AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 3, 1998
REGISTRATION NO. 333-
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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)
DENNIS V. ARRIOLA
VICE PRESIDENT AND TREASURER
SOUTHERN CALIFORNIA GAS COMPANY
555 WEST FIFTH STREET
LOS ANGELES, CALIFORNIA 90013
(213) 244-3310
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
GARY W. KYLE ERIC S. HAUETER
Chief Financial Counsel Brown & Wood LLP
Pacific Enterprises 10877 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, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / __________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offer. / / ______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED (1) PER UNIT (1) PRICE (1)(2) REGISTRATION FEE
Debt Securities................................... $600,000,000 100% $600,000,000 $177,000
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(1) The Debt Securities registered hereby may be offered for U.S. dollars or the
equivalent thereof in foreign currencies, currency units or composite
currencies. If any Debt Securities are issued at an original issue discount,
then the amount of Debt Securities registered hereby shall be increased to
such greater amount as may be sold for an aggregate offering price of up to
the proposed maximum aggregate offering price set forth above.
(2) Estimated solely for the purpose of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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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 SUPPLEMENT 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 FEBRUARY 3, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1998)
$600,000,000
SOUTHERN CALIFORNIA GAS COMPANY
MEDIUM-TERM NOTES
DUE NINE 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 $600,000,000 aggregate initial public offering price of its Medium-Term
Notes (the "Notes"). Such aggregate initial public offering price is subject to
reduction as a result of the sale by the Company of other Debt Securities
described in the accompanying Prospectus. The Notes will have maturities of nine
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 $1,000 and integral multiples thereof, unless otherwise
specified in the applicable Pricing Supplement. Each Book-Entry Note will be
represented by one or more global Notes 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 "CMT Rate," the "Commercial Paper Rate," the "Eleventh
District Cost of Funds Rate," the "Federal Funds Rate," the "J.J. Kenny Rate,"
"LIBOR," the "Prime Rate" or the "Treasury 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(1)(2) TO COMPANY(3)
Per Note...................... 100% .125%-.750% 99.875%-99.250%
Total......................... $600,000,000 $750,000-$4,500,000 $599,250,000-$595,500,000
(1) Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
BancAmerica Robertson Stephens, Credit Suisse First Boston Corporation and
Lehman Brothers Inc. (the "Agents"), individually or in a syndicate, may
purchase Notes, as principal, from the Company for resale to investors and
other purchasers at varying prices relating to prevailing market prices at
the time of resale as determined by the applicable Agent or, if so specified
in the applicable Pricing Supplement, for resale at a fixed offering price.
Unless otherwise specified 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 of the
principal amount equal to the commission applicable to an agency sale (as
described below) of a Note of identical maturity. If agreed to by the
Company and an Agent, such Agent may utilize its reasonable efforts on an
agency basis to solicit offers to purchase the Notes at 100% of the
principal amount thereof, unless otherwise specified in the applicable
Pricing Supplement. The Company will pay a commission to an Agent, ranging
from .125% to .750% of the principal amount of a Note, depending upon its
stated maturity, sold through an Agent. Commissions with respect to Notes
with stated maturities in excess of 30 years that are sold through an Agent
will be negotiated between the Company and such Agent at the time of such
sale. See "Plan of Distribution."
(2) 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."
(3) Before deducting expenses payable by the Company estimated to be $320,000.
------------------------------
The Notes are being offered on a continuing basis by the Company to or
through the Agents. Unless otherwise specified in the applicable Pricing
Supplement, the Notes will not be listed on any securities exchange. There is no
assurance that the Notes offered hereby will be sold or, if sold, that there
will be a secondary market for the Notes or liquidity in the secondary market if
one develops. The Company reserves the right to cancel or modify the offer made
hereby without notice. The Company or an Agent, if it solicits the offer on an
agency basis, may reject any offer to purchase Notes in whole or in part. See
"Plan of Distribution."
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MERRILL LYNCH & CO.
BANCAMERICA ROBERTSON STEPHENS
CREDIT SUISSE FIRST BOSTON
LEHMAN BROTHERS
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The date of this Prospectus Supplement is , 1998.
IN CONNECTION WITH AN OFFERING OF NOTES PURCHASED BY ONE OR MORE AGENTS AS
PRINCIPAL ON A FIXED OFFERING PRICE BASIS, SUCH AGENT OR AGENTS, AS THE CASE MAY
BE, MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE
PRICE OF NOTES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING AND THE PURCHASE OF
NOTES TO COVER SHORT POSITIONS OF SUCH AGENT OR AGENTS, AS THE CASE MAY BE. FOR
A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION."
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS INCLUDED OR INCORPORATED BY REFERENCE HEREIN AND IN THE
ACCOMPANYING PROSPECTUS CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED (THE "EXCHANGE ACT"), AND ARE SUBJECT TO A NUMBER OF RISKS AND
UNCERTAINTIES. THESE FORWARD-LOOKING STATEMENTS ARE IDENTIFIED BY THE WORDS
"ESTIMATES," "EXPECTS," "ANTICIPATES," "PLANS," "BELIEVES" AND SIMILAR
EXPRESSIONS. THE ANALYSES EMPLOYED TO DEVELOP THESE FORWARD-LOOKING STATEMENTS
ARE OF NECESSITY BASED UPON VARIOUS ASSUMPTIONS INVOLVING JUDGMENTS WITH RESPECT
TO THE FUTURE INCLUDING, AMONG OTHER FACTORS, NATIONAL, REGIONAL, AND LOCAL
ECONOMIC, COMPETITIVE AND REGULATORY CONDITIONS, LEGISLATIVE DEVELOPMENTS,
TECHNOLOGICAL DEVELOPMENTS, INFLATION RATES, WEATHER CONDITIONS, FINANCIAL
MARKET CONDITIONS, FUTURE BUSINESS DECISIONS, AND OTHER UNCERTAINTIES, ALL OF
WHICH ARE DIFFICULT TO PREDICT, AND MANY OF WHICH ARE BEYOND THE CONTROL OF THE
COMPANY. ACCORDINGLY, WHILE THE COMPANY BELIEVES THAT THE ASSUMPTIONS UPON WHICH
THE FORWARD-LOOKING STATEMENTS ARE BASED ARE REASONABLE FOR PURPOSES OF MAKING
THESE STATEMENTS, THERE CAN BE NO ASSURANCE THAT THESE ASSUMPTIONS WILL
APPROXIMATE ACTUAL EXPERIENCE, OR THAT THE EXPECTATIONS SET FORTH IN THE
FORWARD-LOOKING STATEMENTS DERIVED FROM THESE ASSUMPTIONS WILL BE REALIZED.
S-2
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 (forms of which have been filed as exhibits to the Registration
Statement of which this Prospectus Supplement is a part and are available as
described in the accompanying Prospectus), 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. Certain capitalized terms used herein and not defined have the
respective meanings given to such terms in the accompanying Prospectus, the
Indenture or the forms of the Notes, as the case may be.
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, $300,000,000
aggregate principal amount of such Medium-Term Notes were outstanding. The
following description will apply to each Note unless otherwise described in the
applicable Pricing Supplement.
The Notes will be unsecured obligations of the Company 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 $850,000,000 in aggregate principal
amount were outstanding as of the date of this Prospectus Supplement. The
Company may from time to time issue additional First Mortgage Bonds which also
will be secured by such properties. Accordingly, the Notes will be effectively
subordinated to all existing and future First Mortgage Bonds to the extent of
the collateral pledged to secure such First Mortgage Bonds. The Company is the
principal subsidiary of Pacific Enterprises (the "Parent"). The Notes are not
obligations of the Parent and are not guaranteed by the Parent or any other
entity.
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 $600,000,000 aggregate initial public offering price 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, is not a day on which banking
institutions are authorized or obligated by law, regulation or executive order
to close (and, with respect to LIBOR Notes and Floating Rate Notes for which
LIBOR is a Base Rate, is also a London Business Day). "London Business Day"
means any day on which dealings in the Designated LIBOR Currency (as hereinafter
defined) are transacted in the London interbank market.
S-3
Each Note will be issued in fully registered form without coupons 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
$1,000 and integral multiples thereof, 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 may be made 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). 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.
Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other factors, the aggregate amount of Notes purchased in
any single transaction. Notes with different variable terms other than interest
rates may also be offered concurrently to different investors. Interest rates or
formulas and other terms of Notes are subject to change by the Company from time
to time, but no such change will affect any Note previously issued or as to
which an offer to purchase has been accepted by the Company.
Principal of, and premium, if any, 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, if any, 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) and at such other places 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 the 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 (whether
having identical or different terms and provisions) 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 (as hereinafter defined) immediately preceding such Interest
Payment Date (as hereinafter defined). In addition, the principal of, and
premium, if any, 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 in the Borough of Manhattan,
The City of New York (with interest, if any, due at Maturity being paid to the
person to whom principal is paid), and will be paid by wire transfer of
immediately available funds to a depository institution in the United States 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.
The Notes will not have an established trading market when issued, and there
can be no assurance of a secondary market for the Notes or the liquidity of the
secondary market if one develops. See "Plan of Distribution."
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. The Notes will be redeemable at the
option of the Company prior to the Stated Maturity only if an Initial Redemption
Date is specified in the applicable Pricing Supplement. If so specified, the
Notes will
S-4
be subject to redemption at the option of the Company on any date on and after
the applicable Initial Redemption Date in whole or from time to time in part in
increments of $1,000 in principal amount or any other integral multiple of
$1,000 in principal amount (provided that any remaining principal amount thereof
shall be at least $1,000), at the applicable Redemption Price (as hereinafter
defined), together with unpaid interest accrued thereon to the date of
redemption, on written notice given to the Holders thereof not more than 60 nor
less than 30 calendar days prior to the date of redemption and in accordance
with the provisions of the Indenture. "Redemption Price," with respect to a
Note, means an amount equal to the Initial Redemption Percentage specified in
the applicable Pricing Supplement (as adjusted by the Annual Redemption
Percentage Reduction, if applicable) multiplied by the unpaid principal amount
to be redeemed. The Initial Redemption Percentage, if any, applicable to a Note
shall decline at each anniversary of the Initial Redemption Date by an amount
equal to the applicable Annual Redemption Percentage Reduction, if any, until
the Redemption Price is equal to 100% of the unpaid principal amount to be
redeemed.
REPAYMENT AT THE OPTION OF THE HOLDER
The Notes will be repayable by the Company at the option of the Holders
thereof prior to Stated Maturity only if one or more Optional Repayment Dates
are specified in the applicable Pricing Supplement. If so specified, the Notes
will be subject to repayment at the option of the Holders thereof on any
Optional Repayment Date in whole or from time to time in part in increments of
$1,000 in principal amount or any other integral multiple of $1,000 in principal
amount (provided that any remaining principal amount thereof shall be at least
$1,000), at a repayment price equal to 100% of the principal amount to be
repaid, together with unpaid interest accrued thereon to the date of repayment.
For any Note to be repaid, such Note must be received, together with the form
thereon entitled "Option to Elect Repayment" duly completed, by the Trustee at
its office maintained for such purpose in the Borough of Manhattan, The City of
New York, currently the Corporate Trust Office of the Trustee, not more than 60
nor less than 30 calendar days prior to the date of repayment. Exercise of such
repayment option by the Holder will be irrevocable.
Only the Depositary may exercise the repayment option in respect of Global
Securities (as hereinafter defined) representing Book-Entry Notes. Accordingly,
Beneficial Owners (as hereinafter defined) of Global Securities that desire to
have all or any portion of the Book-Entry Notes represented by such Global
Securities repaid must instruct the Participant (as hereinafter defined) through
which they own their interests to direct the Depositary to exercise the
repayment option on their behalf by delivering the related Global Security and
duly completed election form to the Trustee as aforesaid. In order to ensure
that such Global Security and election form are received by the Trustee on a
particular day, the applicable Beneficial Owner must so instruct the Participant
through which it owns its interest before such Participant's deadline for
accepting instructions for that day. Different firms may have different
deadlines for accepting instructions from their customers. Accordingly,
Beneficial Owners should consult the Participants through which they own their
interests for the respective deadlines for such Participants. All instructions
given to Participants from Beneficial Owners of Global Securities relating to
the option to elect repayment shall be irrevocable. In addition, at the time
such instructions are given, each such Beneficial Owner shall cause the
Participant through which it owns its interest to transfer such Beneficial
Owner's interest in the Global Security or Securities representing the related
Book-Entry Notes, on the Depositary's records, to the Trustee. See "--Book-Entry
Notes."
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.
S-5
INTEREST
GENERAL
Each interest-bearing 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 relevant Interest Payment Date or date of Maturity,
as the case may be.
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 (other than interest payable at Maturity) 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 such 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 and any and all other terms of the
Notes 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.
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, if any, and
interest 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 specified 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 CMT
Rate, in which case such Note will be a "CMT Rate Note"; (iii) the Commercial
Paper Rate, in which case such Note will be a "Commercial Paper Rate Note"; (iv)
the Eleventh District Cost of Funds Rate, in which case such Note will be an
"Eleventh District Cost of Funds Rate Note"; (v) the Federal Funds Rate, in
which case such Note will be a "Federal Funds Rate Note"; (vi) the J.J. Kenny
Rate, in which case such Note will be a
S-6
"J.J. Kenny Rate Note"; (vii) LIBOR, in which case such Note will be a "LIBOR
Note"; (viii) the Prime Rate, in which case such Note will be a "Prime Rate
Note"; (ix) the Treasury Rate, in which case such Note will be a "Treasury Rate
Note"; and (x) 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, Interest Reset Dates, Calculation Agent (if other than the
Trustee) and Initial Interest Reset Date. If one or more of the applicable
Interest Rate Bases is LIBOR or the CMT Rate, the applicable Pricing Supplement
will also specify the Designated LIBOR Currency and Designated LIBOR Page or the
Designated CMT Maturity Index and Designated CMT Telerate Page, respectively, as
such terms are defined below.
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. Commencing on the Initial Interest Reset Date, the rate at
which interest on such Floating Rate Note shall be payable shall be reset as of
each Interest Reset Date; provided, however, that the interest rate in effect
for the period, if any, from the date of issue to the Initial Interest Reset
Date will be the Initial Interest Rate (as defined below).
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" 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 rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually or on such other specified basis
(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 and weekly
reset Floating Rate Notes for which the Treasury Rate is an applicable Base
Rate, which reset the Tuesday of each week, except as specified below); (iii)
monthly, the third Wednesday of each month (with the exception of monthly reset
Eleventh District Cost of Funds Rate Notes and monthly reset Floating Rate Notes
as to which Eleventh District Cost of Funds Rate is an applicable Base Rate,
which reset on the first calendar day of the 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 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. In addition, if the Treasury Rate is an applicable Base Rate and the
Interest Determination Date would otherwise fall on an Interest Reset Date, then
such Interest Reset Date will be postponed to the next succeeding Business Day.
The interest rate applicable to each Interest Rate Reset Period commencing
on the related Interest Reset Date will be the rate determined by the
Calculation Agent (as hereinafter defined) as of the applicable Interest
Determination Date (as hereinafter defined) and calculated on or prior to the
Calculation Date (as
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hereinafter defined), except with respect to LIBOR and the Eleventh District
Cost of Funds Rate, which will be calculated on such Interest Determination
Date. The "Interest Determination Date" with respect to the CD Rate, the CMT
Rate, Commercial Paper Rate, Federal Funds Rate, the J.J. Kenny Rate and the
Prime Rate will be the second Business Day preceding each Interest Reset Date.
The "Interest Determination Date" with respect to the Eleventh District Cost of
Funds Rate will be the last working day of the month immediately preceding the
applicable Interest Reset Date in which the Federal Home Loan Bank of San
Francisco (the "FHLB of San Francisco") publishes the Index (as hereinafter
defined). The "Interest Determination Date" with respect to LIBOR will be the
second London Business Day preceding the applicable Interest Reset Date unless
the Designated LIBOR Currency is British pounds sterling, in which case the
"Interest Determination Date" will be the applicable 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 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 the Interest Determination Date would otherwise fall on an Interest Reset
Date, then such Interest Reset Date will be postponed to the next succeeding
Business Day. 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 Note on which each such Base Rate
shall be determinable. Each such 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.
Each Floating Rate Note will bear interest from its date of issue at the
rate determined as described below until the principal thereof and premium, if
any, thereon 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 would fall 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 Note for which
LIBOR is a Base Rate), if such Business Day is in the next succeeding calendar
month, such Interest Payment Date shall be the immediately preceding day that is
a Business Day with respect to such 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, if any, and interest 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 (provided, however, that the interest rate in effect for the period, if
any, from the date of original issue to the Initial Interest Reset Date will be
the Initial Interest Rate), subject in either case to any maximum or minimum
interest rate limitation referred to above and subject to adjustment by any
applicable Spread or Spread Multiplier.
Accrued interest on the Floating Rate Notes will be an amount calculated by
multiplying the principal amount thereof by an accrued interest factor. Such
accrued interest factor shall be computed by adding the interest factor for each
day in the applicable period for which interest is being calculated. Unless
otherwise specified in the applicable Pricing Supplement, the interest factor
for each such day will be computed by dividing the interest rate applicable to
such day by 360 in the case of Floating Rate Notes for which an applicable
Interest Rate Basis is the CD Rate, the Commercial Paper Rate, the Eleventh
District Cost of Funds Rate, the Federal Funds Rate, LIBOR or the Prime Rate, or
by the actual number of days in the year in the case of Floating Rate Notes for
which an applicable Interest Rate Basis is the CMT Rate or the Treasury Rate or
by 365 in the case of Floating Rate Notes for which an applicable Interest Rate
Basis is the J.J. Kenney Rate. Unless otherwise specified in the applicable
Pricing Supplement, the interest factor for Floating Rate 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 applicable Base
Rates specified in the applicable Pricing Supplement 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 "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 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 Initial 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 and/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 United States dollar certificates
of deposit having the Index Maturity specified in the applicable Pricing
Supplement as published by the Board of Governors of the Federal Reserve System
in "Statistical Release H.15(519), Selected Interest Rates" or any successor
publication ("H.15(519)") under the heading "CDs (Secondary Market)", or, if not
so 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 United States dollar
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
United States dollar certificates of deposit in New York, New York (which may
include
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the Agents or their affiliates) selected by the Calculation Agent (after
consultation with the Company) for negotiable United States dollar certificates
of deposit of major United States money center banks for negotiable certificates
of deposit with a remaining maturity closest to the Index Maturity specified in
the applicable Pricing Supplement in an amount that is representative for a
single transaction in that market at that time; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting as
described above, the CD Rate determined as of such CD Interest Determination
Date will be the CD Rate in effect on such CD Interest Determination Date.
CMT RATE. 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 the Designated CMT Telerate Page under the caption "...Treasury
Constant Maturities...Federal Reserve Board Release H.15...Mondays Approximately
3:45 P.M.," under the column for the Designated CMT Maturity Index for (i) if
the Designated CMT Telerate Page is 7055, the rate on such CMT Rate Interest
Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the
weekly or monthly average, as specified in the applicable Pricing Supplement,
for the week or the month, as applicable, ended immediately preceding the week
or the month, as applicable, in which the related CMT Rate Interest
Determination Date falls. If such rate is no longer displayed on the relevant
page or is not displayed by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for such CMT Rate Interest Determination
Date will be such treasury constant maturity rate for the Designated CMT
Maturity Index as published in H.15(519). If such rate is no longer published or
is not published by 3:00 P.M., New York City time, on the related Calculation
Date, then the CMT Rate on such CMT Rate Interest Determination Date will be
such treasury constant maturity rate for the Designated CMT Maturity Index (or
other United States Treasury rate for the Designated CMT Maturity Index) 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 (after consultation with the Company) determines to be comparable to the
rate formerly displayed on the Designated CMT Telerate Page and published in
H.15(519). If such information is not provided by 3:00 P.M., New York City time,
on the related Calculation Date, then the CMT Rate on the CMT Rate Interest
Determination Date will be calculated by the Calculation Agent and will be a
yield to maturity, based on the arithmetic mean of the secondary market offered
rates as of approximately 3:30 P.M., New York City time, on such CMT Rate
Interest Determination Date reported, according to their written records, by
three leading primary United States government securities dealers in The City of
New York (which may include the Agents or their affiliates) (each, a "Reference
Dealer") selected by the Calculation Agent (from five such Reference Dealers
selected by the Calculation Agent (after consultation with the Company) and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for the most recently issued direct noncallable fixed rate obligations
of the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent is unable to obtain three such Treasury Note quotations, the
CMT Rate on such CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offered rates as of approximately 3:30 P.M., New York
City time, on such 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 (after consultation with the Company) and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for
Treasury Notes with an original maturity of the number of years that is the next
highest to the Designated CMT Maturity Index and a remaining term to maturity
closest to the
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Designated CMT Maturity Index and in an amount of at least $100 million. If
three or four (and not five) of such Reference Dealers are quoting as described
above, then the CMT Rate will be based on the arithmetic mean of the offered
rates obtained and neither the highest nor the lowest of such quotes will be
eliminated; provided, however, that if fewer than three Reference Dealers so
selected by the Calculation Agent are quoting as mentioned herein, the CMT Rate
determined as of such CMT Rate Interest Determination Date will be the CMT Rate
in effect on such CMT Rate Interest Determination Date. If two Treasury Notes
with an original maturity as described in the second preceding sentence have
remaining terms to maturity equally close to the Designated CMT Maturity Index,
the Calculation Agent will obtain quotations for the Treasury Note with the
shorter remaining term to maturity.
"Designated CMT Telerate Page" means the display on the Dow Jones Markets
Limited (or any successor service) on the page specified in the applicable
Pricing Supplement (or any other page as may replace such page on such service)
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519) or, if no such page is specified in the applicable Pricing Supplement,
page 7052.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified in
the applicable Pricing Supplement with respect to which the CMT Rate will be
calculated or, if no such maturity is specified in the applicable Pricing
Supplement, 2 years.
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 and/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--
Nonfinancial." In the event that such rate is not published by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Commercial Paper
Interest Determination Date, then the Commercial Paper Rate on such Commercial
Paper Interest Determination Date will be the Money Market Yield 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" (with an Index Maturity of one month or three months being deemed to be
equivalent to an Index Maturity of 30 days or 90 days, respectively). 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 on such
Commercial Paper Interest Determination Date will be calculated by the
Calculation Agent and will be the Money Market Yield of the arithmetic mean of
the offered rates, at approximately 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 or their
affiliates) selected by the Calculation Agent (after consultation with the
Company) for commercial paper of the specified Index Maturity placed for a
nonfinancial entity whose bond rating is "Aa", or the equivalent, from a
nationally recognized statistical rating organization; 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 determined as of such
Commercial Paper Interest Determination Date will be the Commercial Paper Rate
in effect on such Commercial Paper Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage) calculated
in accordance with the following formula:
D X 360
Money Market Yield = --------------- X 100
360 - (D X M)
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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 applicable Interest Rate Reset Period.
ELEVENTH DISTRICT COST OF FUNDS RATE. Eleventh District Cost of Funds Rate
Notes will bear interest at the interest rates (calculated with reference to the
Eleventh District Cost of Funds Rate and the Spread and/ or Spread Multiplier,
if any) specified in such Eleventh District Cost of Funds Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Eleventh
District Cost of Funds Rate" means, with respect to any Interest Determination
Date relating to an Eleventh District Cost of Funds Rate Note or any Interest
Determination Date for a Note for which the interest rate is determined with
reference to the Eleventh District Cost of Funds Rate (an "Eleventh District
Cost of Funds Rate Interest Determination Date"), the rate equal to the monthly
weighted average cost of funds for the calendar month immediately preceding the
month in which such Eleventh District Cost of Funds Rate Interest Determination
Date falls, as set forth under the caption "11th District" on Telerate Page 7058
as of 11:00 A.M., San Francisco time, on such Eleventh District Cost of Funds
Rate Interest Determination Date. If such rate does not appear on Telerate Page
7058 on such Eleventh District Cost of Funds Rate Interest Determination Date,
then the Eleventh District Cost of Funds Rate on such Eleventh District Cost of
Funds Rate Interest Determination Date shall be the monthly weighted average
cost of funds paid by member institutions of the Eleventh Federal Home Loan Bank
District that was most recently announced (the "Index") by the FHLB of San
Francisco as such cost of funds for the calendar month immediately preceding
such Eleventh District Cost of Funds Rate Interest Determination Date. If the
FHLB of San Francisco fails to announce the Index on or prior to such Eleventh
District Cost of Funds Rate Interest Determination Date for the calendar month
immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date, the Eleventh District Cost of Funds Rate determined as of
such Eleventh District Cost of Funds Rate Interest Determination Date will be
the Eleventh District Cost of Funds Rate in effect on such Eleventh District
Cost of Funds Rate Interest Determination Date.
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 and/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 on that date for
United States dollar 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 United
States dollar federal funds arranged by three leading brokers of federal funds
transactions in New York, New York (which may include the Agents or their
affiliates) selected by the Calculation Agent (after consultation with the
Company) prior to 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 determined as of such Federal Funds Rate Interest
Determination Date will be the Federal Funds Rate in effect on such Federal
Funds Rate Interest Determination Date.
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J.J. KENNY RATE. 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 Interest Determination Date for a 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 Ratings Group (or their respective successors) in respect 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.
LIBOR. LIBOR Notes will bear interest at the interest rates (calculated
with reference to LIBOR and the Spread and/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 Designated LIBOR Currency (as defined below) having the Index Maturity
designated in the applicable Pricing Supplement, commencing on the
applicable Interest Reset Date, that appear (or, if only a single rate is
required as aforesaid, 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, or (b) if "LIBOR Telerate" is specified
in the applicable Pricing Supplement, or if neither "LIBOR Reuters" nor
"LIBOR Telerate" is specified in the applicable Pricing Supplement as the
method for calculating LIBOR, the rate for deposits in the Designated LIBOR
Currency having the Index Maturity designated in the applicable Pricing
Supplement commencing on such Interest Reset 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.
(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 Designated LIBOR Page as specified in clause (i) above, the Calculation
Agent will request the principal London offices of each of four major
S-13
reference banks (which may include affiliates of the Agents) in the London
interbank market, as selected by the Calculation Agent (after consultation
with the Company), to provide the Calculation Agent with its offered
quotation for deposits in the Designated LIBOR Currency for the period of
the Index Maturity designated in the applicable Pricing Supplement,
commencing on the applicable Interest Reset 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 Designated LIBOR 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. in the
applicable Principal Financial Center (as defined below), on such LIBOR
Interest Determination Date by three major banks (which may include
affiliates of the Agents) in such Principal Financial Center selected by the
Calculation Agent (after consultation with the Company) for loans in the
Designated LIBOR 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 Designated
LIBOR 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 as of such LIBOR Interest Determination Date
will be LIBOR in effect on such LIBOR Interest Determination Date.
"Designated LIBOR Currency" means the currency or composite currency
specified in the applicable Pricing Supplement as to which LIBOR shall be
calculated or, if no such currency or composite currency is specified in the
applicable Pricing Supplement, United States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Pricing Supplement, the display on the Reuter Monitor Money Rates
Service (or any successor service) on the page specified in such Pricing
Supplement (or any other page as may replace such page on such service) for the
purpose of displaying the London interbank rates of major banks for the
Designated LIBOR Currency, or (b) if "LIBOR Telerate" is specified in the
applicable Pricing Supplement or neither "LIBOR Reuters" nor "LIBOR Telerate" is
specified in the applicable Pricing Supplement as the method for calculating
LIBOR, the display on the Dow Jones Markets Limited (or any successor service)
on the page specified in such Pricing Supplement (or any other page as may
replace such page on such service) for the purpose of displaying the London
interbank rates of major banks for the Designated LIBOR Currency.
"Principal Financial Center" means the capital city of the country to which
the Designated LIBOR Currency relates (or, in the case of ECU, Luxembourg),
except that with respect to United States dollars, Australian dollars, Canadian
dollars, Deutsche marks, Dutch guilders and Swiss francs, the "Principal
Financial Center" shall be The City of New York, Sydney, Toronto, Frankfurt,
Amsterdam and Zurich, 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 on such date as such rate is published in
H.15(519) under the heading "Bank Prime Loan." 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 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 USPRIME1 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
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than four such rates appear on the Reuters Screen USPRIME1 Page for such Prime
Rate Interest Determination Date, the Prime Rate will be determined by the
Calculation Agent and will be the arithmetic mean of the prime or base lending
rates quoted on the basis of the actual number of days in the year divided by a
360-day year as of the close of business on such Prime Rate Interest
Determination Date by four major money center banks (which may include
affiliates of the Agents) in The City of New York as selected by the Calculation
Agent (after consultation with the Company). If fewer than four quotations are
provided by such major money center banks, the Prime Rate shall be calculated by
the Calculation Agent and shall be the arithmetic mean of four prime rates
quoted on the basis of the actual number of days in the year divided by a
360-day year as of the close of business on such Prime Rate Interest
Determination Date as furnished in The City of New York by the major money
center banks, if any, that have provided such quotations and by a reasonable
number of substitute banks or trust companies (which may include affiliates of
the Agents) to obtain four such prime rate quotations, provided such substitute
banks or trust companies are organized and doing business under the laws of the
United States, or any State thereof, each having total equity capital of at
least $500,000,000 and being subject to supervision or examination by a Federal
or State authority, selected by the Calculation Agent (after consultation with
the Company) to provide such rates; PROVIDED, HOWEVER, that if the banks or
trust companies selected as aforesaid by the Calculation Agent are not quoting
rates as set forth in this sentence, the Prime Rate determined as of such Prime
Rate Interest Determination Date will be the Prime Rate in effect on such Prime
Rate Interest Determination Date.
"Reuters Screen USPRIME1 Page" means the display on the Reuter Monitor Money
Rates Service (or any successor service) on the "USPRIME1" page (or such other
page as may replace the USPRIME1 page on such service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
TREASURY RATE. Treasury Rate Notes will bear interest at the interest rates
(calculated with reference to the Treasury Rate and the Spread and/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 from the auction held on such
Treasury Rate Interest Determination Date (the "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 of
such Treasury bills (expressed as a bond equivalent on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) as otherwise
announced by the United States Department of the Treasury. In the event that the
results of the Auction of Treasury bills having the specified Index Maturity are
not reported as provided by 3:00 P.M., New York City time, on the related
Calculation Date, or if no such Auction is held, 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 or their affiliates) 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
determined as of such Treasury Rate Interest Determination Date will be the
Treasury Rate in effect on such Treasury Rate Interest Determination Date.
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
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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
(collectively, "Original Issue Discount Notes"). See "Certain United States
Federal Income Tax Considerations."
Notwithstanding anything to the contrary contained herein or in the
Prospectus or any Pricing Supplement, for purposes of determining the rights of
a Holder of an Original Issue Discount Note in respect of voting for or against
amendments to or waivers under the Indenture or any other matters requiring the
vote, consent or other action of Holders of the Notes, the principal amount of
such Original Issue Discount Note that shall be deemed to be outstanding shall
be the amount of the principal thereof that would be due and payable, as of the
date of such determination, upon acceleration of the maturity of such Note.
INDEXED NOTES
Notes also may be issued with the principal amount and premium, if any,
payable at Maturity and/or interest, if any, 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 prices, exchange rates or other items or
indices as may be specified in such Note ("Indexed Notes"), as set forth in the
applicable Pricing Supplement. In certain cases, 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, premium, if any, and interest, if any, payable in respect of Indexed
Notes and, where applicable, certain historical information with respect to the
specified indexed item and, if applicable, certain risk factors and tax
considerations associated with investment in Indexed Notes, will be set forth in
the applicable Pricing Supplement.
Notwithstanding anything to the contrary contained herein or in the
Prospectus or any Pricing Supplement, for purposes of determining the rights of
a Holder of an Indexed Note in respect of voting for or against amendments to or
waivers under the Indenture or any other matters requiring the vote, consent or
other action of Holders of the Notes, the principal amount of such Indexed Note
that shall be deemed to be outstanding shall be equal to the face amount thereof
upon issuance.
FOREIGN CURRENCY NOTES
Notes may be issued which are denominated in, or with the principal thereof
or premium, if any, or interest, if any, thereon payable in, currencies other
than U.S. dollars or in composite currencies or currency units ("Foreign
Currency Notes"). Information with respect to the currencies, currency units or
composite currencies in which Foreign Currency Notes are denominated or payable
and, where applicable, certain historical exchange rate information with respect
to such specified currencies, currency units or composite currencies and, if
applicable, certain risk factors and tax considerations associated with an
investment in such Foreign Currency Notes, will be set forth in the applicable
Pricing Supplement.
Notwithstanding anything to the contrary contained herein or in the
Prospectus or any Pricing Supplement, for purposes of determining the rights of
a Holder of a Foreign Currency Note in respect of voting for or against
amendments to or waivers under the Indenture or any other matters requiring the
vote, consent or other action of Holders of the Notes, the principal amount of
such Foreign Currency Note that shall be deemed outstanding shall be the U.S.
dollar equivalent, determined as of the date of original issuance of such
Foreign Currency Note, of the principal amount thereof.
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, Interest Payment Dates or any other
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provisions of, or matters relating to, the Notes may be modified by such terms
as may be specified under "Other/Additional 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 of like tenor and terms will be
represented by one or more global Notes (each, a "Global Security"). Each Global
Security representing Book-Entry Notes will be deposited with, or on behalf of,
the Depositary and will be registered in the name of the Depositary or its
nominee. 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 (as defined below), 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 may 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 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, or on behalf of, the Depositary. If, however, the aggregate
principal amount of any issue exceeds $200,000,000, one Global Security will
be issued with respect to each $200,000,000 of principal amount and an
additional Global Security will be issued with respect to any remaining
principal amount of such issue.
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 of the Depositary ("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 clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to the Depositary and its Participants are on file with the
Securities and Exchange Commission.
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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 Owners 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 Direct or Indirect 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 limited circumstances described below.
To facilitate subsequent transfers, all Global Securities representing
Book-Entry Notes which are deposited with, or on behalf of, the Depositary
are registered in the name of the Depositary's nominee, Cede & Co. The
deposit of Global Securities with, or on behalf of, 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, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the Book-Entry Notes of like tenor and terms 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, if any, 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, if any, 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.
If applicable, 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
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
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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 information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes to
be reliable, but neither the Company nor any Agent takes any responsibility for
the accuracy thereof.
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. If the Depositary is at any time
unwilling, unable or no longer eligible to serve 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 $1,000 and integral multiples thereof 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 (other than a partnership that is not treated as a United
States person under any applicable Treasury regulations), (iii) an estate whose
income is subject to United States federal income tax regardless of its source,
(iv) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust, or
(v) 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. Notwithstanding
the preceding clause (iv), to the extent provided in regulations, certain trusts
in existence on August 20, 1996 and treated as United States persons prior to
such date that elect to continue to be so treated also shall be considered U.S.
Holders. As used herein, the term "non-U.S. Holder" means a beneficial owner of
a Note that is not a U.S. Holder.
U.S. HOLDERS
PAYMENTS OF INTEREST. Payments of interest on a Note generally will be
taxable to a U.S. Holder as ordinary interest income at the time such payments
are accrued or are received (in accordance with the U.S. Holder's regular method
of tax accounting).
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
("Original Issue Discount Notes"). The following summary is based upon final
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Treasury regulations (the "OID Regulations") released by the Internal Revenue
Service ("IRS") on January 27, 1994, as amended on June 11, 1996, under the
original issue discount provisions of the Internal Revenue Code of 1986, as
amended (the "Code").
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 or, in the case of a Note
providing for the payment of any amount other than qualified stated interest (as
defined below) prior to maturity, multiplied by the weighted average maturity of
such Note). The issue price of each Note in an issue of Notes equals the first
price at which a substantial amount of such Notes has been sold (ignoring sales
to bond houses, brokers, or similar persons or organizations acting in the
capacity of underwriters, placement agents, or wholesalers). 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 an Original Issue 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 an
Original Issue Discount Note is the sum of the daily portions of original issue
discount with respect to such Original Issue Discount Note for each day during
the taxable year (or portion of the taxable year) on which such U.S. Holder held
such Original Issue Discount Note. The "daily portion" of original issue
discount on any Original Issue 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 Original Issue
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 Original Issue 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 an
Original Issue Discount Note at the beginning of any accrual period is the sum
of the issue price of the Original Issue Discount Note plus the amount of
original issue discount allocable to all prior accrual periods minus the amount
of any prior payments on the Original Issue 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 an Original Issue Discount Note for an amount
that is greater than its adjusted issue price as of the purchase date and less
than or equal to the sum of all amounts payable on the Original Issue Discount
Note after the purchase date other than payments of qualified stated interest,
will be considered to have purchased the Original Issue 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
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gross income with respect to such Original Issue Discount Note for any taxable
year (or portion thereof in which the U.S. Holder holds the Original Issue
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 and Indexed Notes ("Variable
Notes") are subject to special rules whereby a Variable 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 Variable 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.
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
Variable 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 .65 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 .65 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 Variable Note (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the Variable 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 unless such cap or floor is fixed
throughout the term of the Note. An "objective rate" is a rate that is not
itself a qualified floating rate but which is determined using a single fixed
formula and that is based on objective financial or economic information. A rate
will not qualify as an objective rate if it is based on information that is
within the control of the issuer (or a related party) or that is unique to the
circumstances of the issuer (or a related party), such as dividends, profits, or
the value of the issuer's stock (although a rate does not fail to be an
objective rate merely because it is based on the credit quality of the issuer).
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 reasonably be expected to inversely reflect contemporaneous
variations in the qualified floating rate. The OID Regulations also provide that
if a Variable Note provides for stated interest at a fixed rate for an initial
period of one year or less followed by a variable rate that is either a
qualified floating rate or an objective rate and if the variable rate on the
Variable 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 Variable 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 and if
the interest on such Note is unconditionally payable in cash or property (other
than debt instruments of the issuer) at least annually, then all stated interest
on the Note will constitute qualified stated interest and will be taxed
accordingly. Thus, a Variable 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 Variable 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. The amount of qualified stated interest and the amount of
original issue discount, if any, that accrues during an accrual period on such a
Variable Note is determined under the rules applicable to fixed rate debt
instruments by assuming that the variable rate is a fixed rate equal to (i) in
the case of a qualified floating rate or qualified
S-21
inverse floating rate, the value, as of the issue date, of the qualified
floating rate or qualified inverse floating rate, or (ii) in the case of an
objective rate (other than a qualified inverse floating rate), a fixed rate that
reflects the yield that is reasonably expected for the Variable Note. The
qualified stated interest allocable to an accrual period is increased (or
decreased) if the interest actually paid during an accrual period exceeds (or is
less than) the interest assumed to be paid during the accrual period pursuant to
the foregoing rules.
In general, any other Variable 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 Variable Note. The OID Regulations
generally require that such a Variable 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 Variable
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 Variable Note's
issue date. Any objective rate (other than a qualified inverse floating rate)
provided for under the terms of the Variable Note is converted into a fixed rate
that reflects the yield that is reasonably expected for the Variable Note. In
the case of a Variable 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 Variable 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 Variable Note as of the Variable 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 Variable Note is then converted into an "equivalent"
fixed rate debt instrument in the manner described above.
Once the Variable 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 Variable 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 Variable Note during the accrual period.
If a Variable Note does not qualify as a "variable rate debt instrument"
under the OID Regulations, then the Variable Note would be treated as a
contingent payment debt obligation. U.S. Holders should be aware that on June
11, 1996, the Treasury Department issued final regulations (the "CPDI
Regulations") concerning the proper United States Federal income tax treatment
of contingent payment debt instruments. In general, the CPDI Regulations would
cause the timing and character of income, gain or loss reported on a contingent
payment debt instrument to substantially differ from the timing and character of
income, gain or loss reported on a contingent payment debt instrument under
general principles of current United States Federal income tax law.
Specifically, the CPDI Regulations generally require a U.S. Holder of such an
instrument to include future contingent and noncontingent interest payments in
income as such interest accrues based upon a projected payment schedule.
Moreover, in general, under the CPDI Regulations, any gain recognized by a U.S.
Holder on the sale, exchange, or retirement of a contingent payment debt
instrument will be treated as ordinary income and all or a portion of any loss
realized could be treated as ordinary loss as opposed to capital loss (depending
upon the circumstances). The CPDI Regulations apply to debt instruments issued
on or after August 13, 1996. The proper United States Federal income tax
treatment of Variable Notes that are treated as contingent payment debt
obligations will be more fully described in the applicable Pricing Supplement.
Furthermore, any other special United States Federal income tax considerations,
not otherwise discussed herein, which are applicable to any particular issue of
Notes will be discussed in the applicable Pricing Supplement.
S-22
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.
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).
MARKET DISCOUNT. If a U.S. Holder purchases a Note, other than an Original
Issue 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 an Original Issue Discount Note, for an amount that is less than its
adjusted issue price as of the purchase date, such U.S. Holder will be treated
as having purchased such Note at a "market discount," unless such market
discount 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 an Original Issue 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
certain earlier dispositions, 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. Such an election will apply to all debt
instruments acquired by the U.S. Holder on or after the first day of the first
taxable year to which such election applies and may be revoked only with the
consent of the IRS.
PREMIUM. If a U.S. Holder purchases a Note for an amount that is greater
than the sum of all amounts payable on the Note after the purchase date other
than payments of qualified stated interest, such U.S.
S-23
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. Any election to
amortize bond premium applies to all taxable debt instruments acquired by the
U.S. Holder on or after the first day of the first taxable year to which such
election applies and may be revoked only with the consent of the IRS.
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 (other than amounts representing accrued and unpaid interest) and
such U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax
basis in a Note generally will equal such U.S. Holder's initial investment in
the Note 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 the applicable holding period.
The Taxpayer Relief Act of 1997 reduces the maximum rates on long-term capital
gains recognized on capital assets held by individual taxpapers for more than
eighteen months as of the date of disposition (and would further reduce the
maximum rates on such gains in the year 2001 and thereafter for certain
individual taxpayers who meet specified conditions). Prospective investors
should consult their own tax advisors concerning these tax law changes.
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 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 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.
Final regulations dealing with withholding tax on income paid to foreign
persons, backup withholding, and related matters (the "New Withholding
Regulations") were issued by the Treasury Department on October 6, 1997. The New
Withholding Regulations will generally be effective for payments made after
December 31, 1998, subject to certain transition rules. Prospective Non-U.S.
Holders are strongly urged to consult their own tax advisors with respect to the
New Withholding Regulations.
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.
S-24
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. In addition, prospective investors are strongly urged to
consult their own tax advisors with respect to the New Withholding Regulations.
See "--Non-U.S. Holders."
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 to
or through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, BancAmerica Robertson Stephens, Credit Suisse First Boston
Corporation and Lehman Brothers Inc. (the "Agents"). The Agents, individually or
in a syndicate, may purchase Notes, as principal, from the Company from time to
time for resale to investors and other purchasers at varying prices relating to
prevailing market prices at the time of resale as determined by the applicable
Agent or, if so specified in the applicable Pricing Supplement, for resale at a
fixed offering price. If agreed to by the Company and an Agent, such Agent may
also utilize its reasonable efforts on an agency basis to solicit offers to
purchase the Notes at 100% of the principal amount thereof, unless otherwise
specified in the applicable Pricing Supplement. The Company will pay a
commission to an Agent, ranging from .125% to .750% of the principal amount of
each Note, depending upon its stated maturity, sold through such Agent as an
agent of the Company. Commissions with respect to Notes with stated maturities
in excess of 30 years that are sold through an Agent as an agent of the Company
will be negotiated between the Company and such Agent at the time of such sale.
Unless otherwise specified 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 of the principal
amount equal to the commission applicable to an agency sale of a Note of
identical maturity. An Agent may sell Notes it has purchased from the Company as
principal to certain dealers less a concession equal to all or any portion of
the discount received in connection with such purchase. Such Agent may allow,
S-25
and such dealers may reallow, a discount to certain other dealers. After the
initial offering of Notes, the offering price (in the case of Notes to be resold
on a fixed offering price basis), the concession and the reallowance may be
changed.
The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject offers in whole or in part (whether placed
directly with the Company or through an Agent). Each Agent will have the right,
in its discretion reasonably exercised, to reject in whole or in part any offer
to purchase Notes received by it on an agency basis.
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.
Upon issuance, the Notes will not have an established trading market. The
Notes will not be listed on any securities exchange. The Agents may from time to
time purchase and sell Notes in the secondary market, but the Agents are not
obligated to do so, and there can be no assurance that there will be a secondary
market for the Notes or that there will be liquidity in the secondary market if
one develops. From time to time, the Agents may make a market in the Notes, but
the Agents are not obligated to do so and may discontinue any market-making
activity at any time.
In connection with an offering of Notes purchased by one or more Agents as
principal on a fixed offering price basis, such Agent or Agents, as the case may
be, will be permitted to engage in certain transactions that stabilize the price
of Notes. Such transactions may consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of Notes. If the Agent creates or the
Agents create, as the case may be, a short position in Notes, i.e., if it sells
or they sell Notes in an aggregate principal amount exceeding that set forth in
the applicable Pricing Supplement, such Agent or Agents, as the case may be, may
reduce that short position by purchasing Notes in the open market. In general,
purchases of Notes for the purpose of stabilization or to reduce a short
position could cause the price of Notes to be higher than it might be in the
absence of such purchases.
Neither the Company nor any of the Agents makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described in the immediately preceding paragraph may have on the price of Notes.
In addition, neither the Company nor any of the Agents makes any representation
that the Agents will engage in any such transactions or that such transactions,
once commenced, will not be discontinued without notice.
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 respect
thereof.
In the ordinary course of its business, the Agents and their affiliates have
engaged and may in the future engage in investment banking and other
transactions with the Company and certain of its affiliates.
From time to time, the Company may issue and sell other Debt Securities
described in the accompanying Prospectus, and the amount of Notes offered hereby
is subject to reduction as a result of such sales.
S-26
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 FEBRUARY 3, 1998
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") for an aggregate initial
public offering price of up to $600,000,000 (or the equivalent in foreign
currencies, currency units or composite currencies). The Debt Securities will be
offered on terms to be determined in light of market conditions at the time of
offering. 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 or repayment, 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
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1998.
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. The
Commission also maintains a site on the World Wide Web at http:\\www.sec.gov.,
which contains reports, proxy statements and other information for registrants
that file electronically with the Commission and certain of the Company's
filings are available at such web site. Certain securities of the Company are
listed on the New York Stock Exchange, 20 Broad Street, New York, New York 10005
and the Pacific Exchange, 301 Pine Street, San Francisco, CA 94104 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 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is made to the Registration Statement, including the
exhibits filed as a part thereof and incorporated by reference therein, 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 Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996, Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997,
June 30, 1997, and September 30, 1997, and Current Report on Form 8-K dated
January 2, 1998, 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 subsequent to the date hereof and 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 Prospectus 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 of
any documents incorporated by reference in this Prospectus (other than exhibits
to such documents, unless such exhibits are specifically incorporated by
reference in such documents). 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) 244-2160.
2
SOUTHERN CALIFORNIA GAS COMPANY
The Company is a public utility owning and operating a natural gas
distribution, transmission and storage system that, as of February 3, 1998,
supplied natural gas in 535 cities and communities throughout a 23,000 square
mile service territory with a population of approximately 17.4 million people,
comprising 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 for gas
service, including an authorized rate of return on investment. The Company is
the principal subsidiary of Pacific Enterprises (the "Parent"). The Debt
Securities are not obligations of, and are not guaranteed by, the Parent or any
other entity.
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.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's consolidated ratios of earnings to fixed charges for each of
the periods indicated are as follows:
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
----------------------------------------------------- SEPTEMBER 30,
1992 1993 1994 1995 1996 1997
--------- --------- --------- --------- --------- -------------
Ratios of Earnings to Fixed Charges
(1):
Actual............................... 4.08 3.76 3.79 4.37 4.49 5.36
--------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- -------------
Actual Adjusted for Supplier Refunds
and Regulatory Accounts.............. 4.16 3.82 4.04 4.50 4.66 5.50
--------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- -------------
- ------------------------
(1) 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.
USE OF PROCEEDS
Except as may otherwise be set forth in the applicable Prospectus Supplement
or Pricing Supplement, as the case may be, 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 used for general corporate
purposes, which may include the expansion and betterment of utility plant, the
refunding and retirement of indebtedness and/or equity securities and the
replenishment of funds previously expended for such purposes.
3
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. Certain capitalized
terms used herein and not defined have the meanings set forth in the Indenture.
The form of Indenture is incorporated by reference as an exhibit to the
Registration Statement and copies thereof may be obtained as described above
under "Available Information."
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. If
so indicated in the applicable Prospectus Supplement and/or Pricing Supplement,
the terms of the Offered Debt Securities may differ from the terms set forth
below.
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 debt securities issued under the
Indenture will rank PARI PASSU in priority of payment with all other debt
securities issued under such Indenture.
The Debt Securities will be unsecured obligations of the Company 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 $850,000,000 in
aggregate principal amount were outstanding as of the date of this Prospectus.
The Company may from time to time issue additional First Mortgage Bonds which
also will be secured by such properties. Accordingly, the Notes will be
effectively subordinated to all existing and future First Mortgage Bonds to the
extent of the collateral securing the First Mortgage Bonds. The Debt Securities
are not obligations of the Parent and are not guaranteed by the Parent or any
other entity.
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 terms 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 otherwise provided in the Prospectus Supplement or a
Pricing Supplement, at the option of the
4
Company, interest, if any, may be paid by mailing a check to the address of the
person entitled thereto as it appears in the Security 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 $1,000 and integral multiples thereof.
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. Provisions of the
Indenture do not afford Holders of the Debt Securities protection in the event
of a highly leveraged transaction, reorganization, restructuring, change of
control, merger or similar transaction involving the Company that may adversely
effect the Holders of the Debt Securities.
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 or a
Pricing 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
5
(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 be deemed to have
occurred so long as the Company shall contest 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 (or, in the case of Original Issue Discount
Securities, such lesser amounts as may be provided by the terms thereof) 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 of Debt
Securities of any series, 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 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 interest, if any, on, any Debt Security;
(b) reduce the principal amount of, or premium, if any, payable upon redemption
of, 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 on or 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 any 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.
6
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 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 within one year or are to be
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 (which shall be based upon an Internal Revenue Service ruling or a
change subsequent to the date of the Indenture in applicable federal income tax
law) 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 Debt Securities 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. The Indenture does not limit
the right of the Trustee and its affiliates 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.
7
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.
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 LLP, Los Angeles,
California, will act as counsel for any underwriters or agents.
EXPERTS
The consolidated financial statements and related consolidated financial
statement schedules incorporated herein by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports also
incorporated herein by reference and have been so incorporated 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 OTHER THAN AS CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING
SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT OR 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, THE APPLICABLE PRICING 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, THE APPLICABLE
PRICING SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION
BY ANYONE IN ANY JURISDICTION 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
---------
Special Note Regarding Forward-Looking
Statements................................... S-2
Description of the Notes....................... S-3
Certain United States Federal
Income Tax Considerations.................... S-19
Plan of Distribution........................... S-25
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
Southern California Gas Company................ 3
Ratios of Earnings to Fixed Charges............ 3
Use of Proceeds................................ 3
Description of the Debt Securities............. 4
Plan of Distribution........................... 8
Legal Matters.................................. 8
Experts........................................ 8
$600,000,000
SOUTHERN CALIFORNIA
GAS COMPANY
MEDIUM-TERM NOTES
DUE NINE MONTHS OR
MORE FROM DATE OF ISSUE
--------------------
PROSPECTUS SUPPLEMENT
--------------------
MERRILL LYNCH & CO.
BANCAMERICA ROBERTSON STEPHENS
CREDIT SUISSE FIRST BOSTON
LEHMAN BROTHERS
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.................................................. $ 177,000
Fees and expenses of accountants.................................. 25,000
Fees and expenses of counsel...................................... 50,000
Blue Sky fees and expenses........................................ 5,000
Fees and expenses of Trustee...................................... 5,000
Printing expenses................................................. 40,000
Rating agency fees................................................ 5,000
Miscellaneous..................................................... 13,000
---------
Total........................................................... $ 320,000
---------
---------
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 -- Form of Distribution Agreement.
4.1 -- 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.*
4.2 -- First Supplemental Indenture, dated as of October 1, 1992, between
Southern California Gas Company and Citibank, N.A., as Trustee.**
4.3 -- Form of Fixed Rate Note.
4.4 -- 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 (Actual).
12.2 -- Computation of Ratios of Earnings to Fixed Charges (Actual Adjusted for
Supplier Refunds and Regulatory Accounts).
23.1 -- Consent of Gary W. Kyle (included in Exhibit 5.1).
23.2 -- Consent of Deloitte & Touche LLP.
24.1 -- Powers of Attorney (included on page II-4).
25.1 -- 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 Current Report on Form 8-K 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.
(4) 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.
(5) 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 Securities
Act of 1933 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 Securities Act of 1933 and will be
governed by the final adjudication of such issue.
(6) 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.
II-2
(7) 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-3
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, State of California, on February 3,
1998.
SOUTHERN CALIFORNIA GAS COMPANY
By: /s/ WARREN I. MITCHELL
-----------------------------------------
Warren I. Mitchell
PRESIDENT
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Neal E. Schmale, Dennis V. Arriola, Ralph Todaro,
Gary W. Kyle and Stephen J. Skuris, and each of them, as his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement with all exhibits thereto, and any
registration statement filed pursuant to Rule 462(b) promulgated under the
Securities Act of 1933 and to file the same, 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/ WARREN I. MITCHELL
- ------------------------------ President and Director February 3,
Warren I. Mitchell (Principal Executive Officer) 1998
/s/ NEAL E. SCHMALE Executive Vice President and
- ------------------------------ Chief Financial Officer February 3,
Neal E. Schmale (Principal Financial Officer) 1998
/s/ RALPH TODARO
- ------------------------------ Vice President and Controller February 3,
Ralph Todaro (Principal Accounting Officer) 1998
/s/ HYLA H. BERTEA
- ------------------------------ Director February 3,
Hyla H. Bertea 1998
II-4
SIGNATURES TITLE DATE
- ------------------------------ --------------------------------- --------------
/s/ HERBERT L. CARTER
- ------------------------------ Director February 3,
Herbert L. Carter 1998
/s/ WILFORD D. GODBOLD, JR.
- ------------------------------ Director February 3,
Wilford D. Godbold, Jr. 1998
/s/ IGNACIO E. LOZANO, JR.
- ------------------------------ Director February 3,
Ignacio E. Lozano, Jr. 1998
/s/ RICHARD J. STEGEMEIER
- ------------------------------ Director February 3,
Richard J. Stegemeier 1998
/s/ DIANA L. WALKER
- ------------------------------ Director February 3,
Diana L. Walker 1998
II-5
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- --------- ------------------------------------------------------------------------------ -------------------
1.1 -- Form of Distribution Agreement................................................
4.1 -- 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.*..................................................................
4.2 -- First Supplemental Indenture, dated as of October 1, 1992, between Southern
California Gas Company and Citibank, N.A., as Trustee.**......................
4.3 -- Form of Fixed Rate Note.......................................................
4.4 -- 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 (Actual)...................
12.2 -- Computation of Ratios of Earnings to Fixed Charges (Actual Adjusted for
Supplier Refunds and Regulatory Accounts).....................................
23.1 -- Consent of Gary W. Kyle (included in Exhibit 5.1).............................
23.2 -- Consent of Deloitte & Touche LLP..............................................
24.1 -- Powers of Attorney (included on page II-4)....................................
25.1 -- 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 Current Report on Form 8-K dated October 12,
1992 (File No. I-1402) and incorporated by reference herein.
SOUTHERN CALIFORNIA GAS COMPANY
Medium-Term Notes due
Nine Months or More From Date of Issue
DISTRIBUTION AGREEMENT
________, 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower, 10th Floor
World Financial Center
New York, New York 10281
BANCAMERICA ROBERTSON STEPHENS
231 South LaSalle Street, 18th Floor
Chicago, Illinois 60697
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, New York 10010
LEHMAN BROTHERS INC.
3 World Financial Center
New York, New York 10281-1200
Dear Sirs:
Southern California Gas Company, a California corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, BancAmerica Robertson Stephens, Credit Suisse First Boston
Corporation and Lehman Brothers 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 will have
maturities of nine months or more from date of issue and are to be issued
pursuant to an indenture dated as of May 1, 1989, as amended and supplemented by
the First 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") issued and to be issued under the Indenture. As of the date
hereof, the Company has authorized (in addition to Notes heretofore issued by
the Company pursuant to the Indenture) the issuance of up to $600,000,000
aggregate initial offering price of Notes (or the equivalent, based upon the
exchange rate on the applicable trade date, in such foreign or composite
currencies or currency units as the Company shall designate at the time of
issuance) to or through the Agents pursuant to the terms of this Agreement. It
is understood, however, that the Company may from time to time pursuant to an
Officers' Certificate (as defined in the Indenture) delivered to the Trustee
pursuant to Section 2.01 of the Indenture (with an original copy thereof
delivered to the Agents), reduce the authorized aggregate initial offering price
of the Notes (but not below the aggregate initial offering price 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
though the issuance of such Notes were authorized as of the date hereof. In the
event that any such additional Notes are authorized, the Company will enter into
such amendments or supplements to this Agreement, and deliver such officers'
certificates, legal opinions, accountants' comfort letters and other documents,
as the Agents may reasonably request in connection therewith.
This Agreement provides both for the sale of Notes by the Company to one or
more Agents as principal for resale to investors and other purchasers and for
the sale of Notes by the Company directly to investors (as may from time to time
be agreed to by the Company and the applicable Agent), in which case the
applicable Agent will act as an agent of the Company in soliciting offers for
the purchase of Notes.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-____) and such
amendments thereto as may have been required through the date hereof for the
registration of $600,000,000 aggregate initial offering price 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"), and the Company has filed such post-effective amendments
to such registration statement as may have been required prior to its acceptance
of any offer for the purchase of Notes and each such post-effective amendment
has been declared effective by the Commission. Such registration statement (as
so amended, if applicable) is referred to herein as the "Registration
Statement"; and the final prospectus and all applicable amendments or
supplements thereto (including the final prospectus supplement and the
applicable pricing supplement relating to the offering of Notes), in the form
first furnished to the applicable Agent or Agents, as the case may be, for use
in confirming sales of Notes, are collectively referred to herein as the
"Prospectus"; provided, however, that all references to the
2
"Registration Statement", the "Prospectus" and any "preliminary prospectus"
shall also be deemed to include all documents incorporated or deemed to be
incorporated therein by reference pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"), prior to any acceptance by the Company of an
offer for the purchase of Notes; provided, further, that if the Company files a
registration statement with the Commission pursuant to Rule 462(b) of the 1933
Act Regulations (the "Rule 462(b) Registration Statement"), then, after such
filing, all references to the "Registration Statement" shall also be deemed to
include the Rule 462(b) Registration Statement. A "preliminary prospectus"
shall be deemed to refer to any prospectus used before the Registration
Statement became effective and any prospectus furnished by the Company after the
registration statement became effective and before any acceptance by the Company
of an offer for the purchase of Notes which omitted information to be included
upon pricing in a form of prospectus filed with the Commission pursuant to Rule
424(b) of the 1933 Act Regulations. For purposes of this Agreement, all
references to the Registration Statement, the Prospectus or any preliminary
prospectus or to any amendment or supplement thereto shall be deemed to include
any copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("EDGAR").
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, the Prospectus or any preliminary 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, the
Prospectus or any preliminary prospectus, as the case may be; and all references
in this Agreement to amendments or supplements to the Registration Statement,
Prospectus or any preliminary prospectus shall be deemed to mean and include the
filing of any document under the 1934 Act which is or is deemed to be
incorporated by reference in the Registration Statement, the Prospectus or any
preliminary 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 agrees, subject to the provisions
of the following two sentences, that Notes will be sold exclusively to or
through the Agents. The Company agrees that, during the period the Agents are
acting as the Company's agents hereunder, the Company shall not contact or
solicit potential investors to purchase the Notes or engage any other person or
party to assist in the offering of the Notes; PROVIDED, HOWEVER, that so long as
this Agreement shall be in effect the Company may solicit offers to purchase
Notes through any other agent but only by amending this Agreement to appoint
such agent an additional Agent hereunder on the same terms and conditions as
provided herein for the Agents and by giving the Agents prior notice of such
appointment. Notwithstanding anything to the contrary contained herein, the
Company may accept offers to purchase Notes through an agent other than an
Agent,
3
PROVIDED THAT (i) the Company shall not have solicited such offers, (ii) the
Company and such agent shall have executed an agreement with respect to such
purchases having terms and conditions (except with respect the commission
schedule attached hereto as Schedule I) substantially the same as the terms
and conditions that would apply to such purchases under this Agreement if
such agent were an Agent (which may be accomplished by incorporating by
reference in such agreement the terms and conditions of this Agreement) and
(iii) the Company shall notify the Agents promptly after the execution of any
such agreement and shall provide the Agents with a copy of such agreement
promptly following the execution thereof.
B. SALE OF NOTES. The Company shall not sell or approve the solicitation
of offers for the purchase of Notes in excess of the amount which shall be
authorized by the Company from time to time or in excess of the aggregate
initial offering price of Notes registered pursuant to the Registration
Statement. The Agents shall 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.
C. PURCHASES AS PRINCIPAL. The Agents shall not have any obligation to
purchase Notes from the Company as principal. However, absent an agreement
between an Agent and the Company that such Agent shall be acting solely as an
agent for the Company, such Agent shall be deemed to be acting as principal in
connection with any offering of Notes by the Company through such Agent.
Accordingly, the Agents, individually or in a syndicate, may agree from time to
time to purchase Notes from the Company as principal for resale to investors and
other purchasers determined by such Agents. Any purchase of Notes from the
Company by an Agent as principal shall be made in accordance with Section 3(A)
hereof.
D. SOLICITATIONS AS AGENT. If agreed upon between an Agent and the
Company, such Agent, acting solely as an agent for the Company and not as
principal, will solicit offers for the purchase of Notes. Such Agent will
communicate to the Company, orally, each offer for the purchase of Notes
solicited by it on an agency basis other than those offers rejected by such
Agent. Such Agent shall have the right, in its discretion reasonably exercised,
to reject any offer for the purchase of Notes, in whole or in part, and any such
rejection shall not be deemed a breach of its agreement contained herein. The
Company may accept or reject any offer for the purchase of Notes, in whole or in
part. Such Agent shall make reasonable efforts to assist the Company in
obtaining performance by each purchaser whose offer for the purchase of Notes
has been solicited by it on an agency basis and accepted by the Company. Such
Agent shall not have any liability to the Company in the event that any such
purchase is not consummated for any reason. If the Company shall default on its
obligation to deliver Notes to a purchaser whose offer has been solicited by
such Agent on an agency basis and accepted by the Company, the Company shall (i)
hold such Agent harmless against any loss, claim or damage arising from or as a
result of such default by the Company and (ii) pay to such Agent any commission
to which it would otherwise be entitled absent such default.
E. RELIANCE. The Company and the Agents, severally and not jointly,
agree that any Notes purchased from the Company by one or more Agents as
principal shall be purchased, and any Notes the placement of which an Agent
arranges as an agent of the Company shall be placed by such Agent, in reliance
on the representations, warranties, covenants and
4
agreements of the Company contained herein and on the terms and conditions and
in the manner provided herein.
F. SEVERAL OBLIGATIONS OF THE AGENTS. Anything herein to the contrary
notwithstanding, the obligations and agreements of each of the Agents under this
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 7(B) hereof (each of the times
referenced above being referred to hereafter as a "Representation Date"), as
follows:
1. 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 Registration Statement and the Prospectus; (B)
has the requisite corporate power and authority to execute and deliver this
Agreement, 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 or be in good standing would not have a material adverse effect
on the condition, financial or otherwise, or the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise. 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.
2. 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 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 or be in good standing would not have a
material adverse effect on the condition, financial or
5
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.
3. REGISTRATION STATEMENT AND PROSPECTUS. At the respective times
the Registration Statement (including any Rule 462(b) Registration
Statement) and any post-effective amendments thereto became or become
effective, as of the date of filing with the Commission of the Company's
most recent annual report on Form 10-K (the "Annual Report") and as of each
Representation Date, the Registration Statement (including any Rule 462(b)
Registration Statement) and any amendments thereto complied and 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") and did
not and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary 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 constituting the Trustee's Statement of Eligibility under the
1939 Act on Form T-1 (the "Form T-1").
4. INCORPORATED DOCUMENTS. The documents incorporated or deemed to
be 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 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.
5. 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
6
pursuant to Section 5(D) or 7(D) hereof will be, independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.
6. 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.
7. 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.
8. NO DEFAULTS. Neither the Company nor any of its subsidiaries is
in violation of its charter or bylaws or in 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 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 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 authority, agency or body is required in connection
with the sale of the Notes hereunder or for the consummation by the Company
of the transactions contemplated by this Agreement or the Indenture, except
as may be required under the 1933 Act, the 1933 Act Regulations, the 1939
Act
7
or the 1939 Regulations (which have been obtained and are in full force and
effect), except the authorization of the Public Utilities Commission of the
State of California ("CPUC") under the California Public Utilities Act
("CPUA") (which authorization will be obtained and will be in full force
and effect as and when required by applicable law or regulation), and
except such as may be required under state securities or blue sky laws.
9. LEGAL PROCEEDINGS; CONTRACTS. Except as may be set forth in the
Registration Statement or the Prospectus, 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 the Prospectus 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; 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 or the
Prospectus, including ordinary routine litigation incidental to its
business, are, considered in the aggregate, not material; and there are no
contracts or documents of the Company or any of its subsidiaries which are
required to be filed as exhibits to the Registration Statement by the 1933
Act or by the 1933 Act Regulations which have not been so filed.
10. COMMODITY EXCHANGE ACT. The Notes, upon issuance, will be
excluded or exempted under, or beyond the purview of, the Commodity
Exchange Act, as amended (the "Commodity Exchange Act"), and the rules and
regulations of the Commodity Futures Trading Commission under the Commodity
Exchange Act (the "Commodity Exchange Act Regulations").
11. 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
8
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise.
12. 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).
13. 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 except further as enforcement thereof may be limited by
requirements that a claim with respect to any debt securities issued under
the Indenture that are payable in a foreign or composite currency (or a
foreign or composite currency judgment in respect of such claim) be
converted into U.S. dollars at a rate of exchange prevailing on a date
determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United States;
and the Indenture has been qualified under the 1939 Act.
14. 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, when completed as contemplated by the Procedures (as hereinafter
defined) and authenticated and delivered pursuant to the provisions of this
Agreement and the Indenture against payment of the consideration therefor,
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 except further as enforcement thereof may
be limited by requirements that a claim with respect to any Notes payable
in a foreign or composite currency (or a foreign or composite currency
judgment in respect of such claim) be converted into U.S. dollars at a rate
or exchange prevailing on a date determined pursuant to applicable law or
by governmental authority to limit, delay or prohibit the making of
payments outside the United States, 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.
15. 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
9
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.
16. 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.
17. DISTRIBUTION AGREEMENT. This Agreement has been duly authorized,
executed and delivered by the Company.
18. RATING OF THE NOTES. The Medium-Term Note Program under which
the Notes are issued (the "Program"), as well as the Notes, are rated "A2"
by Moody's Investors Service, Inc. and "A+" by Standard & Poor's Ratings
Group, or such other rating as to which the Company shall have most
recently notified the Agents pursuant to Section 4(A) hereof.
19. NO BUSINESS IN CUBA. To the extent applicable, 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 Florida statutes, and the rules
and regulations thereunder (collectively, the "Cuba Act") or is exempt
therefrom.
20. 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. PURCHASES AS PRINCIPAL; SOLICITATIONS AS AGENT.
A. PURCHASES AS PRINCIPAL. Notes purchased from the Company by the
Agents, individually or in a syndicate, as principal shall be made in accordance
with terms agreed upon between such Agent or Agents, as the case may be, and the
Company (which terms, unless otherwise agreed, shall, to the extent applicable,
include those terms specified in Exhibit A hereto and shall be agreed upon
orally, with written confirmation prepared by such Agent or Agents and promptly
telecopied to the Company). An Agent's commitment to
10
purchase Notes as principal 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. Unless the context
otherwise requires, references to this "Agreement" (and all references to
"herein" and references of like import) shall include the applicable agreement
of one or more Agents to purchase Notes from the Company as principal. Each
purchase of Notes, unless otherwise agreed, shall be at a discount from the
principal amount of each such Note equivalent to the applicable commission set
forth in Schedule I hereto. The Agents may engage the services of any broker or
dealer in connection with the resale of the Notes purchased by them as principal
and may allow all or any portion of the discount received from the Company in
connection with such purchases to such brokers or dealers. At the time any one
or more of the Agents shall enter into an agreement to purchase Notes from the
Company as aforesaid, such Agent or Agents, as the case may be, shall specify
whether the Company shall be required to deliver an officers' certificate,
opinion of counsel and comfort letter pursuant to Sections 7(B), 7(C) and 7(D)
hereof; and, unless otherwise agreed at such time by the Company and such Agent
or Agents, as the case may be, the stand-off agreement set forth in Section 4(K)
shall be applicable in connection with such purchase.
If the Company and two or more Agents enter into a single agreement
pursuant to which such Agents agree to purchase Notes from the Company as
principal and one or more of such Agents shall fail at the applicable Settlement
Date to purchase the Notes which it or they are obligated to purchase (the
"Defaulted Notes"), then the nondefaulting Agent or Agents, as the case may be,
shall have the right, within 24 hours thereafter, to make arrangements for one
of them or one or more other Agents or underwriters to purchase all, but not
less than all, of the Defaulted Notes in such amounts as may be agreed upon and
upon the terms herein set forth; provided, however, that if such arrangements
shall not have been completed within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Notes does not
exceed 10% of the aggregate principal amount of Notes to be so purchased by
all of such Agents on such Settlement Date pursuant to such agreement, the
nondefaulting Agent or Agents, as the case may be, shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective initial underwriting obligations bear to
the underwriting obligations of all nondefaulting Agents; or
(b) if the aggregate principal amount of Defaulted Notes exceeds 10%
of the aggregate principal amount of Notes to be so purchased by all of
such Agents on the Settlement Date pursuant to such agreement, such
agreement shall terminate without liability on the part of any
nondefaulting Agent.
No action taken pursuant to this paragraph shall relieve any defaulting Agent
from liability in respect of its default. In the event of any such default
which does not result in a termination of such agreement, either the
nondefaulting Agent or Agents, as the case may be, or the Company shall have the
right to postpone the applicable Settlement Date for a period not exceeding
seven days in order to effect any required changes in the Registration Statement
or the Prospectus or in any other documents or arrangements.
11
The parties hereto acknowledge and agree that if on any date two or more of
the Agents shall agree with the Company to purchase Notes as principal, then,
unless otherwise agreed by the Company and such Agents at such time and
notwithstanding that all such Notes may have the same terms and provisions, the
Company shall be deemed to have entered into a separate agreement with each such
Agent and not a single agreement with all such Agents.
B. SOLICITATIONS AS AGENT. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, when agreed by the Company and an Agent, such Agent, as an agent of the
Company, will use its reasonable efforts to solicit offers for the purchase of
Notes upon the terms set forth in the Prospectus. The Agents are not authorized
to appoint sub-agents with respect to Notes sold through them as agent. All
Notes sold through an Agent as agent will be sold at 100% of their principal
amount unless otherwise agreed upon between the Company and such Agent.
The Company reserves the right, in its sole discretion, to suspend
solicitation of offers for the purchase of Notes through an Agent, as an agent
of the Company, commencing at any time for any period of time or permanently.
As soon as practicable after receipt of instructions from the Company, such
Agent will suspend solicitation of offers for the purchase of Notes from the
Company until such time as the Company has advised such Agent 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 an
agent of the Company, as set forth in Schedule I hereto. Nothwithstanding the
foregoing, subsequent to the date hereof, the Company and the Agents may
collectively agree to change the commission schedule set forth in Schedule I
hereto, in which case, the Company and the Agents will enter into a signed
amendment to this Agreement.
C. ADMINISTRATIVE PROCEDURES. 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 $1,000 or any amount in excess thereof which is an
integral multiple of $1,000. 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, and the
Company agrees to use its reasonable best efforts to cause the Trustee to
perform, the respective duties and obligations specifically provided to be
performed by the Agents, the Company and the Trustee 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 LLP, 10877
Wilshire Boulevard, Los Angeles, California 90024 on the date hereof, or at such
other time or place as the Agents and the Company may agree.
12
Section 4. COVENANTS OF THE COMPANY.
The Company covenants with each Agent as follows:
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
incorporated or deemed to be incorporated by reference in the Registration
Statement or the Prospectus (other than any amendment or supplement providing
solely for the determination of the variable terms of the Notes or 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; (v) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;
and (vi) of any change of which the Company has knowledge in the rating assigned
by any nationally recognized statistical rating organization to the Program or
any debt securities (including the Notes) of the Company, or any public
announcement of which the Company has knowledge by any nationally recognized
statistical rating organization that it has under surveillance or review, with
possible negative implications, its rating of the Program or any such debt
securities, or any withdrawal of which the Company has knowledge by any
nationally recognized statistical rating organization of its rating of the
Program or any such debt securities. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
B. NOTICE OF CERTAIN PROPOSED FILINGS. The Company will give 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 (including any filing under Rule 462(b)
of the 1933 Act Regulations) or any amendment or supplement to the Prospectus
(other than an amendment or supplement providing solely for the determination of
the variable terms of the Notes or relating solely to the offering of Debt
Securities other than the Notes), whether by the filing of documents pursuant to
the 1934 Act, the 1933 Act or otherwise, and will furnish 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 or deemed to be incorporated by reference therein) as
such Agent may reasonably request and signed and conformed copies of all
consents and certificates of experts. The Registration Statement and each
amendment
13
thereto furnished to the Agents will be identical to any electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T. The Company will deliver to each
Agent as many copies of each preliminary prospectus as such Agent may reasonably
request, and the Company hereby consents to the use of such copies for purposes
permitted by the 1933 Act. 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. Each
preliminary prospectus and the Prospectus and any amendments or supplements
thereto furnished to the Agents will be identical to any electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
D. PREPARATION OF PRICING SUPPLEMENTS. The Company will prepare, with
respect to any Notes to be sold to or through one or more Agents pursuant to
this Agreement, a Pricing Supplement with respect to such Notes in a form
previously approved by the Agents. The Company will deliver such Pricing
Supplement no later than 3:00 p.m., New York City time, on the business day
following the date of the Company's acceptance of the offer for the purchase of
such Notes and will file such Pricing Supplement pursuant to Rule 424(b)(3)
under the 1933 Act not later than the close of business of the Commission on the
second business day after the applicable trade date.
E. PROSPECTUS REVISIONS -- MATERIAL CHANGES. Except as otherwise
provided in Section 4(M) hereof, if at any time during the term of this
Agreement any event shall occur or condition shall exist as a result of which it
is necessary, in the opinion of counsel for the Agents or counsel for the
Company, to amend the Registration Statement in order that the Registration
Statement 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 or to amend or supplement the Prospectus in
order that the Prospectus will not include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing at
the time the Prospectus is delivered to a purchaser, or if it shall be
necessary, in the 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, by the Company 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 purchased from the Company by such Agent as principal
pursuant to Section 3(A) which such Agent may then own, and the Company will
promptly prepare and file with the Commission, subject to Section 4(B) hereof,
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 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. In addition, the Company
will comply with the 1933 Act, the 1933 Act Regulations, the 1934 Act and the
1934 Act Regulations so as to permit the completion of the distribution of each
offering of Notes.
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F. PROSPECTUS REVISIONS -- PERIODIC FINANCIAL INFORMATION. Except as
otherwise provided in Section 4(M) 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.
G. PROSPECTUS REVISIONS -- AUDITED FINANCIAL INFORMATION. Except as
otherwise provided in Section 4(M) 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 include or incorporate by reference such
audited financial statements and the report or reports, and consent or consents
to such inclusion or incorporation by reference, of the independent accountants
with respect thereto, as well as such other information and explanations as
shall be necessary for an understanding of such financial statements or as shall
be required by the 1933 Act or the 1933 Act Regulations.
H. EARNINGS STATEMENTS. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally available
to its securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last paragraph of
Section 11(a) of the 1933 Act.
I. BLUE SKY QUALIFICATIONS. The Company will endeavor, in cooperation
with the Agents, to qualify the Notes for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States as
the Agents may designate, and will maintain such qualifications in effect for as
long as may be required for the distribution of the Notes; PROVIDED, HOWEVER,
that the Company shall not be obligated to file any general consent to service
of process or 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.
J. 1934 ACT FILINGS. The Company, during the period when the Prospectus
is required to be delivered under the 1933 Act or the 1934 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 or deemed to be
incorporated by reference in the Prospectus, when read together with the other
15
information contained or incorporated or deemed to be incorporated by reference
in 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.
K. STAND-OFF AGREEMENT. Between the date of any agreement between the
Company and one or more Agents to purchase Notes from the Company as principal
pursuant to Section 3(A) hereof and the Settlement Date with respect thereto,
unless otherwise agreed by such Agent or Agents (as the case may be), the
Company will not, without the prior written consent of such Agent or Agents (as
the case may be), directly or indirectly, issue, sell, offer to sell, contract
to sell, grant any option for the sale of, or otherwise dispose of, or announce
the offering of, any debt securities of the Company 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 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).
L. 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."
M. SUSPENSION OF CERTAIN OBLIGATIONS. The Company shall not be required
to comply with the provisions of subsections (E), (F) or (G) of this Section 4
or subsections (B), (C) or (D) of Section 7 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 purchased
as principal from the Company pursuant to Section 3(A) hereof to the time the
Company shall determine that solicitation of purchases of the Notes should be
resumed or shall subsequently enter into a new agreement to sell Notes to an
Agent or Agents, as principal, pursuant to Section 3(A) hereof (at which time
the Company shall provide each Agent with the documentation required by
subsections (E), (F) and (G) of Section 4 and subsections (B), (C) and (D) of
Section 7 which the Company otherwise would have been required to deliver to the
Agents during the suspension period by reason of this Section 4(M), unless such
requirement is waived in writing by such Agent).
N. CUBA ACT. In accordance with the Cuba Act and without limitations to
the provisions of Sections 8 and 9 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.
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 Agents, to the effect that such Notes will be
treated as debt for United States federal income tax purposes.
16
P. CALCULATION AGREEMENT. Prior to such time as the Company first offers
Floating Rate Notes (as defined in the Prospectus), the Company shall enter into
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.
Q. INDEXED NOTES. Prior to the time the Company first offers any Indexed
Notes (as defined in the Prospectus), the Company shall provide an opinion of
counsel, in form and substance satisfactory to the Agents, to the effect that
such Indexed Notes will be excluded or exempted under, or beyond the purview of,
the Commodity Exchange Act and the Commodity Exchange Act Regulations.
R. CPUC AUTHORIZATIONS. If any further authorizations or approvals of
the CPUC are required in connection with any proposed offer, issuance or sale of
any Notes, the Company will notify the Agents, as promptly as practicable, and
prior to offering, issuing or selling any such Notes, the Company will obtain
and keep in full force and effect all such authorizations and approvals of the
CPUC as may be required in connection therewith and will deliver to the Agents
copies of such authorizations and approvals, together with such certificates,
opinions of counsel and other documents as the Agents may reasonably request,
all of the foregoing to be in form and substance satisfactory to the Agents.
S. ADDITIONAL RESOLUTIONS. The Company will not offer, issue or sell
any Notes unless such Notes comply with such parameters as have been or may
be established from time to time by the Board of Directors of the Company or
any committee thereof (including, without limitation, the Debt Financing
Committee).
Section 5. CONDITIONS OF OBLIGATIONS.
The obligations of any 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 any Agent to purchase Notes as principal
pursuant to any agreement with the Company pursuant to Section 3(A) hereof, 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. EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement
(including any Rule 462(b) Registration Statement) shall have become effective
under the 1933 Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act and no
proceedings for that purpose shall have been instituted or shall be pending or
threatened by the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the Agents.
B. 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:
17
(1) OPINION OF COMPANY COUNSEL. The opinion of Gary W. Kyle, Esq.,
counsel to the Company, to the effect that:
1. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of California.
2. The Company has corporate power and authority to own, lease
and operate its properties and conduct its business as described in
the Registration Statement and the Prospectus.
3. 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 or be in good
standing would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise; 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.
4. 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
the Prospectus, 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 or be in
good standing would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs
or business prospects of the Company and its subsidiaries considered
as one enterprise; 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).
18
5. This Agreement has been duly authorized, executed and
delivered by the Company.
6. 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, and
except further as enforcement thereof may be limited by requirements
that a claim with respect to any debt securities issued under the
Indenture that are payable in a foreign or composite currency (or a
foreign or composite currency judgment in respect of such claim) be
converted into U.S. dollars at a rate of exchange prevailing on a date
determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United
States.
7. 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, when completed as
contemplated by the Procedures and executed, authenticated and
delivered in accordance with the provisions of this Agreement and the
Indenture against payment of the consideration therefor, 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 except further as enforcement
thereof may be limited by requirements that a claim with respect to
any Notes payable in a foreign or composite currency (or a foreign or
composite currency judgment in respect of such claim) be converted
into U.S. dollars at a rate of exchange prevailing on a date
determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United
States; and the Notes will be entitled to the benefits of the
Indenture.
8. 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.
9. The Indenture has been duly qualified under the 1939 Act.
10. The Registration Statement (including any Rule 462(b)
Registration Statement) and any post-effective amendments thereto have
been declared effective under the 1933 Act and, to the best knowledge
of such
19
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.
11. At the respective times the Registration Statement, any Rule
462(b) Registration Statement or any post-effective amendments thereto
became effective, the Registration Statement (other than financial
statements and schedules 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.
12. To the best knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened required to be
disclosed in the Registration Statement or the Prospectus, other than
those disclosed therein, and all pending legal or governmental
proceedings the Company or any subsidiary is a party to or any of
their property is the subject of which are not described in the
Registration Statement or the Prospectus, including ordinary routine
litigation incidental to the business, are, considered in the
aggregate, not material.
13. 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.
14. 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 and the 1939 Regulations and except
such further authorizations of the CPUC as may be required in
connection therewith, and except that no opinion need be expressed
as to state securities or Blue Sky laws.
15. 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 other instrument it is a
party to or by which it or any of them or their
20
properties may be bound. The execution and delivery of this
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.
16. Each document filed pursuant to the 1934 Act and
incorporated or deemed to be incorporated by reference in the
Prospectus (other than financial statements and schedules 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.
17. The information under the captions "Business--Rates and
Regulation," "Business--Environmental Matters," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Company Operations -- Ratemaking Procedures" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations--Factors Influencing Future Financial
Performance" in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996, under the captions "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Recent CPUC Regulatory Activity" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Regulatory Activity Influencing Future Performance" in
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, under the captions "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Other
CPUC Regulatory Activity" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Regulatory
Activity Influencing Future Performance" in the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997, and under
the captions "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Recent CPUC Regulatory
Activity" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Regulatory Activity
Influencing Future Performance" in the Company's quarterly report
on Form 10-Q for the quarter ended September 30, 1997, to the
extent that it constitutes matters of law, legal conclusions or
summaries of laws, regulations,
21
contracts or agreements, has been reviewed by such counsel and is
correct in all material respects. In the event that any legal opinion
is delivered subsequent to the date of this Agreement pursuant to
Section 7(C) hereof, such subsequent legal opinion shall cover the
information appearing under the foregoing captions (or any such
similar information appearing under other captions as the Agents or
their counsel may request) in the Company's then most recent Annual
Report on Form 10-K and in any other documents filed with the
Commission subsequent to the date of such Annual Report on Form 10-K
which are incorporated or deemed to be incorporated by reference in
the Registration Statement or the Prospectus.
18. The Company is a "Subsidiary Company" of a "Holding Company"
as such terms are defined by 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.
(2) OPINION OF COUNSEL TO THE AGENTS. The opinion of Brown & Wood
LLP, counsel for the Agents, covering the matters referred to in
subparagraph (1) under the subheadings 1 and 5 to 11, 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 LLP 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 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 a post-effective
amendment to the Registration Statement, a Rule 462(b) Registration
Statement or an Annual Report has been filed by the Company with the
Commission subsequent to the original effectiveness of the Registration
Statement, at the respective times such amendment or such Rule 462(b)
Registration Statement became effective or such Annual Report was filed, as
the case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus (other
than financial statements and schedules and other financial data included
or incorporated by reference therein, as to which such counsel need make no
statement), as of the date of the Prospectus, as of the date of any
amendment or supplement thereto and as of the date of such opinion (or, if
such opinion is being delivered in connection with the purchase of Notes by
an Agent as principal, at the date of the relevant Pricing Supplement and
as of the applicable Settlement Date), included or includes an untrue
statement of a material fact or omitted 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.
C. OFFICERS' CERTIFICATE. At the date hereof and at each Settlement Date
with respect to any purchase of Notes by an Agent as principal pursuant to
Section 3(A) hereof,
22
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 the
applicable agreement between the Company and such Agent pursuant to
Section 3(A), as the case may be, 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 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 and complied with all agreements and satisfied all conditions on its
part to be performed, complied with 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.
D. COMFORT LETTER. On the date hereof, the Agents shall have received a
letter from Deloitte & Touche LLP, dated the date hereof and in form and
substance satisfactory to the Agents and their counsel.
E. OTHER DOCUMENTS. On the date hereof and on each Settlement Date,
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 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 (as to itself but not as to any other 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(H) hereof, the
provisions of Sections 10, 11 and 14 hereof, and the indemnity and contribution
agreements set forth in Sections 4(N), 8 and 9 hereof shall remain in effect.
Section 6. DELIVERY OF AND PAYMENT FOR NOTES SOLD THROUGH AN AGENT AS
AGENT.
Delivery of Notes sold through an Agent as an agent of the Company shall be
made by the Company to such Agent for the account of any purchaser only against
payment therefor in immediately available funds. In the event that a purchaser
shall fail either to accept delivery of or to make payment for a Note on the
date fixed for settlement, such Agent shall promptly notify the Company and
deliver such Note to the Company and, if such Agent has theretofore paid the
Company for such Note, the Company will promptly return such funds to such
Agent. If such failure has occurred for any reason other than default by such
Agent in the performance of its obligations hereunder, the Company will
reimburse such
23
Agent on an equitable basis for its loss of the use of the funds for the
period such funds were credited to the Company's account; provided that the
Company will not be required so to reimburse such Agent pursuant to this
sentence if (i) the Company shall have returned such funds to such Agent as
aforesaid not later than one business day after the Company's receipt of such
funds, (ii) the Company is required, pursuant to Section 1(D) hereof, to pay
to such Agent the commission to which such Agent would otherwise have been
entitled in connection with the proposed sale of such Note and (iii) the
Company shall have promptly paid such commission to such Agent.
Section 7. 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 (whether to one or more Agents as
principal or through an Agent as agent), and each delivery of Notes (whether to
one or more Agents as principal or through an Agent as agent), 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, as the case
may be, of the Note or Notes relating to such acceptance or sale, as the case
may be, as though made at and as of each such time (and it is understood that
such representations and warranties shall relate to the Registration Statement
and Prospectus as amended and supplemented to each such time).
B. SUBSEQUENT DELIVERY OF CERTIFICATES. Subject to the provisions of
Section 4(M), each time that (i) the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or supplement
providing solely for the determination of the variable terms of the Notes or,
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, (ii) 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 (iii) the Company sells Notes to one or more of the Agents
as principal pursuant to Section 3(A) hereof (unless otherwise agreed by such
Agent or Agents, as the case may be), or (iv) the Company sells Notes in a form
not previously certified to the Agents by the Company, the Company shall furnish
or cause to be furnished to the Agent or Agents, as the case may be, 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(C)
hereof last furnished to such Agent or Agents are true and correct at the time
of such filing, effectiveness 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
24
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(C) 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 (it being understood that, in the case
of clause (iii) above, any such certificate shall also include a certification
that 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 since the date of the
agreement by such Agent or Agents, as the case may be, to purchase such Notes
from the Company as principal).
C. SUBSEQUENT DELIVERY OF LEGAL OPINIONS. Subject to the provisions of
Section 4(M), each time that (i) the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or supplement
providing solely for the determination of the variable terms of the Notes or
solely for the inclusion of additional financial information, or, 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
(ii) 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 (iii) the Company sells Notes to one or more of the
Agents as principal pursuant to Section 3(A) hereof (unless otherwise agreed by
such Agent or Agents, as the case may be), or (iv) the Company sells Notes in a
form not previously certified to the Agents by the Company, the Company shall
furnish or cause to be furnished forthwith to the Agent or Agents, as the case
may be, 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 Sections 5(B)(1) and (3)
hereof to the effect that such Agent or Agents may rely on such last opinion to
the same extent as though it 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 as aforesaid and in form and substance
satisfactory to such Agent or Agents, of the same tenor as the opinion referred
to in Sections 5(B)(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(M), each time that (i) the Registration Statement or the
Prospectus shall be amended or supplemented to include additional financial
information, or (ii) there is filed with the Commission any document
incorporated by reference into the Prospectus which contains additional
financial information, or (iii) the Company sells Notes to one or more of the
Agents as principal pursuant to Section 3(A) hereof (unless otherwise agreed
by such Agent or Agents, as the case may be), the Company shall cause
Deloitte & Touche LLP (or other independent accountants of the Company
satisfactory to each Agent) forthwith to furnish the
25
Agent or Agents, as the case may be, 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(D) 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 LLP (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.
Section 8. INDEMNIFICATION.
A. INDEMNIFICATION OF THE AGENTS. The Company agrees to indemnify and
hold harmless each Agent and each person, if any, who controls any Agent within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 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 included in any preliminary
prospectus or 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 any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, provided that (subject to Section
8(D) hereof) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by such Agent), 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
26
alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (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 any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or made in reliance upon the Form T-1 filed as
an exhibit to the Registration Statement.
B. INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. 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 or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in Section 8(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 any preliminary prospectus 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 such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
C. ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 8(A) hereof,
counsel to the indemnified parties shall be selected by the applicable Agent or
Agents, as the case may be, and, in the case of parties indemnified pursuant to
Section 8(B) hereof, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the
defense of any such action; PROVIDED, HOWEVER, that counsel to the indemnifying
party shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the indemnifying parties be
liable for the fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or
27
contribution could be sought under this Section 8 or 9 hereof (whether or not
the indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
D. SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 8(A)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
Section 9. CONTRIBUTION.
If the indemnification provided for in Section 8 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, on the one hand, and the applicable
Agent or Agents (as the case may be), on the other hand, from the offering of
the Notes that were the subject of the claim for indemnification or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, on the one
hand, and the applicable Agent or Agents (as the case may be), on the other
hand, in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company, on the one hand, and the
applicable Agent or Agents (as the case may be), on the other hand, in
connection with the offering of the Notes that were the subject of the claim for
indemnification shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of such Notes (before deducting expenses)
received by the Company and the total discount or commission received by each
applicable Agent, as the case may be, bear to the aggregate initial offering
price of such Notes.
The relative fault of the Company, on the one hand, and the applicable
Agent or Agents, as the case may be, on the other hand, shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or by the applicable Agent
or Agents, as the case may be, and the parties' relative
28
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Agents agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation
(even if the applicable Agent or Agents, as the case may be, were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
9. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 9 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party 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 applicable
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 9, (i) no Agent shall be
required to contribute any amount in excess of the amount by which the total
discount or commission received by such Agent in connection with the offering
of the Notes that were the subject of the claim for indemnification exceeds
the amount of any damages which such Agent has otherwise been required to pay
by reason of any applicable untrue or alleged untrue statement or omission or
alleged omission and (ii) 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. In addition, in connection with an offering of Notes
purchased from the Company by two or more Agents as principal pursuant to a
single agreement entered into under Section 3(A) hereof, the respective
obligations of such Agents to contribute pursuant to this Section 9 are
several, and not joint, in proportion to the aggregate principal amount of
Notes that each such Agent has agreed to purchase from the Company pursuant
to such agreement.
For purposes of this Section 9, each person, if any, who controls an Agent
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 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 or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company.
Section 10. PAYMENT OF EXPENSES.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:
A. The preparation, filing, printing and delivery of the
Registration Statement and all amendments thereto and any preliminary
prospectus, the Prospectus and any amendments or supplements thereto;
29
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),
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(I) 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 any preliminary prospectus and the Prospectus
and any amendments or supplements thereto and the delivery by the Agents of
any preliminary prospectus and the Prospectus and any amendments or
supplements thereto in connection with solicitations or confirmations of
sales of the Notes;
H. The preparation, printing, reproducing and delivery to the
Agents of copies of the Indenture and all supplements and amendments
thereto;
I. Any fees charged by rating agencies for the rating of the
Notes;
J. The fees and expenses, if any, incurred with respect to any
filing with the National Association of Securities Dealers, Inc. (the
"NASD");
K. Any advertising of the Agents incurred with the approval of
such expense by the Company;
L. Any out-of-pocket expenses reasonably 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
30
N. The fees and expenses of any Depository (as defined in the
Indenture) and any nominees thereof in connection with the Notes.
Section 11. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY.
All representations, warranties and agreements contained in this Agreement
or contained in certificates of officers of the Company submitted pursuant
hereto shall remain operative and in full force and effect, regardless of any
investigation made by or on 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.
Section 12. TERMINATION.
A. TERMINATION OF THIS AGREEMENT. This Agreement (excluding any
agreement by one or more Agents to purchase Notes from the Company as principal
pursuant to Section 3(A)) 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 AGREEMENT. If any Agent or Agents shall agree to
purchase Notes from the Company as principal pursuant to Section 3(A) hereof,
such Agent or Agents, as the case may be, may terminate such agreement,
immediately upon notice to the Company, at any time prior to the Settlement Date
relating thereto (i) if there has been, since the date of such agreement or
since the respective dates as of which information is given in the Registration
Statement or the Prospectus, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, (ii) there has
occurred any material adverse change in the financial markets in the United
States or, if such Notes are denominated and/or payable in, or indexed to, one
or more foreign or composite currencies, in the international financial markets,
or any outbreak of hostilities or escalation thereof or other calamity or
crisis, or any change or development in national or international political,
financial or economic conditions, in each case the effect of which is such as to
make it, in the judgment of such Agent or Agents, as the case may be,
impracticable to market such Notes or enforce contracts for the sale of such
Notes, or (iii) trading in any securities of the Company has been suspended or
materially limited by the Commission or a national securities exchange, or if
trading generally on the New York Stock Exchange or the American Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by either of said exchanges or by such system or by
order of the Commission, the NASD or any other governmental authority, or (iv) a
banking moratorium has been declared by either federal, California or New York
authorities or by the relevant authorities in the country or countries of origin
of any foreign or composite currency in which such Notes are denominated and/or
payable, or (v) the rating assigned by any nationally recognized statistical
rating organization
31
to the Program or any debt securities (including the Notes) of the Company as of
the date of such agreement shall have been lowered or withdrawn since that date
or if any such rating organization shall have publicly announced that it has
under surveillance or review, with possible negative implications, its rating of
the Program or any such debt securities, or (vi) 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 (vii) if
any condition applicable to such agreement specified in Sections 5 or 7 of this
Agreement, or any condition specified in such 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(B)
hereof, (ii) if at the time of termination (A) any Agent shall own any Notes
purchased by it from the Company as principal pursuant to Section 3(A) hereof 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 6 hereof and the
covenants set forth in Sections 4 and 7 hereof shall remain in effect until such
Notes are so resold or delivered, as the case may be, and (iii) the covenants
set forth in Section 4(H) hereof, the indemnity and contribution agreements set
forth in Sections 4(N), 8 and 9 hereof, and the provisions of Sections 10, 11
and 14 hereof shall remain in effect, and except that, in the case of any such
termination of an agreement to purchase Notes, the Company shall remain
obligated, pursuant to Section 10 hereof, to pay all expenses incident to such
terminated agreement and the transactions contemplated thereby.
Section 13. 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,
World Financial Center, North Tower, 10th Floor, New York, New York 10281,
attention of MTN Product Management, Telecopy: (212) 449-2234; BancAmerica
Robertson Stephens, 231 South LaSalle Street, 18th Floor, Chicago, Illinois
60697, Attention: Matt Carey, Telecopy: (312) 974-8936, Telephone:
(312) 828-2860; Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, New York 10010, attention of Helena Willner, Telecopy:
(212) 325-8183, Telephone: (212) 325-7198; and to Lehman Brothers Inc., 3
World Financial Center, 12th Floor, New York, New York 10285-1200, Attention:
Medium-Term Note Department, Telecopy: (212) 528-1718, Telephone: (212)
298-2140, and notices to the Company shall be directed to it at 555 West
Fifth Street, Los Angeles, California 90013, attention of Treasurer,
Telecopy: (213) 244-8141, or in each case at such other address as such party
may designate from time to time by notice duly given to the other parties in
accordance with the terms of this Section 13.
32
Section 14. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the parties hereto and their respective successors and
the controlling persons and officers and directors referred to in Sections 8 and
9 hereof and their heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the parties hereto and
their respective successors and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Notes shall be deemed to be
a successor by reason merely of such purchase.
Section 15. GOVERNING LAW.
This Agreement and the rights and obligations of the parties shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed in such State.
Section 16. 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 17. CAPTIONS.
The captions in this Agreement are for convenience of reference only and
shall not be deemed to be part of this Agreement.
33
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
Agreement 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
BANCAMERICA ROBERTSON STEPHENS
By
------------------------------------
Title:
CREDIT SUISSE FIRST BOSTON CORPORATION
By
------------------------------------
Title:
LEHMAN BROTHERS INC.
By
------------------------------------
Title:
34
EXHIBIT A
PRICING TERMS
Principal Amount: $ (or principal amount in a foreign or composite currency)
Stated Maturity:
Original Issue Date:
Price to be Paid to the Company: ______%
Agent's Discount or Commission:
Price to Public:
/ / a fixed initial public offering price of 100% of the principal amount
thereof, plus accrued interest, if any, from the Original Issue Date
/ / a fixed initial public offering price of _____% of the principal
amount thereof, plus accrued interest, if any, from the Original Issue
Date
/ / varying prices related to prevailing market prices at the time of
resale to be determined by the Agent or Agents, as the case may be,
plus accrued interest, if any, from the Original Issue Date
Settlement Date, Place and Time:
Authorized Denominations (if other than $1,000 and integral multiples thereof):
Agent is acting as (if not specified, Agent will be assumed to be acting as
principal):
/ / principal
/ / agent
IF FIXED RATE NOTE:
Interest Rate:
Interest Payment Dates:
/ / March 1 and September 1
/ / Other:
Regular Record Dates:
/ / February 15 and August 15
/ / Other:
IF FLOATING RATE NOTE:
Base Rate(s):
If LIBOR:
/ / LIBOR Telerate
Page:
/ / LIBOR Reuters
Page:
Designated LIBOR Currency:
If CMT Rate,
Designated CMT Telerate Page:
If Telerate Page 7052:
/ / Weekly Average
/ / Monthly Average
Designated CMT Maturity Index:
Initial Interest Rate, if any:
Index Maturity:
Spread (Plus or Minus), if any:
Spread Multiplier, if any:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Payment Dates:
A-1
Initial Interest Reset Date:
Interest Reset Date(s):
Interest Rate Reset Period:
Calculation Agent:
Day Count Convention (if no Day Count Convention is specified below, the
Day Count Convention from the Original Issue Date until the principal of,
premium, if any, and interest on these Notes are paid in full will be as
set forth in the Prospectus Supplement relating to the Notes):
/ / Actual/360 for the period from _______ to _______.
/ / Actual/Actual for the period from _______ to _______.
/ / 30/360 for the period from _______ to _______.
Applicable Base Rate:
REDEMPTION PROVISIONS, IF ANY:
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction:
REPAYMENT PROVISIONS, IF ANY:
Optional Repayment Date(s):
IF ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID"):
Total Amount of OID:
Issue Price (expressed as a percentage of aggregate principal amount):
Yield to Maturity:
Initial Accrual Period OID:
Method used to determine yield for initial accrual period:
/ / Approximate
/ / Exact
Other Provisions:
The pricing terms shall include an agreement as to whether the following
will or will not be required: (i) the officers' certificate pursuant to Section
7(B) of the Distribution Agreement; (ii) the legal opinion pursuant to
Section 7(C) of the Distribution Agreement; and (iii) the comfort letter
pursuant to Section 7(D) of the Distribution Agreement. Unless otherwise agreed
by the Company and the applicable Agent or Agents, as the case may be, the
stand-off agreement set forth in Section 4(K) of the Distribution Agreement will
be applicable.
A-2
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 applicable Agent and the
Company.
FACE OF FIXED RATE MEDIUM-TERM NOTE
[The following legend is for inclusion only in Book-Entry Securities for
which The Depository Trust Company serves as Depositary -- Unless this
certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to the Company or its agent for
registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC, ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.]
[The following legend is for inclusion only in Book-Entry Securities --
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE 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 SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]
SOUTHERN CALIFORNIA GAS COMPANY
MEDIUM-TERM NOTE
(FIXED RATE)
REGISTERED CUSIP NO.: PRINCIPAL AMOUNT:
No. FXR $
ORIGINAL ISSUE DATE: INTEREST RATE: % STATED MATURITY DATE:
INTEREST PAYMENT DATES: REGULAR RECORD DATES
[ ] March 1 and (If other than
September 1 February 15 and
[ ] Other: August 15):
INITIAL REDEMPTION DATE: INITIAL REDEMPTION ANNUAL REDEMPTION
PERCENTAGE: % PERCENTAGE REDUCTION:
%
OPTIONAL REPAYMENT [ ] CHECK IF DISCOUNT
DATE(S): NOTE
Issue Price: %
ADDENDUM ATTACHED: AUTHORIZED DENOMINATION
[ ] Yes (if other than $1,000 and
[ ] No integral multiples
thereof):
OTHER/ADDITIONAL
PROVISIONS:
1
SOUTHERN CALIFORNIA GAS COMPANY, a California corporation (the "Company",
which term includes any successor under the Indenture hereinafter referred to),
for value received, hereby promises to pay to , or registered
assigns, the principal sum of
DOLLARS
on the Stated Maturity Date specified above (except to the extent redeemed or
repaid prior to the Stated Maturity Date) and to pay interest thereon at the
Interest Rate per annum specified above until the principal hereof is paid or
duly made available for payment.
The Company will pay interest in arrears on each of the Interest Payment
Dates specified above in each year, commencing with the first Interest Payment
Date next succeeding the Original Issue Date specified above, and on the Stated
Maturity Date and any earlier Redemption Date (as defined on the reverse hereof)
or Optional Repayment Date specified above with respect to which such redemption
or repayment option has been exercised, and on any other date on which any
principal of this Note shall become due and payable (such Stated Maturity Date,
each such Redemption Date and Optional Repayment Date with respect to which such
redemption or repayment option has been exercised, and each such other date on
which principal or an installment of principal of this Note is due and payable
by declaration of acceleration or otherwise pursuant to the Indenture referred
to on the reverse hereof, being hereinafter referred to as a "Maturity" with
respect to the principal payable on such date); PROVIDED, HOWEVER, that if the
Original Issue Date occurs between a Regular Record Date (as defined below) and
the next succeeding Interest Payment Date, interest payments will commence on
the Interest Payment Date following the next succeeding Regular Record Date to
the Holder of this Note at the close of business on such next succeeding Regular
Record Date.
Unless otherwise specified on the face hereof or in an Addendum hereto,
interest payable on this Note on any Interest Payment Date or Maturity 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 Original Issue Date specified on the face hereof if no
interest has been paid or duly provided for with respect to this Note), to but
excluding the relevant Interest Payment Date or Maturity, as the case may be.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, subject to certain exceptions, be paid to the Person
in whose name this Note (or one or more Predecessor Securities) is registered at
the close of business on the February 15 or August 15 immediately preceding such
Interest Payment Date, unless otherwise specified on the face hereof or in an
Addendum hereto (a "Regular Record Date"); PROVIDED, HOWEVER, that interest
payable at any Maturity will be payable to the
2
Person to whom the principal hereof shall be payable. Any such interest not so
punctually paid or duly provided for on any Interest Payment Date (other than at
Maturity) will forthwith cease to be payable to the Person in whose name this
Note (or one or more Predecessor Securities) is registered at the close of
business on the relevant Regular Record Date and may either be paid to the
Person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest or be paid in any lawful manner, all on the terms and
subject to the conditions set forth in the Indenture. If any Interest Payment
Date or Maturity of this Note falls on a day which is not a Business Day (as
defined below), the payment of the principal of and premium, if any, and
interest on this Note due on such Interest Payment Date or Maturity will be paid
on the next succeeding Business Day with the same force and effect as if paid on
such Maturity or Interest Payment Date, as the case may be, and no interest
shall accrue with respect to such payment for the period from and after such
Interest Payment Date or Maturity.
Payments of principal of and premium, if any, and interest on this Note
shall be made in such coin or currency of the United States as at the time of
payment is legal tender for the payment of public and private debts at the
office or agency of the Company maintained for such purpose in the Borough of
Manhattan, The City of New York and at such additional places as the Company may
designate from time to time; PROVIDED, HOWEVER, that payments of interest on
this Note, other than interest payable at Maturity, may be made at the option of
the Company by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register. Notwithstanding the
foregoing, a Holder of $10,000,000 or more in aggregate principal amount of
Definitive Notes (whether having identical or different terms and provisions)
shall be entitled to receive payments of interest due on such Definitive Notes
on any Interest Payment Date (other than at Maturity) by wire transfer of
immediately available funds to an account maintained by such Holder with a
depository institution located in the United States (provided such depository
institution shall have appropriate facilities therefor) if appropriate wire
transfer instructions have been received in writing by the Trustee on or before
the Regular Record Date immediately preceding such Interest Payment Date. Any
such wire transfer instructions received by the Trustee shall remain in effect
until revoked in writing by such Holder. As used herein, a "Definitive Note"
means a Note which is not a Book-Entry Security (as defined in the Indenture).
The principal of and premium, if any, and interest on this Note due at any
Maturity will be paid in immediately available funds against presentation and
surrender of this Note at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, The City of New York and at such
additional places as the Company may designate from time to time
3
(with interest due at Maturity being paid to the Person to whom principal is
paid), and will be paid by wire transfer of immediately available funds to an
account maintained by the Holder with a depository institution located in the
United States 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.
As used herein, a "Business Day" means any day that is not a Saturday or
Sunday and that, in New York, New York, is not a day on which banking
institutions are authorized or obligated by law, regulation or executive order
to close.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place. References herein to "this Note",
"hereof", "herein" and comparable terms shall include an Addendum hereto if an
Addendum is specified above.
Anything herein to the contrary notwithstanding, if an Addendum is attached
hereto or "Other/Additional Provisions" apply to this Note as specified above,
this Note shall be subject to the terms set forth in such Addendum or such
"Other/Additional Provisions."
Unless the certificate of authentication hereon has been executed by the
Trustee under the Indenture referred to on the reverse hereof by the manual
signature of one of its authorized signatories, this Note shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.
4
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed, manually or in facsimile, and its corporate seal (or a facsimile
thereof) to be imprinted hereon.
[SEAL]
SOUTHERN CALIFORNIA GAS COMPANY
By:
-----------------------------------
Dennis V. Arriola
Vice President and Treasurer
By:
-----------------------------------
Thomas Sanger
Secretary
5
Dated:
------------------------------
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION:
This is one of the Securities
of the series designated
herein referred to in the
within-mentioned Indenture.
CITIBANK, N.A.,
as Trustee
By:
---------------------------------
Authorized Signatory
6
REVERSE OF NOTE
SOUTHERN CALIFORNIA GAS COMPANY
MEDIUM-TERM NOTE
(FIXED RATE)
This Note is one of a duly authorized series of Securities of the Company
issued and to be issued under an Indenture dated as of May 1, 1989, as amended
and supplemented by a First Supplemental Indenture dated as of October 1, 1992
(such Indenture, as amended and supplemented by such First Supplemental
Indenture, is hereinafter referred to as the "Indenture"), between the Company
and Citibank, N.A., as Trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, duties and immunities thereunder of the Company, the Trustee
and the Holders of the Notes and the terms upon which the Notes are, and are to
be, authenticated and delivered. This Note is one of the series of Securities
designated as "Medium-Term Notes" and herein referred to as the "Notes."
This Note is issuable only in registered form without coupons in minimum
denominations of $1,000 and integral multiples of $1,000 in excess thereof or in
such other Authorized Denomination and integral multiples thereof as may be
specified on the face hereof.
Unless otherwise specified in an Addendum hereto or on the face hereof
under "Other/Additional Provisions," this Note will not be subject to any
sinking fund. Unless otherwise specified on the face hereof in accordance with
the provisions of the following two paragraphs, this Note will not be redeemable
or repayable prior to its Stated Maturity Date.
This Note will be subject to redemption at the option of the Company on any
date on or after the Initial Redemption Date, if any, specified on the face
hereof, in whole or from time to time in part in increments of $1,000 in
principal amount or any integral multiple of $1,000 in principal amount (or, if
another Authorized Denomination is set forth on the face hereof, in increments
equal in principal amount to such Authorized Denomination or any integral
multiple thereof) (provided that any remaining principal amount hereof shall be
at least $1,000 or, if another Authorized Denomination is set forth on the face
hereof, the minimum Authorized Denomination), at the Redemption Price (as
defined below), together with unpaid interest accrued thereon to the date fixed
for redemption (the "Redemption Date"), on written notice given to the Holder
hereof (in accordance with the provisions of the Indenture) not more than 60 nor
less than 30 calendar days prior to the Redemption Date. The "Redemption
7
Price" shall be the Initial Redemption Percentage specified on the face hereof
(as adjusted by the Annual Redemption Percentage Reduction, if any, specified on
the face hereof as set forth below) multiplied by the unpaid principal amount of
this Note to be redeemed. The Initial Redemption Percentage shall decline at
each anniversary of the Initial Redemption Date by an amount equal to the Annual
Redemption Percentage Reduction, if any, until the Redemption Price is 100% of
unpaid principal amount to be redeemed. In the event of redemption of this Note
in part only, a new Note of like tenor for the unredeemed portion hereof and
otherwise having the same terms and provisions as this Note shall be issued by
the Company in the name of the Holder hereof upon the presentation and surrender
hereof.
This Note will be subject to repayment by the Company at the option of the
Holder hereof on the Optional Repayment Date(s), if any, specified on the face
hereof, in whole or from time to time in part in increments of $1,000 in
principal amount or any integral multiple of $1,000 in principal amount (or, if
another Authorized Denomination is set forth on the face hereof, in increments
equal in principal amount to such Authorized Denomination or any integral
multiple thereof) (provided that any remaining principal amount hereof shall be
at least $1,000 or, if another Authorized Denomination is set forth on the face
hereof, the minimum Authorized Denomination), at a repayment price equal to 100%
of the principal amount to be repaid, together with unpaid interest accrued
thereon to the date fixed for repayment (the "Repayment Date"). For this Note
to be repaid, this Note must be received, together with the form hereon entitled
"Option to Elect Repayment" duly completed, by the Trustee at its office
maintained for such purpose in the Borough of Manhattan, The City of New York,
not more than 60 nor less than 30 calendar days prior to the Repayment Date.
Exercise of such repayment option by the Holder hereof shall be irrevocable. In
the event of repayment of this Note in part only, a new Note of like tenor for
the unrepaid portion hereof and otherwise having the same terms and provisions
as this Note shall be issued by the Company in the name of the Holder hereof
upon the presentation and surrender hereof. 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.
If this Note is specified on the face hereof to be a Discount Note, then
this Note shall constitute an Original Issue Discount Security within the
meaning of the Indenture and the amount payable to the Holder of this Note in
the event of redemption, repayment or acceleration of maturity of this Note will
be equal to the sum of (1) the Issue Price specified on the face hereof
(increased by any accruals of the Discount, as defined below) and, in the event
of any redemption of this Note (if applicable), multiplied by the Initial
Redemption Percentage (as adjusted by the Annual Redemption Percentage
Reduction, if
8
applicable) and (2) any unpaid interest accrued thereon to the Redemption Date,
Repayment Date or date of acceleration of maturity, as the case may be. The
difference between the Issue Price and 100% of the principal amount of this Note
is referred to herein as the "Discount."
For purposes of determining the amount of Discount that has accrued as of
any Redemption Date, Repayment Date or date of acceleration of maturity of this
Note, such Discount will be accrued so as to cause an assumed yield on the Note
to be constant. The assumed constant yield will be calculated using a 30-day
month, 360-day year convention, a compounding period that, except for the
Initial Period (as defined below), corresponds to the shortest period between
Interest Payment Dates (with ratable accruals within a compounding period), a
coupon rate equal to the initial Interest Rate applicable to this Note and an
assumption that the maturity of this Note will not be accelerated. If the
period from the Original Issue Date to the initial Interest Payment Date (the
"Initial Period") is shorter than the compounding period for this Note, a
proportionate amount of the yield for an entire compounding period will be
accrued. If the Initial Period is longer than the compounding period, then such
period will be divided into a regular compounding period and a short period,
with the short period being treated as provided in the preceding sentence.
Interest payments on this Note shall be computed and paid on the basis of a
360-day year of twelve 30-day months unless otherwise indicated on the face
hereof or in an Addendum hereto.
Any provision contained herein with respect to the calculation of the rate
of interest applicable to this Note, its payment dates or any other terms hereof
or matters relating hereto may be modified as specified in an Addendum hereto or
on the face hereof under "Other/Additional Provisions."
If an Event of Default with respect to the Notes shall occur and be
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Notes may declare the principal of all the
Notes to be due and payable immediately in the manner and with the effect
provided in the Indenture.
The Indenture contains provisions, which provisions apply to the Notes, for
(i) the defeasance of the indebtedness evidenced by the Notes and (ii) the
satisfaction and discharge of the Indenture, in each case upon compliance with
certain conditions, and subject to certain exceptions, set forth in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected thereby
9
at any time by the Company and the Trustee with the consent of the Holders of
66-2/3% in aggregate principal amount of the Outstanding Securities of each
series affected thereby. The Indenture also contains provisions permitting the
Holders of not less than a majority in aggregate principal amount of the
Securities of each series at the time Outstanding, on behalf of the Holders of
all Securities of such series, to waive certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture, and subject to certain limitations therein
set forth, the transfer of this Note may be registered on the Security Register
upon surrender of this Note for registration of transfer at the office or agency
of the Company maintained for that purpose in the Borough of Manhattan, The City
of New York duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or by his attorney duly authorized in writing and thereupon
one or more new Notes, of Authorized Denominations and for the same aggregate
principal amount and having the identical terms and provisions, will be issued
to the designated transferee or transferees.
As provided in the Indenture, and subject to certain limitations therein
set forth, the Notes are exchangeable for a like aggregate principal amount of
Notes having identical terms and provisions, in Authorized Denominations, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Company may, subject to certain exceptions specified in the
Indenture, require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not
10
this Note be overdue, and neither the Company, the Trustee nor any such agent
shall be affected by notice to the contrary.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or premium, if any, or
interest on this Note and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on Company Request or (if then held by the Company) shall be
discharged from such trust, and the Holder of this Note shall thereafter look
only to the Company for payment thereof, all as provided in the Indenture.
If any principal of or premium, if any, or interest on this Note is not
paid when due, then such unpaid principal, premium or interest, as the case may
be, shall, to the extent permitted by law, bear interest until paid at the
interest rate per annum borne by this Note.
The Notes 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.
All capitalized terms used in this Note and not defined herein which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.
11
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Company
to repay this Note (or portion hereof specified below) pursuant to its terms on
_____________________ at a price equal to the principal amount of this Note to
be repaid, together with interest accrued on the principal amount to be repaid
to the repayment date, by payment to the undersigned,
at __________________________________________________________________________
(Please print or type the name and address of the undersigned)
_____________________________________________________________________________
For this Note to be repaid, the Trustee must receive at Citibank, N.A., 111
Wall Street, 5th Floor, Corporate Trust Services, Attention: Issuance and
Transfer, New York, New York 10043, or at such other address of which the
Company shall from time to time notify the Holder of this Note, not more than 60
nor less than 30 days prior to an Optional Repayment Date, if any, shown on the
face of this Note, this Note with this "Option to Elect Repayment" form duly
completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be in increments of $1,000 (or other
Authorized Denomination, if any, specified on the face hereof) in principal
amount) which the Holder elects to have repaid (in the absence of any such
specification, the entire principal amount hereof will be repaid) and specify
the denomination or denominations (which shall be $1,000 (or other minimum
Authorized Denomination, if any, specified on the face hereof) or any multiple
thereof) of the Note or Notes to be issued to the Holder for the portion of this
Note not being repaid (in the absence of any such specification, one such Note
will be issued for the portion not being repaid).
$_______________ ______________________________
(Specify portion to be NOTICE: The signature(s) on this Option
repaid, if less than the to Elect Repayment must correspond with
entire principal amount of the name(s) as written upon the face of
this Note) this Note in every particular without
alteration or enlargement or any change
whatsoever.
$_______________ Date: _________________
(Specify denomination or
denominations of Note or
Notes to be issued for the
portion, if any, of this
Note not being repaid)
12
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM--as tenants in common
UNIF TSFR (GIFT) MIN ACT-- ______ Custodian _______ --
(Cust) (Minor)
Under Uniform Transfer (Gifts) to Minors Act
_________________________________
(State)
TEN ENT-- as tenants by the entirety
JT TEN-- as joint tenants with right of survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the
above list.
13
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please Insert Social Security or Other
Identifying Number of Assignee:
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS,
INCLUDING ZIP CODE OF ASSIGNEE:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ___________________________________________________________________
___________________________________________________________________ attorney
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated: ___________________ ____________________________________________
NOTICE: The signature(s) to this assignment
must correspond with the name(s) as written
upon the face of the within instrument in
every particular, without alteration or
enlargement or any change whatsoever.
14
FACE OF FLOATING RATE MEDIUM-TERM NOTE
[The following legend is for inclusion only in Book-Entry Securities for
which The Depository Trust Company serves as Depositary -- Unless this
certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to the Company or its agent for
registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC, ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.]
[The following legend is for inclusion only in Book-Entry Securities -- UNLESS
AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM,
THIS NOTE 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 SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]
SOUTHERN CALIFORNIA GAS COMPANY
MEDIUM-TERM NOTE
(FLOATING RATE)
REGISTERED CUSIP NO.: PRINCIPAL AMOUNT:
No. FLR $
BASE RATE OR BASE ORIGINAL ISSUE DATE: STATED MATURITY DATE:
RATES:
If LIBOR: IF CMT RATE:
[ ] LIBOR Reuters Designated CMT Telerate
Page: Page:
[ ] LIBOR Telerate If Telerate Page 7052:
Page: [ ] Weekly Average
Designated LIBOR Currency: [ ] Monthly Average
Designated CMT Maturity
Index:
INDEX MATURITY: INITIAL INTEREST RATE: INTEREST PAYMENT DATE(S):
%
SPREAD (PLUS OR MINUS): SPREAD MULTIPLIER:
1
MINIMUM INTEREST RATE: MAXIMUM INTEREST RATE:
% %
INITIAL INTEREST RESET INTEREST RESET INTEREST RATE RESET
DATE: DATE(S): PERIOD:
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION
DATE: PERCENTAGE: % PERCENTAGE REDUCTION: %
OPTIONAL REPAYMENT CALCULATION AGENT: [ ] CHECK IF DISCOUNT NOTE
DATE(S): [ ] Citibank, N.A. Issue Price %
[ ] Other:
AUTHORIZED DENOMINATION (if other DAY COUNT CONVENTION:
than $1,000 and integral multiples [ ] Actual/360 for the period
thereof): from to
[ ] Actual/Actual for the period
from to
[ ] 30/360 for the period
from to
Applicable Base Rate:
ADDENDUM ATTACHED:
[ ] YES
[ ] NO
OTHER/ADDITIONAL PROVISIONS:
2
SOUTHERN CALIFORNIA GAS COMPANY, a California corporation (the "Company",
which term includes any successor under the Indenture hereinafter referred to),
for value received, hereby promises to pay to , or
registered assigns, the principal sum of
DOLLARS
on the Stated Maturity Date specified above (except to the extent
redeemed or repaid prior to the Stated Maturity Date) and to pay interest
thereon at a rate per annum equal to the Initial Interest Rate specified above
until the Initial Interest Reset Date specified above and thereafter at a rate
per annum equal to the Initial Interest Rate specified above until the Initial
Interest Reset Date specified above and thereafter at a rate per annum
determined in accordance with the provisions specified above and elsewhere in
this Note and in any Addendum hereto, depending upon the Base Rate or the lowest
of two or more Base Rates specified above, in each case (i) plus or minus the
Spread, if any, specified above and (ii) multiplied by the Spread Multiplier, if
any, specified above until the principal hereof is paid or duly made available
for payment.
The Company will pay interest in arrears on each of the Interest Payment
Dates specified above in each year, commencing with the first Interest Payment
Date next succeeding the Original Issue Date specified above, and on the Stated
Maturity Date and any earlier Redemption Date (as defined on the reverse hereof)
or Optional Repayment Date specified above with respect to which such redemption
or repayment option has been exercised, and on any other date on which any
principal of this Note shall become due and payable (such Stated Maturity Date,
each such Redemption Date and Optional Repayment Date with respect to which such
redemption or repayment option has been exercised, and each such other date on
which principal or an installment of principal of this Note is due and payable
by declaration of acceleration or otherwise pursuant to the Indenture referred
to on the reverse hereof, being hereinafter referred to as a "Maturity" with
respect to the principal payable on such date); PROVIDED, HOWEVER, that if the
Original Issue Date occurs between a Regular Record Date (as defined below) and
the next succeeding Interest Payment Date, interest payments will commence on
the Interest Payment Date following the next succeeding Regular Record Date to
the Holder of this Note at the close of business on such next succeeding Regular
Record Date; and PROVIDED, FURTHER, that if an Interest Payment Date would fall
on a day that is not a Business Day (as defined below), such Interest Payment
Date shall be the next succeeding day which is a Business Day, except that in
the case of a Note for which LIBOR is the Base Rate or a Base Rate, as indicated
above, if such next succeeding Business Day falls in the next succeeding
calendar month, such Interest Payment Date will be the next preceding day that
is a Business Day.
Unless otherwise specified on the face hereof or in an Addendum hereto,
interest payable on this Note on any Interest Payment Date or Maturity shall be
the amount of interest accrued from and including
3
the next preceding Interest Payment Date in respect of which interest has been
paid or duly provided for (or from and including the Original Issue Date
specified on the face hereof if no interest has been paid or duly provided for
with respect to this Note), to but excluding the relevant Interest Payment Date
or Maturity, as the case may be. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, subject to certain
exceptions, be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on the 15th
calendar day (whether or not a Business Day) immediately preceding such Interest
Payment Date, unless otherwise specified on the face hereof or in an Addendum
hereto (a "Regular Record Date"); PROVIDED, HOWEVER, that interest payable at
any Maturity will be payable to the Person to whom the principal hereof shall be
payable. Any such interest not so punctually paid or duly provided for on any
Interest Payment Date (other than at Maturity) will forthwith cease to be
payable to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on the relevant Regular
Record Date and may either be paid to the Person in whose name this Note (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest or be paid in any
lawful manner, all on the terms and subject to the conditions set forth in the
Indenture. If any Maturity of this Note falls on a day that is not a Business
Day, the payment of the principal of and premium, if any, and interest on this
Note due on such Maturity will be paid on the next succeeding Business Day with
the same force and effect as if paid on such Maturity, and no interest shall
accrue with respect to such payment for the period from and after such Maturity.
Payments of principal of and premium, if any, and interest on this Note
shall be made in such coin or currency of the United States as at the time of
payment is legal tender for the payment of public and private debts at the
office or agency of the Company maintained for such purpose in the Borough of
Manhattan, The City of New York and at such additional places as the Company may
designate from time to time; provided, however, that payments of interest on
this Note, other than interest payable at Maturity, may be made at the option of
the Company by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register. Notwithstanding the
foregoing, a Holder of $10,000,000 or more in aggregate principal amount of
Definitive Notes (whether having identical or different terms and provisions)
shall be entitled to receive payments of interest due on such Definitive Notes
on any Interest Payment Date (other than at Maturity) by wire transfer of
immediately available funds to an account maintained by such Holder with a
depository institution located in the United States (provided such depository
institution shall have appropriate facilities therefor) if appropriate wire
transfer instructions have been received in writing by the Trustee on or before
the Regular Record Date immediately preceding such Interest Payment Date. Any
such wire transfer instructions received by the Trustee shall remain in effect
until revoked in
4
writing by such Holder. As used herein, a "Definitive Note" means a Note which
is not a Book-Entry Security (as defined in the Indenture).
The principal of and premium, if any, and interest on this Note due at any
Maturity will be paid in immediately available funds against presentation and
surrender of this Note at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, The City of New York and at such
additional places as the Company may designate from time to time (with interest
due at Maturity being paid to the Person to whom principal is paid), and will be
paid by wire transfer of immediately available funds to an account maintained by
the Holder with a depository institution located in the United States 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.
As used herein, a "Business Day" means any day that is not a Saturday or
Sunday and that, in New York, New York, is not a day on which banking
institutions are authorized or obligated by law, regulation or executive order
to close, and in the case of a Note for which LIBOR is the Base Rate or a Base
Rate, as indicated above, is also a London Business Day. As used herein,
"London Business Day" means any day on which dealings in the Designated LIBOR
Currency (as defined on the reverse hereof) are transacted in the London
interbank market.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place. References herein to "this Note",
"hereof", "herein" and comparable terms shall include an Addendum hereto if an
Addendum is specified above.
Anything herein to the contrary notwithstanding, if an Addendum is attached
hereto or "Other/Additional Provisions" apply to this Note as specified above,
this Note shall be subject to the terms set forth in such Addendum or such
"Other/Additional Provisions."
Unless the certificate of authentication hereon has been executed by the
Trustee under the Indenture referred to on the reverse hereof by the manual
signature of one of its authorized signatories, this Note shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.
5
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed, manually or in facsimile, and its corporate seal (or a facsimile
thereof) to be imprinted hereon.
[SEAL]
SOUTHERN CALIFORNIA GAS COMPANY
By:
----------------------------------------
Dennis V. Arriola
Vice President and Treasurer
By:
----------------------------------------
Thomas Sanger
Secretary
6
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION:
This is one of the Securities
of the series designated herein
referred to in the within-mentioned
Indenture.
CITIBANK, N.A.,
as Trustee
By:
------------------------------------
Authorized Signatory
7
REVERSE OF NOTE
SOUTHERN CALIFORNIA GAS COMPANY
MEDIUM-TERM NOTE
(FLOATING RATE)
This Note is one of a duly authorized series of Securities of the Company
issued and to be issued under an Indenture dated as of May 1, 1989, as amended
and supplemented by a First Supplemental Indenture dated as of October 1, 1992
(such Indenture, as amended and supplemented by such First Supplemental
Indenture, is hereinafter referred to as the "Indenture"), between the Company
and Citibank, N.A., as Trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, duties and immunities thereunder of the Company, the Trustee
and the Holders of the Notes and the terms upon which the Notes are, and are to
be, authenticated and delivered. This Note is one of the series of Securities
designated as "Medium-Term Notes" and herein referred to as the "Notes."
This Note is issuable only in registered form without coupons in minimum
denominations of $1,000 and integral multiples of $1,000 in excess thereof or in
such other Authorized Denomination and integral multiples thereof as may be
specified on the face hereof.
Unless otherwise specified in an Addendum hereto or on the face hereof
under "Other/Additional Provisions," this Note will not be subject to any
sinking fund. Unless otherwise specified on the face hereof in accordance with
the provisions of the following two paragraphs, this Note will not be redeemable
or repayable prior to its Stated Maturity Date.
This Note will be subject to redemption at the option of the Company on any
date on or after the Initial Redemption Date, if any, specified on the face
hereof, in whole or from time to time in part in increments of $1,000 in
principal amount or any integral multiple of $1,000 in principal amount (or, if
another Authorized Denomination is set forth on the face hereof, in increments
equal in principal amount to such Authorized Denomination or any integral
multiple thereof) (provided that any remaining principal amount hereof shall be
at least $1,000 or, if another Authorized Denomination is set forth on the face
hereof, the minimum Authorized Denomination), at the Redemption Price (as
defined below), together with unpaid interest accrued thereon to the date fixed
for redemption (the "Redemption Date"), on written notice given to the Holder
hereof (in accordance with the provisions of the Indenture) not more than 60 nor
less than 30 calendar days prior to the Redemption Date. The "Redemption Price"
shall be the Initial Redemption Percentage specified on
8
the face hereof (as adjusted by the Annual Redemption Percentage Reduction, if
any, specified on the face hereof as set forth below) multiplied by the unpaid
principal amount of this Note to be redeemed. The Initial Redemption Percentage
shall decline at each anniversary of the Initial Redemption Date by an amount
equal to the Annual Redemption Percentage Reduction, if any, until the
Redemption Price is 100% of unpaid principal amount to be redeemed. In the
event of redemption of this Note in part only, a new Note of like tenor for the
unredeemed portion hereof and otherwise having the same terms and provisions as
this Note shall be issued by the Company in the name of the Holder hereof upon
the presentation and surrender hereof.
This Note will be subject to repayment by the Company at the option of the
Holder hereof on the Optional Repayment Date(s), if any, specified on the face
hereof, in whole or from time to time in part in increments of $1,000 in
principal amount or any integral multiple of $1,000 in principal amount (or, if
another Authorized Denomination is set forth on the face hereof, in increments
equal in principal amount to such Authorized Denomination or any integral
multiple thereof)(provided that any remaining principal amount hereof shall be
at least $1,000 or, if another Authorized Denomination is set forth on the face
hereof, the minimum Authorized Denomination), at a repayment price equal to 100%
of the principal amount to be repaid, together with unpaid interest accrued
thereon to the date fixed for repayment (the "Repayment Date"). For this Note
to be repaid, this Note must be received, together with the form hereon entitled
"Option to Elect Repayment" duly completed, by the Trustee at its office
maintained for such purpose in the Borough of Manhattan, The City of New York,
not more than 60 nor less than 30 calendar days prior to the Repayment Date.
Exercise of such repayment option by the Holder hereof shall be irrevocable. In
the event of repayment of this Note in part only, a new Note of like tenor for
the unrepaid portion hereof and otherwise having the same terms and provisions
as this Note shall be issued by the Company in the name of the Holder hereof
upon the presentation and surrender hereof. 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.
If this Note is specified on the face hereof to be a Discount Note, then
this Note shall constitute an Original Issue Discount Security within the
meaning of the Indenture and the amount payable to the Holder of this Note in
the event of redemption, repayment or acceleration of maturity of this Note will
be equal to the sum of (1) the Issue Price specified on the face hereof
(increased by any accruals of the Discount, as defined below) and, in the event
of any redemption of this Note (if applicable), multiplied by the Initial
Redemption Percentage (as adjusted by the Annual Redemption Percentage
Reduction, if applicable) and (2) any unpaid interest accrued thereon to the
9
Redemption Date, Repayment Date or date of acceleration of maturity, as the case
may be. The difference between the Issue Price and 100% of the principal amount
of this Note is referred to herein as the "Discount."
For purposes of determining the amount of Discount that has accrued as of
any Redemption Date, Repayment Date or date of acceleration of maturity of this
Note, such Discount will be accrued so as to cause an assumed yield on the Note
to be constant. The assumed constant yield will be calculated using a 30-day
month, 360-day year convention, a compounding period that, except for the
Initial Period (as defined below), corresponds to the shortest period between
Interest Payment Dates (with ratable accruals within a compounding period), a
coupon rate equal to the initial Interest Rate applicable to this Note and an
assumption that the maturity of this Note will not be accelerated. If the
period from the Original Issue Date to the initial Interest Payment Date (the
"Initial Period") is shorter than the compounding period for this Note, a
proportionate amount of the yield for an entire compounding period will be
accrued. If the Initial Period is longer than the compounding period, then such
period will be divided into a regular compounding period and a short period,
with the short period being treated as provided in the preceding sentence.
Unless otherwise specified on the face hereof or in an Addendum hereto,
this Note will bear interest at the rate determined by reference to the Base
Rate (or the lowest of two or more specified Base Rates) shown on the face
hereof (i) plus or minus the Spread, if any, specified on the face hereof and
(ii) multiplied by the Spread Multiplier, if any, specified on the face hereof.
Commencing on the Initial Interest Reset Date specified on the face hereof, the
rate at which interest on this Note is payable shall be reset daily, weekly,
monthly, quarterly, semiannually or annually (as shown on the face hereof under
Interest Rate Reset Period) or on such other basis as may be set forth on the
face hereof or in an Addendum hereto as of each Interest Reset Date specified on
the face hereof; provided, however, that the interest rate in effect for the
period, if any, from the Original Issue Date to the Initial Interest Reset Date
will be the Initial Interest Rate.
Except as specified on the face hereof or in an Addendum hereto, the
interest rate in effect on this Note on each day shall be (a) if such day is an
Interest Reset Date, the interest rate determined as of the Interest
Determination Date (as defined below) pertaining to such Interest Reset Date or
(b) if such day is not an Interest Reset Date, the interest rate determined as
of the Interest Determination Date pertaining to the next preceding Interest
Reset Date, subject, in either case, to adjustment by the Spread, if any, and
Spread Multiplier, if any, if each case as specified on the face hereof;
provided, however, that the interest rate in effect from the Original Issue Date
to the
10
Initial Interest Reset Date shall be the Initial Interest Rate. If any Interest
Reset Date would otherwise be a day that is not a Business Day, such Interest
Reset Date shall be postponed to the next succeeding day that is a Business Day,
except that in the case of a Note for which LIBOR is the Base Rate or a Base
Rate, if such next succeeding Business Day falls in the next succeeding calendar
month, such Interest Reset Date shall be the next preceding day that is a
Business Day. In addition, if the Treasury Rate is the Base Rate or a Base Rate
and the Interest Determination Date would otherwise fall on an Interest Reset
Date, then such Interest Reset Date shall be postponed to the next succeeding
Business Day.
The interest rate applicable to each Interest Rate Reset Period commencing
on the related Interest Reset Date will be determined by the Calculation Agent
(as hereinafter defined) as of the applicable Interest Determination Date and
will be calculated by the Calculation Agent on or prior to the Calculation Date
(as hereinafter defined), except with respect to LIBOR and the Eleventh District
Cost of Funds Rate, which will be calculated on such Interest Determination
Date. The "Interest Determination Date" with respect to the CD Rate, the CMT
Rate, the Commercial Paper Rate, the Federal Funds Rate, the J.J. Kenny Rate and
the Prime Rate (as such terms are defined below) shall be the second Business
Day preceding each Interest Reset Date. The "Interest Determination Date" with
respect to the Eleventh District Cost of Funds Rate (as defined below) will be
the last working day of the month immediately preceding the applicable Interest
Reset Date in which the Federal Home Loan Bank of San Francisco (the "FHLB of
San Francisco") publishes the Index (as hereinafter defined). The "Interest
Determination Date" with respect to LIBOR (as defined below) shall be the second
London Business Day preceding the applicable Interest Reset Date unless the
Designated LIBOR Currency is British pounds sterling, in which case the
"Interest Determination Date" will be the applicable Interest Reset Date. The
"Interest Determination Date" with respect to the Treasury Rate (as defined
below) shall be the day of the week in which the Interest Reset Date falls on
which Treasury bills (as defined below) normally would be auctioned; PROVIDED,
HOWEVER, that if 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 the Interest Determination Date
would otherwise fall on an Interest Reset Date, then the Interest Reset Date
shall be postponed to the next succeeding Business Day. If the interest rate of
this Note is determined with reference to the lowest of two or more Base Rates,
the Interest Determination Date pertaining to this Note will be the first
Business Day which is at least two Business Days prior to the Interest Reset
Date on which each such Base Rate shall be determinable. Each such Base Rate
shall be determined and compared on such date, and the applicable interest rate
shall take effect on the related Interest Reset Date.
11
Except as specified on the face hereof or in an Addendum (if any) hereto,
the Base Rate or Rates on this Note shall be determined in accordance with the
provisions of the applicable heading below:
DETERMINATION OF CD RATE. The CD Rate means, with respect to any Interest
Determination Date relating to a Note for which the Base Rate is the CD Rate 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 United States dollar certificates of
deposit having the Index Maturity specified on the face hereof as published by
the Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication ("H.15(519)")
under the heading "CDs (Secondary Market)", or, if not so 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 United States dollar certificates of deposit
of the Index Maturity specified on the face hereof 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 yet published in either H.15(519) or the Composite Quotations by
3:00 P.M., New York City time, on such Calculation Date, then the CD Rate on
such CD Interest Determination Date will be calculated by the calculation agent
specified on the face hereof or any successor in such capacity (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 United States dollar certificates of
deposit in The City of New York selected by the Calculation Agent (after
consultation with the Company) for negotiable United States dollar certificates
of deposit of major United States money center banks for negotiable certificates
of deposit with a remaining maturity closest to the Index Maturity specified on
the face hereof in an amount that is representative for a single transaction in
that market at that time; PROVIDED, HOWEVER, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as described above, the CD
Rate determined as of such CD Interest Determination Date will be the CD Rate in
effect on such CD Interest Determination Date.
DETERMINATION OF CMT RATE. CMT Rate means, with respect to any Interest
Determination Date relating to a Note for which the Base Rate is the CMT Rate or
any Interest Determination Date for a Note for which the interest rate is
determined with reference to the CMT Rate (a "CMT Rate Interest Determination
Date"), the rate displayed on the Designated CMT Telerate Page under the caption
"...Treasury Constant Maturities...Federal Reserve Board
12
Release H.15...Mondays Approximately 3:45 P.M.," under the column for the
Designated CMT Maturity Index for (i) if the Designated CMT Telerate Page is
7055, the rate on such CMT Rate Interest Determination Date and (ii) if the
Designated CMT Telerate Page is 7052, the weekly or monthly average, as
specified on the face hereof, for the week or the month, as applicable, ended
immediately preceding the week or the month, as applicable, in which the
related CMT Rate Interest Determination Date falls. If such rate is no
longer displayed on the relevant page or is not displayed by 3:00 P.M., New
York City time, on the related Calculation Date, then the CMT Rate for such
CMT Rate Interest Determination Date will be such treasury constant maturity
rate for the Designated CMT Maturity Index as published in H.15(519). If
such rate is no longer published or is not published by 3:00 P.M., New York
City time, on the related Calculation Date, then the CMT Rate on such CMT
Rate Interest Determination Date will be such treasury constant maturity rate
for the Designated CMT Maturity Index (or other United States Treasury rate
for the Designated CMT Maturity Index) 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
(after consultation with the Company) determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in
H.15(519). If such information is not provided by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate on the CMT Rate
Interest Determination Date will be calculated by the Calculation Agent and
will be a yield to maturity, based on the arithmetic mean of the secondary
market offered rates as of approximately 3:30 P.M., New York City time, on
such CMT Rate Interest Determination Date reported, according to their
written records, by three leading primary United States government securities
dealers in The City of New York (each, a "Reference Dealer") selected by the
Calculation Agent (from five such Reference Dealers selected by the
Calculation Agent (after consultation with the Company) and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for the
most recently issued direct noncallable fixed rate obligations of the United
States ("Treasury Notes") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not less
than such Designated CMT Maturity Index minus one year. If the Calculation
Agent is unable to obtain three such Treasury Note quotations, the CMT Rate
on such CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic
mean of the secondary market offered rates as of approximately 3:30 P.M., New
York City time, on such 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 (after consultation with the Company) and
eliminating the highest quotation (or, in the event
13
of equality, one of the highest) and the lowest quotation (or, in the event
of equality, one of the lowest)), for Treasury Notes with an original
maturity of the number of years that is the next highest to the Designated
CMT Maturity Index and a remaining term to maturity closest to the Designated
CMT Maturity Index and in an amount of at least $100 million. If three or
four (and not five) of such Reference Dealers are quoting as described above,
then the CMT Rate will be based on the arithmetic mean of the offered rates
obtained and neither the highest nor the lowest of such quotes will be
eliminated; provided, however, that if fewer than three Reference Dealers so
selected by the Calculation Agent are quoting as mentioned herein, the CMT
Rate determined as of such CMT Rate Interest Determination Date will be the
CMT Rate in effect on such CMT Rate Interest Determination Date. If two
Treasury Notes with an original maturity as described in the second preceding
sentence have remaining terms to maturity equally close to the Designated CMT
Maturity Index, the Calculation Agent will obtain quotations for the Treasury
Note with the shorter remaining term to maturity.
"Designated CMT Telerate Page" means the display on the Dow Jones Markets
Limited (or any successor service) on the page specified on the face hereof (or
any other page as may replace such page on such service) for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519) or, if no such
page is specified on the face hereof, page 7052.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified on the face hereof with respect to which the CMT Rate will be
calculated or, if no such maturity is specified on the face hereof, 2 years.
DETERMINATION OF COMMERCIAL PAPER RATE. The Commercial Paper Rate means,
with respect to any Interest Determination Date relating to a Note for which the
Base Rate is the Commercial Paper Rate 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 on the face hereof as such rate shall be published
in H.15(519) under the heading "Commercial Paper-Nonfinancial." In the event
that such rate is not published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Commercial Paper Interest Determination
Date, then the Commercial Paper Rate on such Commercial Paper Interest
Determination Date will be the Money Market Yield of the rate for commercial
paper of the Index Maturity shown on the face hereof as published in Composite
Quotations under the heading "Commercial Paper" (with an Index Maturity of one
month or three months being deemed to be equivalent to an Index Maturity of 30
days or 90 days, respectively). If by 3:00 P.M., New York City time, on such
14
Calculation Date such rate is not published in either H.15(519) or Composite
Quotations, then the Commercial Paper Rate on such Commercial Paper Interest
Determination Date will be calculated by the Calculation Agent and will be the
Money Market Yield of the arithmetic mean of the offered rates, at approximately
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
selected by the Calculation Agent (after consultation with the Company) for
commercial paper of the Index Maturity specified on the face hereof placed for a
nonfinancial entity whose bond rating is "Aa", or the equivalent, from a
nationally recognized statistical rating organization; 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 determined as of such
Commercial Paper Interest Determination Date will be the Commercial Paper Rate
in effect on such Commercial Paper Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage)
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 applicable Interest Rate Reset Period.
DETERMINATION OF ELEVENTH DISTRICT COST OF FUNDS RATE. The Eleventh
District Cost of Funds Rate means, with respect to any Interest Determination
Date relating to a Note for which the Base Rate is the Eleventh District Cost of
Funds Rate or any Interest Determination Date for a Note for which the interest
rate is determined with reference to the Eleventh District Cost of Funds Rate
(an "Eleventh District Cost of Funds Rate Interest Determination Date"), the
rate equal to the monthly weighted average cost of funds for the calendar month
immediately preceding the month in which such Eleventh District Cost of Funds
Rate Interest Determination Date falls, as set forth under the caption "11th
District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such
Eleventh District Cost of Funds Rate Interest Determination Date. If such rate
does not appear on Telerate Page 7058 on such Eleventh District Cost of Funds
Rate Interest Determination Date, then the Eleventh District Cost of Funds Rate
on such Eleventh District Cost of Funds Rate Interest Determination Date shall
be the monthly weighted average cost of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently announced (the
"Index") by the FHLB of San Francisco as such cost of funds for the calendar
month immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date. If the FHLB of San Francisco fails to announce the Index on
or prior to such
15
Eleventh District Cost of Funds Rate Interest Determination Date for the
calendar month immediately preceding such Eleventh District Cost of Funds Rate
Interest Determination Date, the Eleventh District Cost of Funds Rate determined
as of such Eleventh District Cost of Funds Rate Interest Determination Date will
be the Eleventh District Cost of Funds Rate in effect on such Eleventh District
Cost of Funds Rate Interest Determination Date.
DETERMINATION OF FEDERAL FUNDS RATE. The Federal Funds Rate means, with
respect to any Interest Determination Date relating to a Note for which the Base
Rate is the Federal Funds Rate 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 on that date for
United States dollar 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 United
States dollar federal funds arranged by three leading brokers of federal funds
transactions in New York, New York selected by the Calculation Agent (after
consultation with the Company) prior to 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 in this sentence, the Federal Funds Rate determined as of such Federal
Funds Rate Interest Determination Date will be the Federal Funds Rate in effect
on such Federal Funds Rate Interest Determination Date.
DETERMINATION OF J.J. KENNY RATE NOTES. J.J. Kenny Rate means, with
respect to any Interest Determination Date relating to a Note for which the Base
Rate is the J.J. Kenny Rate or any Interest Determination Date for a 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
16
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 Ratings Group
(or their respective successors) in respect 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.
DETERMINATION OF LIBOR. LIBOR will be determined by the Calculation Agent
in accordance with the following provisions:
(i) With respect to an Interest Determination Date relating to a Note
for which the Base Rate is LIBOR or any Interest Determination Date for a
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 on the face of this Note, 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 Designated LIBOR Currency
(as defined below) having the Index Maturity designated on the face of this
Note, commencing on the applicable Interest Reset Date, that appear (or, if
only a single rate is required as aforesaid, appears) on the Designated
LIBOR Page as of 11:00 A.M. London time, on that LIBOR Interest
Determination Date, or (b) if "LIBOR Telerate" is specified on the face of
this Note, or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified
on the face of this Note as the method for calculating LIBOR, the rate for
deposits in the Designated LIBOR Currency having the Index Maturity
designated on the face of this Note commencing on such Interest Reset Date
that appears on the Designated LIBOR Page 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.
17
(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 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 (after consultation with the Company), to provide the
Calculation Agent with its offered quotation for deposits in the Designated
LIBOR Currency for the period of the Index Maturity designated on the face
of this Note, commencing on the applicable Interest Reset 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 Designated LIBOR
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., 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 (after
consultation with the Company) for loans in the Designated LIBOR Currency
to leading European banks, having the Index Maturity designated on the face
of this Note and in a principal amount that is representative for a single
transaction in such Designated LIBOR 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 as of such
LIBOR Interest Determination Date will be LIBOR in effect on such LIBOR
Interest Determination Date.
"Designated LIBOR Currency" means the currency or composite currency
specified on the face hereof as to which LIBOR shall be calculated or, if no
such currency or composite currency is specified on the face hereof, United
States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified on the
face hereof, the display on the Reuter Monitor Money Rates Service (or any
successor service) on the page specified on the face hereof (or any other page
as may replace such page on such service) for the purpose of displaying the
London interbank rates of major banks for the Designated LIBOR Currency, or
(b) if "LIBOR Telerate" is specified on the face hereof or neither "LIBOR
Reuters" nor "LIBOR Telerate" is specified on the face hereof as the method for
calculating LIBOR, the display on the Dow Jones Markets Limited (or any
successor service) on the page specified on the face hereof (or any other page
as may replace such page on such service) for the purpose of
18
displaying the London interbank rates of major banks for the Designated LIBOR
Currency.
"Principal Financial Center" means the capital city of the country to which
the Designated LIBOR Currency relates (or, in the case of ECU, Luxembourg),
except that with respect to United States dollars, Australian dollars, Canadian
dollars, Deutsche marks, Dutch guilders, and Swiss francs, the "Principal
Financial Center" shall be The City of New York, Sydney, Toronto, Frankfurt,
Amsterdam, and Zurich, respectively.
DETERMINATION OF PRIME RATE. The Prime Rate means, with respect to any
Interest Determination Date relating to a Note for which the Base Rate is the
Prime Rate 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 on such date as such rate is published in
H.15(519) under the heading "Bank Prime Loan." 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 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 USPRIME1 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 USPRIME1 Page for
such Prime Rate Interest Determination Date, the Prime Rate will be determined
by the Calculation Agent and will be the arithmetic mean of the prime or base
lending rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on such Prime Rate
Interest Determination Date by four major money center banks in The City of New
York as selected by the Calculation Agent (after consultation with the Company).
If fewer than four quotations are provided by such major money center banks, the
Prime Rate shall be calculated by the Calculation Agent and shall be the
arithmetic mean of four prime rates quoted on the basis of the actual number of
days in the year divided by a 360-day year as of the close of business on such
Prime Rate Interest Determination Date as furnished in The City of New York by
the major money center banks, if any, that have provided such quotations and by
a reasonable number of substitute banks or trust companies to obtain four such
prime rate quotations, provided such substitute banks or trust companies are
organized and doing business under the laws of the United States, or any State
thereof, each having total equity capital of at least $500,000,000 and being
subject to supervision or examination by a Federal or State authority, selected
by the Calculation Agent (after consultation with the Company) to provide such
rates; PROVIDED, HOWEVER, that if the banks or trust companies selected as
aforesaid by the Calculation Agent are not quoting rates as set forth in this
sentence, the Prime Rate determined as of such Prime Rate Interest
19
Determination Date will be the Prime Rate in effect on such Prime Rate Interest
Determination Date.
"Reuters Screen USPRIME1 Page" means the display on the Reuter Monitor
Money Rates Service (or any successor service) on the "USPRIME1" page (or such
other page as may replace the USPRIME1 page on such service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
DETERMINATION OF TREASURY RATE. The Treasury Rate means, with respect to
any Interest Determination Date relating to a Note for which the Base Rate is
the Treasury Rate 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 from the auction held on such
Treasury Rate Interest Determination Date (the "Auction") of direct obligations
of the United States ("Treasury bills") having the Index Maturity specified on
the face hereof, 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 of such Treasury
bills (expressed as a bond equivalent on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) as otherwise announced by the
United States Department of the Treasury. In the event that the results of the
Auction of Treasury bills having the Index Maturity specified on the face hereof
are not reported as provided by 3:00 P.M., New York City time, on the related
Calculation Date, or if no such Auction is held, 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 selected by the Calculation Agent (after consultation with
the Company) for the issue of Treasury bills with a remaining maturity closest
to the Index Maturity specified on the face hereof; PROVIDED, HOWEVER, that if
the dealers selected as aforesaid by the Calculation Agent are not quoting as
described above, the Treasury Rate determined as of such Treasury Rate Interest
Determination Date will be the Treasury Rate in effect on such Treasury Rate
Interest Determination Date.
Anything herein to the contrary notwithstanding, (i) the interest rate in
effect with respect to this Note from time to time shall not be greater than the
Maximum Interest Rate, if any, or less than the Minimum Interest Rate, if any,
specified on the face hereof and (ii) the interest rate hereon will in no event
be higher than the maximum rate permitted from time to time by New
20
York law, as the same may be modified by United States law of general
application.
The "Calculation Date," where applicable, pertaining to any Interest
Determination Date shall be the earlier of (i) the tenth calendar day after such
Interest Determination Date or, if 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 Calculation Agent
shall calculate the interest rate hereon in accordance with the foregoing on or
before each Calculation Date. At the request of the Holder hereof, the
Calculation Agent will provide to the Holder hereof the interest rate hereon
then in effect and, if determined, the interest rate which will become effective
as a result of a determination made for the next Interest Reset Date.
Accrued interest hereon shall be an amount calculated by multiplying the
principal amount hereof by an accrued interest factor. Such accrued interest
factor shall be computed by adding the interest factor calculated for each day
in the applicable period for which interest is being calculated. Unless
otherwise specified under Day Count Convention on the face hereof or in an
Addendum hereto, the interest factor for each such day shall be computed by
dividing the interest rate applicable to such day by 360 if the CD Rate, the
Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the Federal
Funds Rate, LIBOR or the Prime Rate is an applicable Base Rate, or by the actual
number of days in the year if the CMT Rate or the Treasury Rate is an applicable
Base Rate, or by 365 days if the J.J. Kenney Rate is an applicable Base Rate.
Unless otherwise specified under Day Count Convention on the face hereof or in
an Addendum hereto, the interest factor for this Note, if the interest rate is
calculated with reference to two or more Base Rates, shall be calculated in each
period in the same manner as if only the applicable Base Rate specified on the
face hereof applied.
All percentages resulting from any calculation on this Note 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 this Note will
be rounded to the nearest cent (with one-half cent being rounded upward).
Any provision contained herein with respect to the calculation of the rate
of interest applicable to this Note, its payment dates or any other terms hereof
or matters relating hereto may be modified as specified in an Addendum hereto or
on the face hereof under "Other/Additional Provisions."
If an Event of Default with respect to the Notes shall occur and be
continuing, the Trustee or the Holders of not less than
21
25% in aggregate principal amount of the Outstanding Notes may declare the
principal of all the Notes to be due and payable immediately in the manner and
with the effect provided in the Indenture.
The Indenture contains provisions, which provisions apply to the Notes, for
(i) the defeasance of the indebtedness evidenced by the Notes and (ii) the
satisfaction and discharge of the Indenture, in each case upon compliance with
certain conditions, and subject to certain exceptions, set forth in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected thereby at any time by the Company and the Trustee with the consent of
the Holders of 66-2/3% in aggregate principal amount of the Outstanding
Securities of each series affected thereby. The Indenture also contains
provisions permitting the Holders of not less than a majority in aggregate
principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Note shall be conclusive and binding upon such Holder and
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture, and subject to certain limitations therein
set forth, the transfer of this Note may be registered on the Security Register
upon surrender of this Note for registration of transfer at the office or agency
of the Company maintained for that purpose in the Borough of Manhattan, The City
of New York duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Security Registrar duly executed by,
the Holder hereof or by his attorney duly authorized in writing and thereupon
one or more new Notes, of Authorized Denominations and for the same aggregate
principal amount and having the identical terms and provisions, will be issued
to the designated transferee or transferees.
22
As provided in the Indenture, and subject to certain limitations therein
set forth, the Notes are exchangeable for a like aggregate principal amount of
Notes having identical terms and provisions, in Authorized Denominations, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Company may, subject to certain exceptions specified in the
Indenture, require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or premium, if any, or
interest on this Note and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on Company Request or (if then held by the Company) shall be
discharged from such trust, and the Holder of this Note shall thereafter look
only to the Company for payment thereof, all as provided in the Indenture.
If any principal of or premium, if any, or interest on this Note is not
paid when due, then such unpaid principal, premium or interest, as the case may
be, shall, to the extent permitted by law, bear interest until paid at the
interest rate per annum borne by this Note from time to time.
The Notes 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.
All capitalized terms used in this Note and not defined herein which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.
23
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Company
to repay this Note (or portion hereof specified below) pursuant to its terms on
____________________ at a price equal to the principal amount of this Note to be
repaid, together with interest accrued on the principal amount to be repaid to
the repayment date, by payment to the undersigned, at
________________________________________________________________________________
(Please print or type the name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at Citibank, N.A.,
111 Wall Street, 5th Floor, Corporate Trust Services, Attention: Issuance and
Transfer, New York, New York 10043, or at such other address of which the
Company shall from time to time notify the Holder of this Note, not more than 60
nor less than 30 days prior to an Optional Repayment Date, if any, shown on the
face of this Note, this Note with this "Option to Elect Repayment" form duly
completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be in increments of $1,000 (or other
Authorized Denomination, if any, specified on the face hereof) in principal
amount) which the Holder elects to have repaid (in the absence of any such
specification, the entire principal amount hereof will be repaid) and specify
the denomination or denominations (which shall be $1,000 (or other minimum
Authorized Denomination, if any, specified on the face hereof) or any multiple
thereof) of the Note or Notes to be issued to the Holder for the portion of this
Note not being repaid (in the absence of any such specification, one such Note
will be issued for the portion not being repaid).
$______________________ ________________________________________
(Specify portion to be NOTICE: The signature(s) on this Option
repaid, if less than the to Elect Repayment must correspond with
entire principal amount of the name(s) as written upon the face of
this Note) this Note in every particular without
alteration or enlargement or any change
whatsoever.
$_________________________ Date: ________________________
(Specify denomination or
denominations of Note or
Notes to be issued for the
portion, if any, of this
Note not being repaid)
24
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM--as tenants in common
UNIF TSFR (GIFT) MIN ACT--____________Custodian__________ --
(Cust) (Minor)
Under Uniform Transfer (Gifts) to Minors Act
----------------------------------
(State)
TEN ENT-- as tenants by the entirety
JT TEN-- as joint tenants with right of survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above list.
25
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please Insert Social Security or Other
Identifying Number of Assignee:
- ---------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS,
INCLUDING ZIP CODE OF ASSIGNEE:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing _____________________________________________________________________
__________________ attorney to transfer said Note on the books of the Company,
with full power of substitution in the premises.
Dated:____________________ ____________________________________________
NOTICE: The signature(s) to this assignment
must correspond with the name(s) as written
upon the face of the within instrument in
every particular, without alteration or
enlargement or any change whatsoever.
26
[PACIFIC ENTERPRISES LETTERHEAD]
February 3, 1998
Southern California Gas Company
555 West Fifth Street
Los Angeles, California 90013-1011
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 up to $600,000,000 aggregate
public offering price of your debt securities (the "Securities").
I am familiar with the proceedings taken and proposed to be taken in
connection with the authorization, issuance and sale of the Securities. Upon
the basis of the foregoing and subject to the completion of said proceedings
prior to the issuance of the Securities, I am of the opinion that the Securities
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
GWK/lhp
EXHIBIT 12.1
SOUTHERN CALIFORNIA GAS COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
ACTUAL
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------- -------------
1992 1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ---------- -------------
Earnings before fixed charges and
taxes based on income:
Net income......................... $ 194,716 $ 193,676 $ 190,513 $ 214,833 $ 201,111 $ 187,181
Fixed charges.................... 116,504 116,890 120,111 108,645 100,015 75,611
Income taxes charged to
operations..................... 164,487 134,491 145,603 161,274 144,213 139,589
Income taxes on nonoperating
income......................... (570) (5,670) (941) 277 3,581 3,264
---------- ---------- ---------- ---------- ---------- -------------
Earnings before fixed charges
and taxes based on income.... $ 475,137 $ 439,387 $ 455,286 $ 475,029 $ 448,920 $ 405,645
---------- ---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- ---------- -------------
Fixed charges:
Interest and amortization.......... $ 105,509 $ 104,986 $ 106,448 $ 93,802 $ 86,088 $ 64,985
Rental expenses approximating
interest charges included in
operating expenses............... 10,995 11,904 13,663 14,843 13,927 10,625
---------- ---------- ---------- ---------- ---------- -------------
Total actual fixed charges..... $ 116,504 $ 116,890 $ 120,111 $ 108,645 $ 100,015 $ 75,610
---------- ---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- ---------- -------------
Ratio of earnings to fixed charges... 4.08 3.76 3.79 4.37 4.49 5.36
---------- ---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- ---------- -------------
For purpose of the above computation, 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.
EXHIBIT 12.2
SOUTHERN CALIFORNIA GAS COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
ACTUAL ADJUSTED FOR SUPPLIER REFUNDS AND
REGULATORY ACCOUNTS
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------- -------------
1992 1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ---------- -------------
(DOLLARS IN THOUSANDS)
Earnings before fixed charges and
taxes based on income............... $ 475,137 $ 439,387 $ 455,286 $ 475,029 $ 448,920 $ 405,645
Adjustment for interest related to
supplier refunds and regulatory
accounts............................ (3,018) (2,678) (9,729) (3,826) (4,752) (2,346)
Earnings before adjusted fixed
charges and taxes based on
income........................... $ 472,119 $ 436,709 $ 445,557 $ 471,203 $ 444,168 $ 403,299
---------- ---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- ---------- -------------
Fixed charges........................ $ 116,504 $ 116,890 $ 120,111 $ 108,645 $ 100,015 $ 75,611
Adjustment for interest related to
supplier refunds and regulatory
accounts............................ (3,018) (2,678) (9,729) (3,826) (4,752) (2,346)
---------- ---------- ---------- ---------- ---------- -------------
Adjusted fixed charges............. $ 113,486 $ 114,212 $ 110,382 $ 104,819 $ 95,263 $ 73,265
---------- ---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- ---------- -------------
Ratio of earnings to fixed charges
adjusted for supplier refunds and
regulatory
accounts............................ 4.16 3.82 4.04 4.50 4.66 5.50
---------- ---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- ---------- -------------
For purpose of the above computation, 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. See Exhibit 12.1 for the
computation of the foregoing amounts.
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 described above, but exclude from
fixed charges related interest expense during the relevant period to the extent
of related interest income.
EXHIBIT 23.2
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement
of Southern California Gas Company on Form S-3 of our report dated January 28,
1997, appearing in the Annual Report on Form 10-K of Southern California Gas
Company for the year ended December 31, 1996, and to the reference to us under
the heading "Experts" in the Prospectus, which is part of this Registration
Statement.
Deloitte & Touche LLP
Los Angeles, California
February 3, 1998
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 Fifth 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)
Exhibit2 - 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 September 30, 1997 - 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 27th day
of January, 1998.
CITIBANK, N.A.
By /s/Arthur W. Aslanian
---------------------
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 SEPTEMBER 30,
1997, PUBLISHED IN RESPONSE TO CALL MADE BY COMPTROLLER OF THE CURRENCY, UNDER
TITLE 12, UNITED STATES CODE, SECTION 161. CHARTER NUMBER 1461 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 . . . . . . . . . . . . . . . $ 6,529,000
Interest-bearing balances. . . . . . . . . . . . . . . . . 12,319,000
Held-to-maturity securities. . . . . . . . . . . . . . . . 0
Available-for-sale securities. . . . . . . . . . . . . . . 28,477,000
Federal funds sold and
securities purchased under
agreements to resell. . . . . . . . . . . . . . . . 11,422,000
Loans and lease financing receiv-
ables:
Loans and Leases, net of un-
earned income . . . . . . . . . . . . $ 151,679,000
LESS: Allowance for loan
and lease losses. . . . . . . . . . . 4,253,000
---------------
Loans and leases, net of un-
earned income, allowance,
and reserve . . . . . . . . . . . . . . . . . . . . . 147,426,000
Trading assets . . . . . . . . . . . . . . . . . . . . . . 31,496,000
Premises and fixed assets (includ-
ing capitalized leases) . . . . . . . . . . . . . . . 3,380,000
Other real estate owned. . . . . . . . . . . . . . . . . . 651,000
Investments in unconsolidated
subsidiaries and associated com-
panies. . . . . . . . . . . . . . . . . . . . . . . . 1,284,000
Customers' liability to this bank
on acceptances outstanding. . . . . . . . . . . . . . 2,023,000
Intangible assets. . . . . . . . . . . . . . . . . . . . . 177,000
Other assets . . . . . . . . . . . . . . . . . . . . . . . 8,745,000
---------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . $ 253,929,000
---------------
---------------
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . $ 35,919,000
Noninterest-
bearing . . . . . . . . . . . . . . $ 12,462,000
Interest-
bearing . . . . . . . . . . . . . . 23,457,000
---------------
In foreign offices, Edge and
Agreement subsidiaries, and
IBFs. . . . . . . . . . . . . . . . . . . . . . . . . 138,955,000
Noninterest-
bearing . . . . . . . . . . . . . . 9,790,000
Interest-
bearing . . . . . . . . . . . . . . 129,165,000
---------------
Federal funds purchased and
securities sold under agree-
ments to repurchase . . . . . . . . . . . . . . . . . 6,161,000
Trading liabilities. . . . . . . . . . . . . . . . . . . . 24,966,000
Other borrowed money (includes
mortgage indebtedness and
obligations under capitalized
leases):
With a remaining maturity of one
year or less. . . . . . . . . . . . . . . . . . . . . 9,351,000
With a remaining maturity of more
than one year through three years . . . . . . . . . . 2,916,000
With a remaining maturity of more
than three years. . . . . . . . . . . . . . . . . . . 915,000
Bank's liability on acceptances ex-
ecuted and outstanding. . . . . . . . . . . . . . . . 2,024,000
Subordinated notes and
debentures . . . . . . . . . . . . . . . . . . . . . . . . 5,400,000
Other liabilities. . . . . . . . . . . . . . . . . . . . . 9,856,000
---------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . $ 236,463,000
---------------
---------------
EQUITY CAPITAL
Perpetual preferred stock
and related surplus . . . . . . . . . . . . . . . . . 0
Common stock . . . . . . . . . . . . . . . . . . . . . . . $ 751,000
Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . 7,387,000
Undivided profits and capital re-
reserves. . . . . . . . . . . . . . . . . . . . . . . 9,254,000
Net unrealized holding gains (losses)
on available-for-sale securities. . . . . . . . . . . 737,000
Cumulative foreign currency
translation adjustments . . . . . . . . . . . . . . . (663,000)
---------------
TOTAL EQUITY CAPITAL . . . . . . . . . . . . . . . . . . . $ 17,466,000
---------------
TOTAL LIABILITIES, LIMITED-
LIFE PREFERRED STOCK, AND
EQUITY CAPITAL. . . . . . . . . . . . . . . . . . . . $ 253,929,000
---------------
---------------
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
CONTROLLER
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.
PAUL J. COLLINS
JOHN S. REED
WILLIAM R. RHODES
DIRECTORS
