December 31, 1992 and 1991 and for each
of the three years in the period ended December 31, 1992, included or
incorporated by reference in the Annual Report of the Company to the Securities
and Exchange Commission on Form 10-K for the year ended December 31, 1992, have
been audited by Deloitte & Touche, independent auditors, as stated in their
reports also included or incorporated by reference therein. Such consolidated
financial statements and related consolidated financial statement schedules are
incorporated herein by reference in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
8
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE AGENTS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF. 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 IS NOT QUALIFIED TO DO SO OR TO ANYONE TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Page
---------
Description of the Notes....................... S-2
Certain United States Federal
Income Tax Considerations.................... S-16
Plan of Distribution........................... S-21
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
Southern California Gas Company................ 2
Summary Financial Information.................. 3
Use of Proceeds................................ 4
Description of the Debt Securities............. 4
Plan of Distribution........................... 7
Legal Matters.................................. 8
Experts........................................ 8
$250,000,000
SOUTHERN CALIFORNIA
GAS COMPANY
MEDIUM-TERM NOTES
------------------------
PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO.
CS FIRST BOSTON
LEHMAN BROTHERS
MARCH , 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses in connection with the issuance
and distribution of the securities being registered, other than underwriting
discounts and commissions. All the amounts shown are estimates, except the
registration fee.
Registration fee.................................................. $ 86,208
---------
Fees and expenses of accountants.................................. 25,000
Fees and expenses of counsel...................................... 25,000
Blue Sky fees and expenses........................................ 15,000
Fees and expenses of Trustee...................................... 5,000
Printing expenses................................................. 30,000
Printing of Debt Securities....................................... 5,000
Rating agency fees................................................ 70,000
Miscellaneous..................................................... 8,792
---------
Total........................................................... $ 270,000
---------
---------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 317 of the California General Corporation Law authorizes a court to
award indemnity to "corporate agents," including directors and officers under
certain circumstances, and authorizes the Board of Directors to have the
registrant provide the costs of defense, settlement or payment of any judgment
against a corporate agent under certain circumstances. The registrant's articles
of incorporation and bylaws authorize indemnification of directors and officers
to the fullest extent permitted by California law.
Pursuant to the Distribution Agreement included as Exhibit 1.1 to this
Registration Statement between the Company and the Agents named therein, the
directors and officers of the Company are indemnified by the Agents, and the
Agents are indemnified by the Company, against certain civil liabilities.
ITEM 16. LIST OF EXHIBITS.
1.1.1 -- Form of Distribution Agreement.
4.1.1 -- Indenture, dated as of May 1, 1989, between Southern California Gas
Company and Citibank, N.A., as Trustee providing for the issuance of Debt
Securities.*
4.1.2 -- First Supplemental Indenture, dated as of October 1, 1992, between
Southern California Gas Company and Citibank, N.A., as Trustee.**
4.2.1 -- Form of Fixed Rate Note.**
4.2.2 -- Form of Floating Rate Note.**
5.1 -- Opinion of Gary W. Kyle as to the legality of the Debt Securities.
12.1 -- Computation of Ratios of Earnings to Fixed Charges.
24.1 -- Consent of Gary W. Kyle (included in Exhibit 5.1).
24.2 -- Consent of Deloitte & Touche.
25.1 -- Powers of Attorney (included on page II-3).
26.1 -- Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Citibank, N.A., as Trustee.
- ------------------------
* Previously filed as part of Registration Statement on Form S-3 (No. 33-28260)
on April 20, 1989 and incorporated by reference herein.
** Previously filed as part of Form 8-K Current Report dated October 12, 1992
(File No. I-1402) and incorporated by reference herein.
II-1
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided however, that paragraphs 1(i) and (ii) do not apply if the
registration statement is on Form S-3 or S-8, and the information required
to be included in a post-effective amendment of those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions referred to in Item 15 of this
registration statement, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, and State of California, on March 14,
1994.
SOUTHERN CALIFORNIA GAS COMPANY
By /s/ WILLIS B. WOOD, JR.
------------------------------------
Willis B. Wood, Jr.
PRESIDING DIRECTOR
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Lloyd A. Levitin, Ralph Todaro, Gary W. Kyle and
Stephen J. Skuris, and each of them, their true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for them and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as they might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their substitute or substitutes,
may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURES TITLE DATE
- --------------------------------------------- ----------------------------------------------- -----------------
/s/ WILLIS B. WOOD, JR.
------------------------------------ Presiding Director March 14, 1994
Willis B. Wood, Jr. (Principal Executive Officer)
/s/ LLOYD A. LEVITIN Executive Vice President and Chief Financial
------------------------------------ Officer (Principal Financial and Accounting March 14, 1994
Lloyd A. Levitin Officer)
/s/ HYLA H. BERTEA
------------------------------------ Director March 14, 1994
Hyla H. Bertea
/s/ HERBERT L. CARTER
------------------------------------ Director March 14, 1994
Herbert L. Carter
/s/ JAMES F. DICKASON
------------------------------------ Director March 14, 1994
James F. Dickason
II-3
SIGNATURES TITLE DATE
- --------------------------------------------- ----------------------------------------------- -----------------
/s/ RICHARD D. FARMAN
------------------------------------ Director March 14, 1994
Richard D. Farman
/s/ WILFORD D. GODBOLD, JR.
------------------------------------ Director March 14, 1994
Wilford D. Godbold, Jr.
/s/ IGNACIO E. LOZANO, JR.
------------------------------------ Director March 14, 1994
Ignacio E. Lozano, Jr.
/s/ HAROLD M. MESSMER, JR.
------------------------------------ Director March 14, 1994
Harold M. Messmer, Jr.
/s/ PAUL A. MILLER
------------------------------------ Director March 14, 1994
Paul A. Miller
/s/ JOSEPH N. MITCHELL
------------------------------------ Director March 14, 1994
Joseph N. Mitchell
/s/ JOSEPH R. RENSCH
------------------------------------ Director March 14, 1994
Joseph R. Rensch
/s/ ROCCO C. SICILIANO
------------------------------------ Director March 14, 1994
Rocco C. Siciliano
/s/ LEONARD H. STRAUS
------------------------------------ Director March 14, 1994
Leonard H. Straus
/s/ DIANA L. WALKER
------------------------------------ Director March 14, 1994
Diana L. Walker
II-4
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- --------- ------------------------------------------------------------------------------ -------------------
1.1.1 -- Form of Distribution Agreement................................................
4.1.1 -- Indenture, dated as of May 1, 1989, between Southern California Gas Company
and Citibank, N.A., as Trustee providing for the issuance of Debt Securities.*
4.1.2 -- First Supplemental Indenture, dated as of October 1, 1992, between Southern
California Gas Company and Citibank, N.A., as Trustee.**
4.2.1 -- Form of Fixed Rate Note.**
4.2.2 -- Form of Floating Rate Note.**
5.1 -- Opinion of Gary W. Kyle as to the legality of the Debt Securities.............
12.1 -- Computation of Ratios of Earnings to Fixed Charges............................
24.1 -- Consent of Gary W. Kyle (included in Exhibit 5.1).............................
24.2 -- Consent of Deloitte & Touche..................................................
25.1 -- Powers of Attorney (included on page II-3)....................................
26.1 -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of Citibank, N.A., as Trustee.....................................
- ------------------------
* Previously filed as part of Registration Statement on Form S-3 (No. 33-28260)
on April 20, 1989 and incorporated by reference herein.
** Previously filed as part of Form 8-K Current Report dated October 12, 1992
(File No. I-1402) and incorporated by reference herein.
SOUTHERN CALIFORNIA GAS COMPANY
Medium-Term Notes Due
9 Months or More from Date of Issue
DISTRIBUTION AGREEMENT
__________, 1994
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower, 10th Floor
World Financial Center
New York, New York 10281
CS FIRST BOSTON CORPORATION
Park Avenue Plaza
New York, New York 10055
LEHMAN BROTHERS
Lehman Brothers Inc.
American Express Tower
World Financial Center
New York, New York 10285
Dear Sirs:
Southern California Gas Company, a California corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, CS First Boston Corporation and Lehman Brothers Inc.
(including its affiliate, Lehman Special Securities Inc.) (each, an "Agent" and
collectively, the "Agents") with respect to the issue and sale by the Company of
its Medium-Term Notes (the "Notes"). The Notes
are to be issued pursuant to an indenture dated as of May 1, 1989, as amended
and supplemented by the First Supplemental Indenture (the "Supplemental
Indenture") dated as of October 1, 1992 (such Indenture, as so amended and
supplemented, is hereinafter referred to as the "Indenture"), between the
Company and Citibank, N.A., as trustee (the "Trustee"). The Notes are part of
an authorized series of the Company's debt securities (the "Debt Securities")
to be issued under the Indenture. As of the date hereof, the Company has
authorized the issuance of up to $250,000,000 aggregate principal amount of
Notes through the Agents pursuant to the terms of this Agreement. It is
understood, however, that the Company may from time to time, pursuant to a Board
Resolution and an Officer's Certificate delivered to the Trustee pursuant to
Section 2.01 of Indenture (with an original copy thereof delivered to the
Agents) reduce the authorized aggregate principal amount of the Notes (but not
below the aggregate principal amount of Notes previously issued under the
Indenture) or authorize the issuance of additional Notes and that such
additional Notes may be distributed directly by the Company or through or to the
Agents pursuant to the terms of this Agreement, all as through the issuance of
such Notes were authorized as of the date hereof.
This Agreement provides both for the sale of Notes by the Company directly
to purchasers, in which case each Agent will act as an agent of the Company in
soliciting Note purchasers, and (as may from time to time be agreed to by the
Company and one or more Agents) to one or more Agents as principal for resale to
purchasers. Additional terms of any sale of Notes to one or more Agents as
principal will be set out in a Terms Agreement (as hereafter defined) relating
to such sale, all as more fully provided herein.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 33-_____) and such
amendments thereto as may have been required through the date hereof for the
registration of $250,000,000 aggregate principal amount of the Notes under the
Securities Act of 1933 (the "1933 Act") and the offering thereof from time to
time in accordance with Rule 415 of the rules and regulations of the Commission
under the 1933 Act (the "1933 Act Regulations"). Such registration statement,
as so amended (if applicable), has been declared effective by the Commission and
the Indenture has been qualified under the Trust Indenture Act of 1939 (the
"1939 Act"). Such registration statement (as so amended, if applicable) (and
any further registration statements which may be filed by the Company for the
purpose of registering additional Notes and in connection with which this
Agreement is included or incorporated by reference as an Exhibit), including all
documents incorporated therein by reference and as from time to time amended or
supplemented by the filing of documents pursuant to the Securities Exchange Act
of 1934 (the "1934 Act") or the 1933 Act or otherwise, is referred to herein as
the
2
"Registration Statement" and the prospectus and prospectus supplement
constituting a part of such registration statement and any further prospectus
supplements relating to the Notes, including all documents incorporated therein
by reference and as from time to time amended or supplemented by the filing of
documents pursuant to the 1934 Act or the 1933 Act or otherwise, are referred to
herein, collectively, as the "Prospectus" except that if any revised prospectus
or prospectus supplement shall be provided to the Agents by the Company for use
in connection with the offering of the Notes which differs from the Prospectus
on file at the Commission at the time such revised prospectus and/or prospectus
supplement is delivered to the Agents (whether or not such revised prospectus
and/or prospectus supplement is required to be filed by the Company pursuant to
Rule 424(b) of the 1933 Act Regulations), the term "Prospectus" shall refer to
such revised prospectus and/or prospectus supplement from and after the time it
is first provided to the Agents for such use. Unless the context otherwise
requires, all references in this Agreement to documents, financial statements
and schedules and other information which is "contained", "included", "stated",
"described in" or "referred to" in the Registration Statement or the Prospectus
(and all other references of like import) shall be deemed to mean and include
all such documents, financial statements and schedules and other information
which is or is deemed to be incorporated by reference in the Registration
Statement or the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement or the
Prospectus shall be deemed to mean and include the filing of any document under
the 1934 Act after the date of this Agreement which is or is deemed to be
incorporated by reference in the Registration Statement or the Prospectus, as
the case may be. Notwithstanding the foregoing, for purposes of this Agreement
any prospectus supplement prepared with respect to the offering of a series of
Debt Securities other than the Notes shall not be deemed to have supplemented
the Prospectus.
Section 1. APPOINTMENT OF AGENTS.
(a) APPOINTMENT OF AGENTS. Subject to the terms and conditions stated
herein and subject to the reservation by the Company of the right to sell Notes
directly on its own behalf, the Company hereby (i) appoints each of the Agents
as the exclusive agent of the Company for the purpose of soliciting purchases of
the Notes from the Company by others and (ii) agrees that whenever the Company
determines to sell Notes directly to one or more Agents as principal for resale
to others, it will enter into a Terms Agreement relating to each such sale in
accordance with the provisions of Section 3(b) hereof if requested by the Agent.
The Company agrees that during the period the Agents are acting as the Company's
agents hereunder, the Company will not engage any other party to assist in the
placement of the Notes.
3
(b) REASONABLE EFFORTS SOLICITATIONS; RIGHT TO REJECT OFFERS. Upon
receipt of instructions from the Company, each Agent will use its reasonable
efforts to solicit purchases of such principal amount of Notes as the Company
and such Agent shall agree upon from time to time during the term of this
Agreement, it being understood that the Company shall not approve the
solicitation of purchases of Notes in excess of the amount which shall be
authorized by the Company from time to time or in excess of the initial offering
price of Notes registered pursuant to the Registration Statement. The Agents
will have no responsibility for maintaining records with respect to the
aggregate initial offering price of Notes sold, or of otherwise monitoring the
availability of Notes for sale under the Registration Statement. Each Agent
will communicate to the Company, orally or in writing, each offer to purchase
Notes received by such Agent, other than those offers rejected by such Agent.
Each Agent shall have the right, in its discretion reasonably exercised, without
notice to the Company, to reject any proposed purchase of Notes, as a whole or
in part, and any such rejection shall not be deemed a breach of such Agent's
agreement contained herein. The Company may accept or reject any proposed
purchase of the Notes, in whole or in part.
(c) SOLICITATIONS AS AGENT; PURCHASES AS PRINCIPAL. In soliciting
purchases of the Notes on behalf of the Company, unless otherwise specified
pursuant to the terms hereof, each Agent shall act solely as agent for the
Company and not as principal. Each Agent shall make reasonable efforts to
assist the Company in obtaining performance by the purchaser whose offer to
purchase Notes has been solicited by such Agent and accepted by the Company. An
Agent shall not have any liability to the Company in the event any such purchase
is not consummated for any reason. An Agent shall not have any obligation to
purchase Notes from the Company as principal, but an Agent may agree from time
to time to purchase Notes as principal. Any such purchase of Notes by an Agent
as principal shall be made pursuant to a Terms Agreement in accordance with
Section 3(b) hereof if requested by such Agent.
(d) RELIANCE. The Company and each Agent severally agrees that any Notes
the placement of which such Agent arranges shall be placed by the Agent, and any
Notes purchased by such Agent shall be purchased, in reliance on the
representations, warranties, covenants and agreements of the Company contained
herein and on the terms and subject to the conditions and in the manner provided
herein.
4
(e) SEVERAL OBLIGATIONS OF THE AGENTS. Anything herein to the contrary
notwithstanding, the obligations and agreements of each of the Agents contained
in this Agreement or in any Terms Agreement shall be several and not joint.
Section 2. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to each Agent as of the date
hereof, as of the date of each acceptance by the Company of an offer for the
purchase of Notes (whether through an Agent as agent or by an Agent as
principal), as of the date of each delivery of Notes (whether through an Agent
as agent or to an Agent as principal) (the date of each such delivery to an
Agent as principal being hereafter referred to as a "Settlement Date"), and as
of each of the times referred to in Section 6(b) hereof (each of the times
referenced above being referred to hereafter as a "Representation Date"), as
follows:
(i) DUE INCORPORATION AND QUALIFICATION. The Company (A) has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of California with corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus; (B) has the requisite corporate
power and authority to execute and deliver this Agreement, the applicable
Terms Agreement, if any, the Indenture and the Notes and to perform its
obligations hereunder and thereunder and (C) is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure to so qualify would not have a material adverse effect on
the condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise. All of the issued and outstanding capital stock of the Company
has been duly authorized and validly issued and is fully paid and non-
assessable and, except for directors' qualifying shares, Pacific
Enterprises, a California corporation ("Pacific Enterprises"), owns
directly or indirectly all of the outstanding shares of the common stock of
the Company, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(ii) SUBSIDIARIES. Each subsidiary of the Company that is a
"significant subsidiary" as defined in Rule 405 of Regulation C of the 1933
Act Regulations (each, a "Significant Subsidiary") has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus
5
and is duly qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not have
a material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise; and all of the issued and
outstanding capital stock of each Significant Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and, except
for directors' qualifying shares, is owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity. As of the date of this
Agreement, the Company does not have any Significant Subsidiaries.
(iii) REGISTRATION STATEMENT AND PROSPECTUS. At the time the
Registration Statement became effective the Registration Statement
complied, and as of the applicable Representation Date will comply, in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations and the 1939 Act and the rules and regulations of the
Commission promulgated thereunder (the "1939 Act Regulations"). The
Registration Statement, at the time it became effective, did not, and at
each time thereafter at which any amendment to the Registration Statement
becomes effective or is filed by the Company with the Commission and as of
the applicable Representation Date, will not, contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus, as of the date hereof does not, and as of the applicable
Representation Date will not, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the representations and
warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by an Agent
expressly for use in the Registration Statement or Prospectus or to that
part of the Registration Statement which constitutes the Trustee's
Statement of Eligibility under the 1939 Act on Form T-1 (the "Form T-1").
(iv) INCORPORATED DOCUMENTS. The documents incorporated by reference
in the Prospectus, at the time they were or hereafter are filed with the
Commission, complied or, when so filed, will comply, as the case may be, in
all material respects with the requirements of the 1934
6
Act and the rules and regulations of the Commission promulgated thereunder
(the "1934 Act Regulations"), and, when read together and with the other
information in the Prospectus, did not, do not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were or are
made, not misleading.
(v) ACCOUNTANTS. The accountants who certified the financial
statements and supporting schedules included or incorporated by reference
in the Registration Statement and Prospectus are, and any other firm of
accountants who may certify any other financial statements constituting a
part of the Prospectus or deliver a letter pursuant to Section 5(c) or 6(d)
hereof will be, independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(vi) FINANCIAL STATEMENTS. The financial statements and supporting
schedules of the Company and its consolidated subsidiaries included or
incorporated by reference in the Registration Statement and the Prospectus
present fairly the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates indicated and the consolidated
results of their operations for the periods specified, and, except as
stated therein, said consolidated financial statements have been prepared
in conformity with generally accepted accounting principles in the United
States applied on a consistent basis; the supporting schedules included in
the Registration Statement present fairly the information required to be
stated therein; and the ratios of earnings to fixed charges set forth in
the Prospectus and in any documents incorporated by reference therein have
been prepared in accordance with and comply with the requirements of Item
503 of Regulation S-K of the Commission.
(vii) MATERIAL CHANGES OR MATERIAL TRANSACTIONS. Since the respective
dates as of which information is given in the Registration Statement and
Prospectus, except as otherwise stated therein or contemplated thereby, (A)
there has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business and (B) there have been no
transactions entered into by the Company or any of its subsidiaries which
are material with respect to the Company and its subsidiaries considered as
one enterprise.
(viii) NO DEFAULTS. Neither the Company nor any of its subsidiaries is
in violation of its charter or bylaws or in
7
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which it is a
party or by which it or any of them or any of their properties may be
bound; and the execution and delivery of this Agreement, the Indenture, the
Notes and each applicable Terms Agreement, if any, and the consummation of
the transactions contemplated herein and therein (including, without
limitation, the issuance and sale of the Notes from time to time) have been
duly authorized by all necessary corporate action and will not conflict
with or constitute a breach of, or default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company or any such subsidiary is a party or by which it or any
of them may be bound or to which any of the property or assets of the
Company or any such subsidiary is subject, nor will such action result in
any violation of the provisions of the charter or by-laws of the Company or
any law, administrative regulation or administrative or court order or
decree; and no consent, approval, authorization, order or decree of any
court or governmental agency or body is required for the consummation by
the Company of the transactions contemplated by this Agreement, any Terms
Agreement or the Indenture, except as may be required under the 1933 Act,
the 1933 Act Regulations, the 1939 Act or the 1939 Regulations (which have
been obtained and are in full force and effect) or such as may be required
by state securities or blue sky laws.
(ix) LEGAL PROCEEDINGS; CONTRACTS. Except as may be set forth in the
Registration Statement, there is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, threatened against or affecting, the
Company or any of its subsidiaries which is required to be disclosed in the
Registration Statement or which might, in the opinion of the Company,
result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise, or which
might materially and adversely affect the properties or assets thereof or
might materially and adversely affect the consummation of this Agreement or
any applicable Terms Agreement; all pending legal or governmental
proceedings to which the Company or any of its subsidiaries is a party or
of which any of their respective property or assets is the subject which
are not described in the Registration Statement, including ordinary routine
litigation incidental to its business, are, considered in the aggregate,
not material; and there are no contracts or
8
documents of the Company or any of its subsidiaries which are required to
be filed as exhibits to the Registration Statement by the 1933 Act or by
the 1933 Act Regulations which have not been so filed.
(x) NO AUTHORIZATION, APPROVAL OR CONSENT REQUIRED. No
authorization, approval or consent of any court or governmental authority
or agency is necessary in connection with the sale of the Notes hereunder,
except such as may be required under the 1933 Act, the 1933 Act
Regulations, the 1939 Act or the 1939 Act Regulations (which have been
obtained and are in full force and effect), the authorization of the Public
Utilities Commission of the State of California ("CPUC") under the
California Public Utilities Act ("CPUA") (which authorization has been
obtained and is in full force and effect) and such as may be required under
state securities or Blue Sky laws.
(xi) REGULATORY CERTIFICATES, AUTHORITIES AND PERMITS. The Company
and its subsidiaries possess such certificates, authorities or permits
issued by the appropriate state, federal or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them, and neither
the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(xii) GOOD TITLE. The Company has good title (either by way of fee
simple, leasehold, easement, right-of-way, grant, servitude, privilege,
permit, franchise or license, as the case may be) to all its properties
including, without limitation, the properties reflected in the most recent
balance sheet of the Company incorporated by reference in the Registration
Statement (except for such items thereof which have been disposed of since
such date and which do not, in the aggregate, constitute a substantial
amount).
(xiii) INDENTURE. The Indenture has been duly and validly authorized,
executed and delivered by the Company and constitutes the valid and binding
agreement of the Company, enforceable in accordance with its terms, except
as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
enforcement of creditors' rights generally or by general equitable
principles; and the Indenture has been qualified under the 1939 Act.
9
(xiv) AUTHORIZATION AND VALIDITY OF THE NOTES. The Notes are in the
respective forms established pursuant to the Indenture, have been duly
authorized by the Company for issuance and sale pursuant to this Agreement
and any applicable Terms Agreement and, when completed as contemplated by
the Procedures (as hereinafter defined) and authenticated and delivered
pursuant to the provisions of this Agreement, any applicable Terms
Agreement and the Indenture against payment of the consideration therefor
determined pursuant to this Agreement or any applicable Terms Agreement,
the Notes will have been duly executed and delivered by the Company and
will constitute valid and binding obligations of the Company enforceable in
accordance with their terms, except as enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting enforcement of creditors' rights generally or by
general equitable principles, and will be entitled to the benefits of the
Indenture; and the Notes and the Indenture conform in all material respects
to all statements relating thereto contained in the Prospectus.
(xv) NO LABOR DISPUTES, ETC. No labor dispute with the employees of
the Company or any of its subsidiaries exists or, to the knowledge of the
Company, is imminent which might be expected to result in any material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(xvi) PUBLIC UTILITY HOLDING COMPANY ACT. The Company is a "Subsidiary
Company" of a "Holding Company" as such terms are defined by the Public
Utility Holding Company Act of 1935 (the "1935 Act"). Pursuant to an
exemptive order issued by the Commission on January 13, 1936, Pacific
Enterprises, the Holding Company, is not subject to the provisions of the
1935 Act, except for the provisions of Section 9(a)(2) thereof.
(xvii) DISTRIBUTION AGREEMENT AND TERMS AGREEMENT. This Agreement is,
and each Terms Agreement entered into by the Company will be, duly
authorized, executed and delivered by the Company.
(xviii) RATING OF THE NOTES. The Notes are rated at least "A3" by
Moody's Investors Service, Inc. and at least "A" by Standard & Poor's
Corporation.
(xix) NO BUSINESS IN CUBA. The Company has complied with, and is and
will be in compliance with, the provisions of that certain Florida act
relating to disclosure of doing business with Cuba, codified as Section
517.075 of the
10
Florida statutes, and the rules and regulations thereunder (collectively,
the "Cuba Act") or is exempt therefrom.
(xx) TERMS OF NOTES. Without limitation to any other provision of
this Agreement, the terms and provisions of each Note offered, issued or
sold from time to time will comply with all applicable parameters and other
limitations on the terms and provisions of the Notes established by the
Company's board of directors or any committee thereof.
(b) ADDITIONAL CERTIFICATIONS. Any certificate signed by any director or
officer of the Company and delivered to the Agents or to counsel for the Agents
in connection with an offering of Notes or the sale of Notes to an Agent as
principal shall be deemed a representation and warranty by the Company to each
Agent as to the matters covered thereby on the date of such certificate and at
each Representation Date subsequent thereto.
Section 3. SOLICITATIONS AS AGENT; PURCHASES AS PRINCIPAL.
(a) SOLICITATIONS AS AGENT. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, each Agent individually agrees, when acting as an agent of the Company,
to use its reasonable efforts to solicit offers to purchase the Notes upon the
terms and conditions set forth in the Prospectus.
The Company reserves the right, in its sole discretion, to suspend
solicitation of purchases of the Notes through the Agents commencing at any time
for any period of time or permanently. Upon receipt of instructions from the
Company, the Agents will forthwith suspend solicitation of purchases from the
Company until such time as the Company has advised the Agents that such
solicitation may be resumed.
The Company agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Note sold by the Company as a result of a solicitation made by such Agent as set
forth in Schedule I hereto.
The aggregate principal amount, purchase price, interest rate (or manner in
which such Notes are to bear interest), maturity date, redemption provisions, if
any, and other terms of the Notes shall be agreed upon by the Company and the
applicable Agent and set forth in a pricing supplement to the Prospectus (a
"Pricing Supplement") to be prepared following each acceptance by the Company of
an offer for the purchase of Notes. Except as may be otherwise provided in a
Pricing Supplement, the Notes will be issued in denominations of $100,000 or any
amount in excess thereof which is an integral multiple of $1,000. All Notes
will be sold at 100% of their principal amount unless otherwise agreed to by the
Company and the Agents.
11
(b) PURCHASES AS PRINCIPAL. Each sale of Notes to one or more of the
Agents as principal shall be made in accordance with the terms of this Agreement
and, if requested by an Agent, pursuant to a separate agreement which will
provide for the sale of such Notes to, and the purchase and reoffering thereof
by, each such Agent. Each such separate agreement (which may be an oral
agreement) is herein referred to as a "Terms Agreement". Unless the context
otherwise requires, each reference contained herein to "this Agreement" shall be
deemed to include any Terms Agreement between the Company and an Agent. Each
such Terms Agreement, whether oral or in writing, shall be with respect to such
information (as applicable) as is specified in Exhibit A hereto. An Agent's
commitment to purchase Notes as principal pursuant to any Terms Agreement shall
be deemed to have been made on the basis of the representations and warranties
of the Company herein contained and shall be subject to the terms and conditions
herein set forth. Each Terms Agreement shall specify the principal amount of
Notes to be purchased by the Agent pursuant thereto, the price to be paid to the
Company for such Notes (which, if not so specified in a Terms Agreement, shall
be at a discount equivalent to the applicable commission set forth in Schedule I
hereto), the time and place of delivery of and payment for such Notes, any
provisions relating to rights of, and default by, purchasers acting together
with the Agent in the reoffering of the Notes, and such other provisions
(including further terms of the Notes) as may be mutually agreed upon. An Agent
may utilize a selling or dealer group in connection with the resale of the Notes
purchased. Such Terms Agreement shall also specify whether or not any of the
officer's certificate, opinions of counsel or comfort letter specified in
Sections 6(b), 6(c) and 6(d) hereof shall be required to be delivered by the
Company in connection therewith, and whether or not the stand-off agreement set
forth in Section 4(j) shall be applicable with respect to such Terms Agreement.
(c) ADMINISTRATIVE PROCEDURES. Administrative procedures with respect to
the sale of Notes shall be agreed upon from time to time by the Agents and the
Company (the "Procedures"). The Agents and the Company agree to perform the
respective duties and obligations specifically provided to be performed by the
Agents and the Company herein and in the Procedures.
(d) DELIVERY OF CLOSING DOCUMENTS. The documents required to be delivered
by Section 5 hereof shall be delivered at the offices of Brown & Wood, 10900
Wilshire Boulevard, Suite 1100, Los Angeles, California 90024 on the date
hereof, or at such other time or place as the Agents and the Company may agree.
Section 4. COVENANTS OF THE COMPANY.
The Company covenants with each Agent as follows:
12
(a) NOTICE OF CERTAIN EVENTS. The Company will notify each Agent
immediately (i) of the effectiveness of any amendment to the Registration
Statement; (ii) of the transmittal to the Commission for filing of any amendment
or supplement to the Registration Statement or the Prospectus (including,
without limitation, any document to be filed pursuant to the 1934 Act which will
be incorporated by reference in the Registration Statement or the Prospectus
(other than any Current Report on Form 8-K relating exclusively to an offering
of Debt Securities under the Registration Statement other than the Notes));
(iii) of the receipt of any comments from the Commission with respect to the
Registration Statement or Prospectus; (iv) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information; and (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose. The Company
will make every reasonable effort to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) NOTICE OF CERTAIN PROPOSED FILINGS. The Company will give each Agent
notice of its intention to file or prepare any additional registration statement
with respect to the registration of additional Notes or Debt Securities, any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus (other than an amendment or supplement providing solely for the
establishment of or change in the interest rates, maturity or price of Notes or
other similar changes), whether by the filing of documents pursuant to the 1934
Act (other than any Current Report on Form 8-K relating exclusively to the
issuance of Debt Securities under the Registration Statement other than the
Notes), the 1933 Act or otherwise, and will furnish each Agent with copies of
any such amendment or supplement or other documents a reasonable time in advance
of such proposed filing or the proposed use thereof, as the case may be, and
will not file or use any such amendment or supplement or other documents to
which the Agents or counsel for the Agents shall object.
(c) COPIES OF THE REGISTRATION STATEMENT AND THE PROSPECTUS. The Company
will deliver to each Agent as many signed and conformed copies of the
Registration Statement (as originally filed) and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated by reference therein) as such Agent may reasonably
request. The Company will furnish to each Agent as many copies of the
Prospectus (as amended or supplemented) as such Agent shall reasonably request
so long as such Agent is required to deliver a Prospectus in connection with
sales or solicitations of offers to purchase the Notes.
13
(d) PROSPECTUS REVISIONS -- MATERIAL CHANGES. Except as otherwise
provided in Section 4(l) hereof, if at any time during the term of this
Agreement any event shall occur or condition exist as a result of which it is
necessary, in the opinion of counsel for the Agents or counsel for the Company,
to further amend or supplement the Prospectus in order that the Prospectus will
not include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a purchaser,
or if it shall be necessary, in the opinion of either such counsel, to amend or
supplement the Registration Statement or the Prospectus in order to comply with
the requirements of the 1933 Act or the 1933 Act Regulations, immediate notice
shall be given, and confirmed in writing, to each Agent to cease the
solicitation of offers to purchase the Notes in its capacity as agent and to
cease sales of any Notes such Agent may then own as principal pursuant to a
Terms Agreement, and the Company will promptly prepare and file with the
Commission such amendment or supplement, whether by filing documents pursuant to
the 1934 Act, the 1933 Act or otherwise, as may be necessary to correct such
untrue statement or omission or to make the Registration Statement and
Prospectus comply with such requirements and the Company shall furnish to each
Agent as many copies of the Registration Statement and the Prospectus, as each
may then be amended or supplemented, as such Agent shall reasonably require.
(e) PROSPECTUS REVISIONS -- PERIODIC FINANCIAL INFORMATION. Except as
otherwise provided in Section 4(l) hereof, on or prior to the date on which
there shall be released to the general public interim financial statement
information related to the Company with respect to each of the first three
quarters of any fiscal year or preliminary financial statement information with
respect to any fiscal year, the Company shall furnish such information to each
Agent, confirmed in writing, and, on or prior to the date of such release or as
soon as practicable thereafter, shall cause the Registration Statement and the
Prospectus to be amended or supplemented to include or incorporate by reference
capsule financial information with respect thereto and corresponding information
for the comparable period of the preceding fiscal year, as well as such other
information and explanations as shall be necessary for an understanding thereof
or as shall be required by the 1933 Act or the 1933 Act Regulations.
(f) PROSPECTUS REVISIONS -- AUDITED FINANCIAL INFORMATION. Except as
otherwise provided in Section 4(l) hereof, on or prior to the date on which
there shall be released to the general public financial information included in
or derived from the audited financial statements of the Company for the
preceding fiscal year, the Company shall cause the Registration Statement and
the Prospectus to be amended, whether by the filing of documents pursuant to the
1934 Act, the 1933 Act or otherwise, to
14
include or incorporate by reference such audited financial statements and the
report or reports, and consent or consents to such inclusion or incorporation by
reference, of the independent accountants with respect thereto, as well as such
other information and explanations as shall be necessary for an understanding of
such financial statements or as shall be required by the 1933 Act or the 1933
Act Regulations.
(g) EARNINGS STATEMENTS. The Company, by applying the provisions of Rule
158 under the 1933 Act, will make generally available to its security holders as
soon as practicable, but not later than 60 days after the close of the period
covered thereby (or within 90 days if the period ends on the last date of a
fiscal year), an earnings statement (in form complying with the provisions of
Rule 158 under the 1933 Act) covering each twelve-month period beginning, in
each case, not later than the first day of the Company's fiscal quarter next
following the "effective date" (as defined in Rule 158) of the Registration
Statement with respect to each sale of Notes.
(h) BLUE SKY QUALIFICATIONS. The Company will endeavor, in cooperation
with the Agents, to qualify the Notes for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States as
the Agents may designate, and will maintain such qualifications in effect for as
long as may be required for the distribution of the Notes; PROVIDED, HOWEVER,
that the Company shall not be obligated to file any general consent to service
of process or qualify as a foreign corporation in any jurisdiction in which it
is not so qualified. The Company will file such statements and reports as may
be required by the laws of each jurisdiction in which the Notes have been
qualified as provided above. The Company will promptly advise the Agents of the
receipt by it of any notification with respect to the suspension of the
qualification of the Notes for sale in any such state or jurisdiction or the
initiating or threatening of any proceeding for such purpose.
(i) 1934 ACT FILINGS. The Company, during the period when the Prospectus
is required to be delivered under the 1933 Act, will file promptly all documents
required to be filed with the Commission pursuant to Sections 13(a), 13(c), 14
or 15(d) of the 1934 Act. Such documents will comply in all material respects
with the requirements of the 1934 Act and the 1934 Act Regulations and to the
extent such documents are incorporated by reference in the Prospectus, when read
together with the other information in or incorporated by reference into the
Prospectus, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading.
(j) STAND-OFF AGREEMENT. Between the date of any Terms Agreement and the
Settlement Date with respect to such Terms
15
Agreement, the Company will not, without the prior written consent of each Agent
party to such Terms Agreement, directly or indirectly, sell, offer to sell,
contract to sell or otherwise dispose of, or announce the offering of, any debt
securities of the Company or any securities convertible into or exercisable or
exchangeable for such debt securities (other than the Notes that are to be sold
pursuant to such Terms Agreement, First Mortgage Bonds, debt securities offered
or sold other than in the United States and commercial paper offered or sold in
the ordinary course of business), except as may otherwise be provided in any
such Terms Agreement.
(k) USE OF PROCEEDS. The Company will use the net proceeds received by it
from the sale of the Notes in the manner specified in the Prospectus under the
caption "Use of Proceeds".
(l) SUSPENSION OF CERTAIN OBLIGATIONS. The Company shall not be required
to comply with the provisions of subsections (d), (e) or (f) of this Section 4
or subsections (b), (c) or (d) of Section 6 hereof during any period from the
later of (i) the time that the Agents shall have suspended solicitation of
purchases of the Notes in their capacity as agents pursuant to a request from
the Company and (ii) the time that no Agent shall then hold any Notes as
principal purchased pursuant to a Terms Agreement, to the time the Company shall
determine that solicitation of purchases of the Notes should be resumed or shall
subsequently enter into a new Terms Agreement with one or more of the Agents;
(at which time the Company shall provide each Agent with the documentation
required by subsections (d), (e) and (f) of Section 4 and subsections (b), (c)
and (d) of Section 6 which the Company otherwise would have been required to
deliver to the Agents during the suspension period by reason of this Section
4(l), unless such requirement is waived in writing by such Agent).
(m) CUBA ACT. In accordance with the Cuba Act and without limitations to
the provisions of Sections 7 and 8 hereof, the Company agrees to indemnify and
hold harmless each Agent from and against any and all loss, liability, claim,
damage and expense whatsoever (including fees and disbursements of counsel), as
incurred, arising out of any violation by the Company of the Cuba Act.
(n) FIXED CHARGE COVERAGE RATIO. The Company shall include in each Annual
Report on Form 10-K and Quarterly Report on Form 10-Q issued by the Company
under the 1934 Act the information required by, and prepared in accordance with,
Item 503(d) of Regulation S-K of the Commission for the period covered by such
report.
(o) NOTES WITH MATURITIES IN EXCESS OF 30 YEARS. Prior to any time that
the Company offers or issues Notes with maturities in excess of thirty years,
the Company will deliver to the Agents an opinion of counsel, in form and
substance satisfactory to the
16
Agents, to the effect that such Notes will be treated as debt for United States
federal income tax purposes. In addition, prior to such time as the Company
first offers or issues Notes with maturities in excess of thirty years, the
Company will deliver to the Agents evidence, satisfactory to each of the Agents,
that all authorizations, approvals and consents of the CPUC necessary for the
issuance of Notes with maturities in excess of thirty years have been obtained
and are in full force and effect and will also deliver such certificates,
opinions of counsel and instruments (including an amendment to this Agreement)
as the Agents may reasonably request in connection therewith, all in form and
substance satisfactory to the Agents.
(p) CALCULATION AGREEMENT. Prior to such time as the Company first offers
or issues Floating Rate Notes (as defined in the Prospectus), the Company shall
enter a Calculation Agreement with the Trustee (or such other person acceptable
to the Agents), and shall prepare and deliver such certificates, opinions of
counsel and instruments (including an amendment to this Agreement) as the Agents
may reasonably request, all in form and substance satisfactory to the Agents.
Section 5. CONDITIONS OF OBLIGATIONS.
The obligations of each Agent to solicit offers to purchase the Notes as
agent of the Company, the obligation of any purchaser of Notes sold through any
Agent as agent, and the obligations of an Agent to purchase Notes pursuant to
any Terms Agreement, will be subject at all times to the accuracy of the
representations and warranties on the part of the Company herein and to the
accuracy of the statements of the Company's directors and officers made in any
certificates furnished pursuant to the provisions hereof, to the performance and
observance by the Company of all covenants and agreements herein contained on
its part to be performed and observed and to the following additional conditions
precedent:
(a) LEGAL OPINIONS. On the date hereof, the Agents shall have received
the following legal opinions, dated as of the date hereof and in form and
substance satisfactory to the Agents:
(1) OPINION OF COMPANY COUNSEL. The opinion of Gary W. Kyle, Esq.,
counsel to the Company, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of California.
(ii) The Company has corporate power and authority to own, lease
and operate its properties and conduct its business as described in
the Registration Statement.
17
(iii) To the best knowledge of such counsel, the Company is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required
whether by reason of ownership or leasing of property or the conduct
of business, except where the failure to so qualify would not have a
material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise; and all of the
issued and outstanding capital stock of the Company has been duly
authorized and validly issued and is fully paid and non-assessable
and, except for directors' qualifying shares, Pacific Enterprises owns
directly or indirectly all of the outstanding shares of the common
stock of the Company, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(iv) Each Significant Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement, and,
to the best knowledge of such counsel, is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required whether by reason
of the ownership or leasing of property or the conduct of a business,
except where the failure to so qualify would not have a material
adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise; all of the issued and
outstanding capital stock of each Significant Subsidiary has been duly
authorized and validly issued and is fully paid and non-assessable,
and all of such capital stock, except for directors' qualifying
shares, is owned by the Company, directly or through subsidiaries,
free and clear of any mortgage, pledge, lien, encumbrance, claim or
equity (in the event that the Company has no Significant Subsidiaries
at the date of such opinion, such opinion shall state, in lieu of the
foregoing, that to the best knowledge and information of such counsel
the Company has no Significant Subsidiaries).
(v) This Agreement (and, if the opinion is being given pursuant
to Section 6(c) hereof on account of the Company having entered into a
Terms Agreement, the
18
applicable Terms Agreement) has been duly authorized, executed and
delivered by the Company.
(vi) The Indenture has been duly authorized, executed and
delivered by the Company and, assuming the due authorization,
execution and delivery thereof by the Trustee, constitutes a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as enforcement thereof may be
subject to or limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting enforcement
of creditors' rights generally or by general equitable principles.
(vii) The Notes are in the respective forms established pursuant
to the Indenture, have been duly authorized by the Company for
issuance and sale pursuant to this Agreement and the applicable Terms
Agreement, if any, and, when completed as contemplated by the
Procedures and executed, authenticated and delivered in accordance
with the provisions of this Agreement, any applicable Terms Agreement
and the Indenture against payment of the consideration therefor
determined pursuant to this Agreement or the applicable Terms
Agreement, if any, will constitute valid and binding obligations of
the Company, enforceable against the Company in accordance with their
respective terms, except as enforcement thereof may be subject to or
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
generally or by general equitable principles; and the Notes will be
entitled to the benefits of the Indenture.
(viii) The statements in the Prospectus under the captions
"Description of the Notes" and "Description of the Debt Securities",
insofar as they purport to summarize certain provisions of the
Indenture or the Notes, are accurate summaries of such provisions in
all material respects.
(ix) The Indenture has been duly qualified under the 1939 Act.
(x) The Registration Statement has been declared effective under
the 1933 Act and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.
(xi) At the time the Registration Statement became effective, the
Registration Statement (other than
19
financial statements and schedules and other financial and statistical
data included or incorporated by reference therein and the Form T-1,
as to which such counsel need express no opinion) complied as to form
in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations.
(xii) To the best knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened which are required to
be disclosed in the Registration Statement, other than those disclosed
therein, and all pending legal or governmental proceedings to which
the Company or any subsidiary is a party or of which any of their
property is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, are, considered in the aggregate, not material.
(xiii) To the best knowledge of such counsel, there are no
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments or documents required to be described or referred to
in the Registration Statement or to be filed or incorporated by
reference as exhibits thereto other than those described or referred
to therein or filed or incorporated by reference as exhibits thereto,
the descriptions thereof or references thereto are correct, and no
default exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument so described, referred to, filed or incorporated by
reference.
(xiv) No consent, approval, authorization, order or decree of any
court or governmental authority or agency is required in connection
with the sale of the Notes and the consummation by the Company of the
transactions contemplated by this Agreement, except such as have been
obtained and are in full force and effect under the 1933 Act, the 1939
Act, the 1933 Act Regulations, the 1939 Regulations and the
authorization of the CPUC under the CPUA (which has been obtained and
is in full force and effect), except that no opinion need be expressed
as to state securities or Blue Sky laws.
(xv) Neither the Company nor any of its subsidiaries is in
violation of its charter or bylaws or, to the best knowledge of such
counsel, in default in performance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or
20
other instrument to which it is a party or by which it or any of them
or their properties may be bound. The execution and delivery of this
Agreement (and, if the opinion is being given pursuant to Section 6(c)
hereof on account of the Company having entered into a Terms
Agreement, the applicable Terms Agreement), the Indenture and the
Notes and the consummation of the transactions contemplated herein and
therein (including, without limitation, the issuance and sale of the
Notes from time to time) have been duly authorized by all necessary
corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other instrument known to
such counsel and to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound or to which any of
the property or assets of the Company or any of its subsidiaries is
subject, or any law, administrative regulation or administrative,
arbitration or court order or decree known to such counsel to be
applicable to the Company or any of its subsidiaries; nor will such
action result in any violation of the provisions of the articles of
incorporation or by-laws of the Company.
(xvi) Each document filed pursuant to the 1934 Act and
incorporated by reference in the Prospectus (other than financial
statements and schedules and other financial and statistical data
included or incorporated by reference therein, as to which such
counsel need make no statement) complied when filed as to form in all
material respects with the 1934 Act and the 1934 Act Regulations.
(xvii) The information contained or incorporated by reference in
the Prospectus under the captions "Part I - Business - Rates and
Regulations" and "Part I - Business - Environmental Matters" in the
Company's Annual Report on Form 10-K for the year ended December 31,
1992 and under the captions "Management's Discussion and Analysis --
Regulatory Structure" and "Management's Discussion and Analysis -
Other Regulatory Matters" in the Company's Annual Report to Security
Holders for the year ended December 31, 1992, to the extent that it
constitutes matters of law or legal conclusions, has been reviewed by
such counsel and is correct in all material respects.
(xviii) The Company is a "Subsidiary Company" of a "Holding Company"
as such terms are defined by the 1935
21
Act. Pursuant to an exemptive order issued by the Commission on
January 13, 1936, Pacific Enterprises, the Holding Company, is not
subject to the provisions of the 1935 Act, except for the provisions
of Section 9(a)(2) thereof.
(2) OPINION OF COUNSEL TO THE AGENTS. The opinion of Brown & Wood,
counsel for the Agents, covering the matters referred to in subparagraph
(1) under the subheadings (i) and (v) to (xi), inclusive, above.
(3) In giving their opinions required by subsections (b)(1) and
(b)(2) of this Section, Gary W. Kyle, Esq. and Brown & Wood shall each
additionally state that nothing has come to their attention that would lead
them to believe that the Registration Statement (other than financial
statements and schedules and other financial and statistical data included
or incorporated by reference therein or the Form T-1, as to which such
counsel need make no statement), at the time it became effective and if an
amendment to the Registration Statement or an Annual Report on Form 10-K
has been filed by the Company with the Commission subsequent to the
effectiveness of the Registration Statement, then at the time such
amendment became effective or such Annual Report was filed, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus (other than financial statements and
schedules and other financial and statistical data included or incorporated
by reference therein, as to which such counsel need make no statement), as
amended or supplemented at the date hereof, or (if such opinion is being
delivered in connection with a Terms Agreement pursuant to Section 6(c)
hereof) at the date of such Terms Agreement and at the Settlement Date with
respect thereto, as the case may be, includes an untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) OFFICERS' CERTIFICATE. At the date hereof and at each Settlement Date
with respect to any Terms Agreement, there shall not have been, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus or since the date of such Terms Agreement, any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business; and the Agents shall have received a certificate of the President or a
Vice President of the Company and of the chief financial or chief accounting
officer of the Company, to the effect (i) that there has been no such material
adverse change, (ii) that the other representations
22
and warranties of the Company contained in Section 2 hereof are true and correct
with the same force and effect as though expressly made at and as of the date of
such certificate, (iii) that the Company has performed or complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the date of such certificate, and (iv) that no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been initiated or threatened by the
Commission.
(c) COMFORT LETTER. On the date hereof, the Agents shall have received a
letter from Deloitte & Touche, dated the date hereof and in form and substance
satisfactory to the Agents and their counsel.
(d) OTHER DOCUMENTS. On the date hereof and on each Settlement Date with
respect to any applicable Terms Agreement, counsel for the Agents shall have
been furnished with such documents and opinions as such counsel may reasonably
require for the purpose of enabling such counsel to pass upon the issuance and
sale of Notes as herein contemplated and related proceedings, or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained; and
all proceedings taken by the Company in connection with the issuance and sale of
Notes as herein contemplated shall be satisfactory in form and substance to the
Agents and their counsel.
If any condition specified in this Section 5 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by any
Agent by notice to the Company at any time and any such termination shall be
without liability of any party to any other party, except that the covenants set
forth in Section 4(g) hereof, the provisions of Sections 9, 10 and 13 hereof,
and the indemnity and contribution agreements set forth in Sections 4(m), 7 and
8 hereof shall remain in effect.
Section 6. SUBSEQUENT DOCUMENTATION REQUIREMENTS OF THE COMPANY.
The Company covenants and agrees that:
(a) REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each acceptance by
it of an offer for the purchase of Notes, and each delivery of Notes to an Agent
pursuant to a Terms Agreement, shall be deemed to be an affirmation that the
representations and warranties of the Company contained in this Agreement and in
any certificate theretofore delivered to the Agents or to counsel for the Agents
pursuant hereto are true and correct at the time of such acceptance or sale, as
the case may be, and an undertaking that such representations and warranties
will be true and correct at the time of delivery to the purchaser or its agent,
or to the Agent or Agents, of the Note or Notes relating to such acceptance
23
or sale, as the case may be, as though made at and as of each such time (and it
is understood that such representations and warranties shall relate to the
Registration Statement and Prospectus as amended and supplemented to each such
time).
(b) SUBSEQUENT DELIVERY OF CERTIFICATES. Subject to the provisions of
Section 4(l), each time that the Registration Statement or the Prospectus shall
be amended or supplemented (other than by an amendment or supplement providing
solely for a change in the interest rates, maturity or price of Notes or similar
changes, and, unless the Agents shall otherwise specify, other than by an
amendment or supplement which relates exclusively to an offering of a series of
Debt Securities other than the Notes) or there is filed with the Commission any
document incorporated by reference into the Prospectus (other than any Current
Report on Form 8-K relating exclusively to the issuance of Debt Securities other
than the Notes under the Registration Statement, unless the Agents shall
otherwise specify) or the Company sells Notes to one or more of the Agents
pursuant to a Terms Agreement (unless otherwise provided in such Terms
Agreement), the Company shall furnish or cause to be furnished to the related
Agent or Agents forthwith a certificate, dated the date of filing with the
Commission of such supplement or document, the date of effectiveness of such
amendment or the date of such sale, as the case may be, in form satisfactory to
such Agent or Agents to the effect that the statements contained in the
certificate referred to in Section 5(b) hereof which were last furnished to such
Agent or Agents are true and correct at the time of such amendment, supplement,
filing or sale, as the case may be, as though made at and as of such time
(except that such statements shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to such time) or, in
lieu of such certificate, a certificate of the same tenor as the certificate
referred to in Section 5(b) hereof, modified as necessary to relate to the
Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such certificate.
(c) SUBSEQUENT DELIVERY OF LEGAL OPINIONS. Subject to the provisions of
Section 4(l), each time that the Registration Statement or the Prospectus shall
be amended or supplemented (other than by an amendment or supplement providing
solely for a change in the interest rates, maturity or price of the Notes or
similar changes or solely for the inclusion of additional financial information,
and, unless the Agents shall otherwise specify, other than by an amendment or
supplement which relates exclusively to an offering of Debt Securities other
than the Notes) or there is filed with the Commission any document incorporated
by reference into the Prospectus (other than any Current Report on Form 8-K
relating exclusively to the issuance of Debt Securities other than the Notes
under the Registration Statement or any Quarterly Report on Form 10-Q, unless
the Agents shall otherwise specify) or the Company sells Notes to one or
24
more of the Agents pursuant to a Terms Agreement (unless otherwise provided in
such Terms Agreement), the Company shall furnish or cause to be furnished
forthwith to the related Agent or Agents and to counsel for the Agents a letter,
dated the date of filing with the Commission of such supplement or document, the
date of effectiveness of such amendment or the date of such sale, as the case
may be, from counsel for the Company last furnishing the opinion referred to in
Section 5(a)(1) and (3) hereof to the effect that such Agent or Agents may rely
on such last opinion to the same extent as though they were dated the date of
such letter authorizing reliance (except that statements in such last opinion
shall be deemed to relate to the Registration Statement and the Prospectus as
amended and supplemented to the time of delivery of such letter authorizing
reliance) or, in lieu of such letter, such counsel, or other counsel
satisfactory to such Agent or Agents, shall furnish an opinion, dated the date
of delivery of such opinion and in form and substance satisfactory to such Agent
or Agents, of the same tenor as the opinion referred to in Section 5(a)(1) and
(3) hereof, but modified, as necessary, to relate to the Registration Statement
and the Prospectus as amended and supplemented to the time of delivery of such
opinion.
(d) SUBSEQUENT DELIVERY OF COMFORT LETTERS. Subject to the provisions of
Section 4(l), each time that the Registration Statement or the Prospectus shall
be amended or supplemented to include additional financial information or there
is filed with the Commission any document incorporated by reference into the
Prospectus which contains additional financial information or the Company sells
Notes to one or more of the Agents pursuant to a Terms Agreement (unless
otherwise provided in such Terms Agreement), the Company shall cause Deloitte &
Touche (or other independent accountants of the Company satisfactory to each
Agent) forthwith to furnish the related Agent or Agents a letter, dated the date
of filing with the Commission of such document or supplement, the date of
effectiveness of such amendment or the date of such sale, as the case may be, in
form satisfactory to such Agent or Agents, of the same tenor as the letter
referred to in Section 5(c) hereof but modified to relate to the Registration
Statement and Prospectus, as amended and supplemented to the date of such
letter, and with such changes as may be necessary to reflect changes in the
financial statements and other information derived from the accounting records
of the Company; PROVIDED, HOWEVER, that if the Registration Statement or the
Prospectus is amended or supplemented solely to include financial information as
of and for a fiscal quarter, Deloitte & Touche (or such other acceptable
independent accountants) may limit the scope of such letter to the unaudited
financial statements included in such amendment or supplement unless any other
information included therein of an accounting, financial or statistical nature
is of such a nature that, in the reasonable judgment of the related Agent or
Agents, such letter should cover such other information.
25
Section 7. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE AGENTS. The Company agrees to indemnify and
hold harmless each Agent and each person, if any, who controls any Agent within
the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus (or
any amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever (including the fees and
disbursements of counsel chosen by the Agents), as incurred, reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under clauses (i) or (ii)
above;
PROVIDED, HOWEVER, that the foregoing indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by the Agents expressly for use in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement thereto),
or made in reliance upon the Trustee's Statement of Eligibility and
Qualification under the 1939 Act filed as an exhibit to the Registration
Statement.
26
(b) INDEMNIFICATION OF THE COMPANY. Each Agent severally agrees to
indemnify and hold harmless the Company, its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in Section 7(a) hereof, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such Agent expressly for use in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto).
(c) GENERAL. Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it may
have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action. In no
event shall the indemnifying parties be liable for the fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
Section 8. CONTRIBUTION.
In order to provide for just and equitable contribution in circumstances in
which the indemnity agreement provided for in Section 7 hereof is for any reason
held to be unavailable to or insufficient to hold harmless the indemnified
parties although applicable in accordance with its terms, the Company and the
Agents shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by said indemnity agreement incurred by
the Company and the Agents, as incurred, in such proportions that each Agent is
responsible for that portion represented by the percentage that the total
commissions and underwriting discounts received by such Agent pursuant to this
Agreement to the date of such liability bears to the total sales price received
by the Company from the sale of Notes to the date of such liability, and the
Company is responsible for the balance; PROVIDED, HOWEVER, that no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section, each person,
if any, who controls an Agent within the meaning of Section 15 of
27
the 1933 Act shall have the same rights to contribution as such Agent, and each
director of the Company, each officer of the Company who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act shall have the same rights to contribution as the
Company.
Section 9. PAYMENT OF EXPENSES.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:
(a) The preparation and filing of the Registration Statement and all
amendments thereto and the Prospectus and any amendments or supplements thereto;
(b) The preparation, filing and reproduction of this Agreement and related
documentation;
(c) The preparation, printing, issuance and delivery of the Notes,
including any fees and expenses relating to the use of book-entry Notes;
(d) The fees and disbursements of the Company's accountants and counsel,
of the Trustee and its counsel and of any calculation agent;
(e) The reasonable fees and disbursements of counsel to the Agents
incurred from time to time in connection with this Agreement, the Notes, the
Indenture, any Calculation Agreement to be entered into in connection with the
issuance of Floating Rate Notes (as defined in the Prospectus), any Terms
Agreement, the Registration Statement, the Prospectus, any pricing supplements
and any other documents or certificates delivered from time to time and in
connection with transactions contemplated hereby;
(f) The qualification of the Notes under state securities laws in
accordance with the provisions of Section 4(h) hereof, including filing fees and
the reasonable fees and disbursements of counsel to the Agents in connection
therewith and in connection with the preparation of any Blue Sky Survey;
(g) The printing and delivery to the Agents in quantities as hereinabove
stated of copies of the Registration Statement and any amendments thereto, and
of the Prospectus and any amendments or supplements thereto and the delivery by
the Agents of the Prospectus and any amendments or supplements thereto in
connection with solicitations or confirmations of sales of the Notes;
28
(h) The preparation, printing, reproducing and delivery to the Agents of
copies of the Indenture and all supplements and amendments thereto;
(i) Any fees charged by rating agencies for the rating of the Notes;
(j) The fees and expenses, if any, incurred with respect to any filing
with the National Association of Securities Dealers, Inc.;
(k) Any advertising of the Agents incurred with the approval of such
expense by the Company;
(l) Any out-of-pocket expenses incurred by the Agents in connection with
this Agreement and the transactions contemplated thereby;
(m) The cost of preparing, and providing any CUSIP or other identification
numbers for, the Notes; and
(n) The fees and expenses of any Depository (as defined in the Indenture)
and any nominees thereof in connection with the Notes.
Section 10. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY.
All representations, warranties and agreements contained in this Agreement
or any applicable Terms Agreement, or contained in certificates of officers of
the Company submitted pursuant hereto or thereto, shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any Agent or any controlling person of such Agent, or by or on behalf of the
Company, and shall survive each delivery of and payment for any of the Notes and
the termination of this Agreement or such Terms Agreement.
Section 11. TERMINATION.
(a) TERMINATION OF THIS AGREEMENT. This Agreement may be terminated for
any reason, at any time, by either the Company or any Agent; PROVIDED, HOWEVER,
that the termination of this Agreement with respect to any Agent, by either the
Company or such Agent, but not the other Agents shall have no effect on the
status of this Agreement with respect to such other Agents.
(b) TERMINATION OF A TERMS AGREEMENT. Any Agent party to a Terms
Agreement may terminate such Terms Agreement, by notice to the Company at any
time prior to the Settlement Date relating thereto (i) if there has been, since
the date of such Terms Agreement or since the respective dates as of which
information is given in the Registration Statement or the Prospectus, any
29
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business; (ii) if there shall have occurred any material
adverse change in the financial markets in the United States or any outbreak or
escalation of hostilities or other national or international calamity or crisis,
the effect of which shall be such as to make it, in the judgment of such Agent,
impracticable to market the Notes or enforce contracts for the sale of the
Notes; (iii) if trading in any securities of the Company shall have been
suspended by the Commission or any national securities exchange, or if trading
generally on either the American Stock Exchange or the New York Stock Exchange
shall have been suspended, or minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have been
required, by either of said exchanges or by order of the Commission or any other
governmental authority, or if a banking moratorium shall have been declared by
either federal, California or New York authorities or if a banking moratorium
shall have been declared by the relevant authorities in the country or countries
of origin of any foreign currency or currencies in which the Notes covered by
such Terms Agreement are denominated or payable; (iv) if the rating assigned by
any nationally recognized securities rating agency to any debt securities of the
Company as of the date of the applicable Terms Agreement shall have been lowered
since that date or if any such rating agency shall have publicly announced that
it has placed any debt securities of the Company on what is commonly termed a
"watch list" for possible downgrading; (v) if there shall have come to such
Agent's attention any facts that would cause such Agent to believe that the
Prospectus, as amended or supplemented at the time it was or would be required
to be delivered to a purchaser of Notes, contained or would contain an untrue
statement of a material fact or omitted or would omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time of such delivery, not misleading; or (vi) if
any condition applicable to such Terms Agreement specified in Sections 5 or 6 of
this Agreement, or any condition specified in such Terms Agreement, shall not
have been fulfilled as and when required to be fulfilled.
(c) GENERAL. In the event of any such termination, no party will have any
liability to any other party hereto, except that, in the case of any such
termination of this Agreement (i) each Agent shall be entitled to any
commissions earned in accordance with the third paragraph of Section 3(a)
hereof, (ii) if at the time of termination (A) any Agent shall own any Notes
purchased pursuant to a Terms Agreement with the intention of reselling them or
(B) an offer to purchase any of the Notes has been accepted by the Company but
the time of delivery to the purchaser or his agent of the Note or Notes relating
thereto has not occurred, the obligations set forth in Section 5 hereof and
30
the covenants set forth in Sections 4 and 6 hereof shall remain in effect until
such Notes are so resold or delivered, as the case may be, and (iii) the
covenants set forth in Section 4(g) hereof, the indemnity and contribution
agreements set forth in Sections 4(m), 7 and 8 hereof, and the provisions of
Sections 9, 10 and 13 hereof shall remain in effect, and except that, in the
case of any such termination of a Terms Agreement, the Company shall remain
obligated, pursuant to Section 9 hereof, to pay all expenses incident to such
terminated Terms Agreement and the transactions contemplated thereby.
Section 12. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Agents shall be directed to Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Merrill Lynch
World Headquarters, North Tower, 10th Floor, World Financial Center, New York,
New York 10281, attention of MTN Product Management, Telecopy: (212) 449-2234;
CS First Boston Corporation, One New York Plaza, New York, New York 10055,
attention of Joseph D. Fashano; and to Lehman Brothers, Lehman Brothers Inc.,
American Express Tower, World Financial Center, 9th Floor, New York, New York
10285-0900, Attention: Medium-Term Note Department, Telecopy: (212) 528-7035.
Notices to the Company shall be directed to it at 555 West Fifth Street, Los
Angeles, California 90071, attention of Treasurer.
Section 13. PARTIES.
This Agreement and any Terms Agreement shall inure to the benefit of and be
binding upon the parties hereto and thereto and their respective successors.
Nothing expressed or mentioned in this Agreement or any Terms Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the parties hereto and thereto and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
hereof and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any Terms Agreement or
any provision herein or therein contained. This Agreement and any Terms
Agreement and all conditions and provisions hereof and thereof are intended to
be for the sole and exclusive benefit of the parties hereto and thereto and
their respective successors and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Notes shall be deemed to be
a successor by reason merely of such purchase.
31
Section 14. GOVERNING LAW.
This Agreement and any Terms Agreement and the rights and obligations of
the parties created hereby or thereby, shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed in such State.
Section 15. COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which shall
be deemed an original hereof and all of which together shall constitute one or
the same instrument.
Section 16. CAPTIONS.
The captions in this Agreement are for convenience of reference only and
shall not be deemed to be part of this Agreement.
32
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
the Agents and the Company in accordance with its terms.
Very truly yours,
SOUTHERN CALIFORNIA GAS COMPANY
By
----------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
-----------------------------------
Authorized Signatory
CS FIRST BOSTON CORPORATION
By
-----------------------------------
Title:
LEHMAN BROTHERS INC.
By
-----------------------------------
Title:
33
EXHIBIT A
$___,000,000
SOUTHERN CALIFORNIA GAS COMPANY
Medium-Term Notes
TERMS AGREEMENT
___________, 19__
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281
[and/or]
CS FIRST BOSTON CORPORATION
Park Avenue Plaza
New York, New York 10055
[and/or]
LEHMAN BROTHERS
Lehman Brothers Inc.
American Express Tower
World Financial Center
New York, New York 10285
Re: Distribution Agreement dated _____________, 1994 (the "Distribution
Agreement"), between Southern California Gas Company (the "Company")
and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, CS Boston Corporation and Lehman Brothers, Lehman
Brothers, Inc. (including its affiliate Lehman Special Securities
Inc.) (the "Agents")
----------------------------------------------------------------------
Gentlemen:
The undersigned agrees to purchase the following aggregate principal amount
of Medium-Term Notes referred to in the Distribution Agreement: $____,000,000.
[The undersigned agree, severally and not jointly, to purchase the aggregate
principal amount of Medium-Term Notes referred to
A-1
in the Distribution Agreement set forth opposite their respective names below:]
[Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . $________]
[CS First Boston Corporation. . . . . . . . . . . . . . $________]
[Lehman Brothers Inc. . . . . . . . . . . . . . . . . . $________]
[Total . . . . . . . . . . . . . . . . . . . . . . $________]
The undersigned [Agent is] [several Agents are] purchasing such Medium-Term
Notes for resale to investors and other purchasers at (check one and complete as
necessary):
[ ] a fixed initial public offering price of 100% of the principal amount
thereof, plus accrued interest, if any, from the Original Issue Date
specified below.
[ ] a fixed initial public offering price of % of the principal
amount thereof, plus accrued interest, if any, from the Original Issue
Date specified below.
[ ] varying prices related to prevailing market prices at the time of
resale to be determined by the undersigned Agent[s], plus accrued
interest, if any, from the Original Issue Date specified below.
The terms of such Medium-Term Notes shall be as set forth below.
Stated Maturity:
Original Issue Date:
Price to be Paid to the Company:
Agent's Discount or Commission:
Settlement Date, Place and Time:
Additional Terms:
If Fixed Rate Note:
------------------
Interest Rate:
Interest Payment Dates:
[ ] March 1 and September 1
[ ] Other:
Regular Record Dates:
[ ] February 15 and August 15
[ ] Other:
Day Count Convention:
[ ] 30/360 for the period
from _______ to ________.
[ ] Actual/360 for the period from _________ to
________.
[ ] Actual/Actual for the period from _________ to
________.
A-2
If Floating Rate Note:
---------------------
Base Rate(s):
If LIBOR:
[ ] LIBOR Telerate
[ ] LIBOR Reuters
Initial Interest Rate:
Index Maturity:
Spread (Plus or Minus):
Spread Multiplier:
Maximum Interest Rate:
Minimum Interest Rate:
Interest Payment Dates:
Interest Payment Period:
Initial Interest Reset Date:
Interest Reset Dates:
Interest Reset Period:
Interest Rate Reset Period:
Calculation Agent:
Day Count Convention:
[ ] Actual/360 for the period from ________ to
________.
[ ] Actual/Actual for the period from ________ to
________.
For both Fixed and Floating Rate Notes:
--------------------------------------
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage
Reduction:
Optional Repayment Date(s):
If issued with Original Issue Discount ("OID"):
----------------------------------------------
Total Amount of OID:
Yield to Maturity:
Initial Accrual Period:
Other Provisions:
The following will [will not] be required as a condition to settlement:
(i) the officers' certificate pursuant to Section 6(b) of the Distribution
Agreement; (ii) the legal opinion pursuant to Section 6(c) of the Distribution
Agreement; and (iii) the comfort letter pursuant to Section 6(d) of the
Distribution Agreement. The stand-off agreement set forth in Section 4(j) of
the Distribution Agreement will [will not] be applicable.
A-3
This Agreement and all of the rights and obligations of the parties hereto
shall be governed by and construed in accordance with the laws of the State of
New York applicable to agreements made and to be performed in such State.
If the foregoing is in accordance with our agreement, please indicate your
acceptance hereof in the space provided for that purpose below.
SOUTHERN CALIFORNIA GAS COMPANY
By
----------------------------
Title:
Accepted:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
-----------------------------------
Authorized Signatory
[and/or]
CS FIRST BOSTON CORPORATION
By
-----------------------------------
Title:
[and/or]
LEHMAN BROTHERS INC.
By
-----------------------------------
Title:
A-4
Schedule I
COMMISSION SCHEDULE
As compensation for the services of the Agents hereunder, the Company
shall pay each Agent, on a discount basis, a commission for the sale of each
Note by such Agent equal to the principal amount of such Note multiplied by the
appropriate percentage set forth below:
Percent of
Maturing Ranges Principal Amount
- --------------- ----------------
From 9 months but less than 1 year . . . . . . . . . . . . . 0.125%
From 1 year but less than 18 months. . . . . . . . . . . . . 0.150%
From 18 months but less than 2 years . . . . . . . . . . . . 0.200%
From 2 years but less than 3 years . . . . . . . . . . . . . 0.250%
From 3 years but less than 4 years . . . . . . . . . . . . . 0.350%
From 4 years but less than 5 years . . . . . . . . . . . . . 0.450%
From 5 years but less than 6 years . . . . . . . . . . . . . 0.500%
From 6 years but less than 7 years . . . . . . . . . . . . . 0.550%
From 7 years but less than 10 years. . . . . . . . . . . . . 0.600%
From 10 years but less than 15 years . . . . . . . . . . . . 0.625%
From 15 years but less than 20 years . . . . . . . . . . . . 0.700%
From 20 years but less than 30 years . . . . . . . . . . . . 0.750%
More than 30 years . . . . . . . . . . . . . . . . . . . . . *
_________________
* To be negotiated at the time of sale between the Agent and the Company.
[Pacific Enterprises Letterhead]
March 8, 1994
Southern California Gas Company
555 West Fifth Street
Los Angeles, California 90013
Gentlemen:
In my capacity as your counsel, I have examined the Registration
Statement on Form S-3 (the "Registration Statement") to be filed by you with
the Securities and Exchange Commission in connection with the registration
under the Securities Act of 1933 of the public offering of $250,000,000
aggregate principal amount of your Medium-Term Notes (the "Notes").
I am familiar with the proceedings taken and proposed to be taken in
connection with the authorization, issuance and sale of the Notes. Upon the
basis of the foregoing and subject to the completion of said proceedings prior
to the issuance of the Notes, I am of the opinion that the Notes when issued
and sold in the manner set forth in the Registration Statement will be legally
issued and binding obligations.
I consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of my name under the caption "Legal Matters" in the
Registration Statement and the Prospectus which is a part thereof.
Respectfully submitted,
/s/ Gary W. Kyle
-----------------------
Gary W. Kyle
SCHEDULE 12.1
SOUTHERN CALIFORNIA GAS COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
ACTUAL
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1989 1990 1991 1992 1993
---------- ---------- ---------- ---------- ----------
Earnings Before Fixed Charges and Taxes
Based on Income:
Net Income............................... $ 180,903 $ 177,744 $ 211,792 $ 194,716 $ 193,676
Add:
Fixed Charges........................ 108,872 117,026 112,867 116,504 116,890
Income taxes charged to operations... 138,618 156,191 146,442 164,487 134,491
Income taxes on nonoperating
income.............................. 1,806 (4,628) 12,841 (572) (5,670)
---------- ---------- ---------- ---------- ----------
Earnings before fixed charges and
taxes based on income............. $ 430,199 $ 446,333 $ 483,942 $ 475,135 $ 439,387
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Fixed Charges:
Interest and amortization................ $ 100,015 $ 108,655 $ 105,112 $ 105,509 $ 104,986
Rental expense approximating interest
charges included in operating
expenses................................ 8,857 8,371 7,755 10,995 11,904
---------- ---------- ---------- ---------- ----------
Total actual fixed charges............. $ 108,872 $ 117,026 $ 112,867 $ 116,504 $ 116,890
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Ratio of Earnings to Fixed Charges......... 3.95 3.81 4.29 4.08 3.76
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
S-1
SOUTHERN CALIFORNIA GAS COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
ACTUAL EXCLUDING INTEREST RELATED TO SUPPLIER REFUNDS AND
REGULATORY ACCOUNTS*
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1989 1990 1991 1992 1993
---------- ---------- ---------- ---------- ----------
Earnings Before Fixed Charges and Taxes Based on
Income.............................................. $ 430,199 $ 446,333 $ 483,942 $ 475,135 $ 439,387
Adjustment for interest related to supplier refunds
and regulatory accounts............................. (12,229) (5,271) (5,760) (3,018) (2,678)
---------- ---------- ---------- ---------- ----------
Earnings before adjusted fixed charges and taxes
based on income................................... $ 417,970 $ 441,062 $ 478,182 $ 472,117 $ 436,709
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Fixed Charges........................................ $ 108,872 $ 117,026 $ 112,867 $ 116,504 $ 116,890
Adjustment for interest related to supplier refunds
and regulatory accounts............................. (12,229) (5,271) (5,760) (3,018) (2,678)
Adjusted fixed charges............................. $ 96,643 $ 111,755 $ 107,107 $ 113,486 $ 114,212
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Ratio of Earnings to Fixed Charges Adjusted for
Supplier Refunds and Regulatory Accounts............ 4.32 3.95 4.46 4.16 3.82
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
- ------------------------
*The ratios of earnings to fixed charges are influenced by the accrual of
interest expense relating to supplier refunds payable to customers and
regulatory accounts. Ratios which exclude interest related to supplier refunds
and regulatory accounts are calculated as shown in the preceding computation,
but exclude from fixed charges related interest expense during the relevant
period to the extent of related interest income.
S-2
EXHIBIT 24.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Southern California Gas Company on Form S-3 of our reports dated
February 2, 1993 appearing in and incorporated by reference in the Annual
Report on Form 10-K of Southern California Gas Company for the year ended
December 31, 1992, and to the reference to us under the heading "Experts" in
the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE
Los Angeles, California
March 10, 1994
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility
of a Trustee pursuant to Section 305(b)(2)______
----------------------------
CITIBANK, N.A.
(Exact name of trustee as specified in its charter)
13-5266470
(I.R.S. employer
identification no.)
399 Park Avenue, New York, New York 10043
(Address of principal executive office) (Zip Code)
----------------------------
Southern California Gas Company
(Exact name of obligor as specified in its charter)
California 95-1240705
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
555 West 5th Street
Los Angeles, California 90013
(Address of Principal Executive Offices) (Zip Code)
--------------------
Debt Securities
(Title of the indenture securities)
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Name Address
---- -------
Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of New York New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation
None.
Item 16. LIST OF EXHIBITS
Exhibit 1 - Copy of Articles of Association of the Trustee, as now in
effect. (Exhibit 1 to T-1 to Registration Statement No. 2-79983)
Exhibit 2 - Copy of certificate of authority of the Trustee to
commence business. (Exhibit 2 to T-1 to Registration Statement No.
2-29577)
Exhibit 3 - Copy of authorization of the Trustee to exercise corporate
trust powers. (Exhibit 3 to T-1 to Registration Statement No. 2-55519)
Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit 4 to T-1
to Registration Statement No. 33-34988)
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the Trustee required by Section 321(b) of
the Trust Indenture Act of 1939. (Exhibit 6 to T-1 to Registration
Statement No. 33-19227.)
2
Exhibit 7 - Copy of the latest Report of Condition of Citibank, N.A.
(as of December 31, 1993 - attached)
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
--------------------
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Citibank, N.A., a national banking association organized and existing
under the laws of the United States of America, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York and State of New York, on the 8th day of
March, 1994.
CITIBANK, N.A.
By /s/ R.T. Kirchner
--------------------------------
R.T. Kirchner
Vice President
3
Charter No. 1461
Comptroller of the Currency
Northeastern District
REPORT OF CONDITION
CONSOLIDATING
DOMESTIC AND FOREIGN
SUBSIDIARIES OF
CITIBANK, N.A.
of New York in the State of
New York, at the close of
business on December 31, 1993,
published in response to call
made by Comptroller of the
Currency, under Title 12,
United States Code, Section
161. Charter Number 1481
Comptroller of the Currency
Northeastern District.
ASSETS
Thousands of
Dollars
Cash and balances due from de-
pository institutions:
Noninterest-bearing balances
and currency and coin . . . . . .$ 5,863,000
Interest-bearing balances. . . . . 7,137,000
Securities . . . . . . . . . . . . . 11,442,000
Federal funds sold and securities
purchased under agreements to
resell in domestic offices of the
bank and of its Edge and Agree-
ment subsidiaries, and in IBFs:
Federal funds sold. . . . . . . . . 1,467,000
Securities purchased under
agreements to resell. . . . . . . . 1,261,000
Loans and lease financing receiv-
ables:
Loans and leases, net of un-
earned income . . . .$115,952,000
LESS: Allowance for loan
and lease losses. . . . 3,471,000
----------
Loans and leases, net of un-
earned income and allowance . . . 112,481,000
Assets held in trading accounts. . . 15,259,000
Premises and fixed assets (includ-
ing capitalized leases) . . . . . . 3,041,000
Other real estate owned. . . . . . . 3,371,000
Investments in unconsolidated
subsidiaries and associated com-
panies. . . . . . . . . . . . . . . 983,000
Customers' liability to this bank
on acceptances outstanding. . . . . 1,512,000
Intangible assets. . . . . . . . . . 29,000
Other assets . . . . . . . . . . . . 11,866,000
------------
TOTAL ASSETS . . . . . . . . . . . .$175,712,000
------------
------------
LIABILITIES
Deposits:
In domestic offices . . . . . . . .$ 34,236,000
Noninterest-
bearing . . . . . . . $11,921,000
Interest-
bearing . . . . . . . .22,315,000
-----------
In foreign offices, Edge and
Agreement subsidiaries, and
IBFs . . . . . . . . . . . . . . . 94,076,000
Noninterest-
bearing. . . . . . . . 6,515,000
Interest-
bearing. . . . . . . $87,561,000
-----------
Federal funds purchased and se-
curities sold under agreements
to repurchase in domestic offices
of the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased. . . . . . 4,113,000
Securities sold under agree-
ments to repurchase. . . . . . . . 1,190,000
Other borrowed money . . . . . . . . 12,053,000
Mortgage indebtedness and obli-
gations under capitalized leases. . 285,000
Bank's liability on acceptances ex-
ecuted and outstanding. . . . . . . 1,530,000
Notes and debentures subordi-
nated to deposits . . . . . . . . . 4,700,000
Other liabilities. . . . . . . . . . 12,462,000
------------
TOTAL LIABILITIES. . . . . . . . . .$164,645,000
------------
EQUITY CAPITAL
Common stock . . . . . . . . . . . .$ 751,000
Surplus. . . . . . . . . . . . . . . 5,912,000
Undivided profits and capital re-
serves. . . . . . . . . . . . . . . 5,066,000
Cumulative foreign currency
translation adjustments . . . . . . (662,000)
------------
TOTAL EQUITY CAPITAL . . . . . . . .$ 11,067,000
------------
TOTAL LIABILITIES AND
EQUITY CAPITAL. . . . . . . . . . .$175,712,000
------------
------------
I, Roger W. Trupin, Controller of the above-
named bank do hereby declare that this
Report of Condition is true and correct to the
best of my knowledge and belief.
ROGER W. TRUPIN
We, the undersigned directors, attest to
the correctness of this Report of Condition.
We declare that it has been examined by us,
and to the best of our knowledge and belief
has been prepared in conformance with the
instructions and is true and correct.
CHRISTOPHER J. STEFFEN
PEI-YUAN CHIA Directors
PAUL J. COLLINS
