EXHIBIT 1.01
MOUNTAIN FUEL SUPPLY COMPANY
Medium-Term Notes, Series C, Due from
Nine Months to 30 Years from Date of Issue
DISTRIBUTION AGREEMENT
June , 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Mountain Fuel Supply Company, a Utah corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and Smith Barney Inc. ("Smith Barney" and
together with Merrill Lynch, the "Agents") with respect to the issue and sale by
the Company of its Medium-Term Notes, Series C, due from nine months to 30 years
from date of issue, described herein (the "Notes"). The Notes are to be issued
pursuant to an indenture dated as of May 1, 1992, as amended, supplemented or
modified from time to time (the "Indenture"), between the Company and First
Security Bank, N.A. (as successor trustee to Citibank, N.A.), as trustee (the
"Trustee").
As of the date hereof, the Company has authorized the issuance and sale
of up to $75,000,000 aggregate principal amount of Notes directly or through the
Agents pursuant to the terms of this Agreement. It is understood, however, that
the Company may from time to time authorize the issuance of additional Notes and
that such additional Notes may be distributed 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.
This Agreement provides both for the sale of Notes by the Company
directly to purchasers, in which case the Agents will act as agents of the
Company in soliciting Note purchases, and (as may from time to time be agreed to
by the Company and the related
Agent or the Agents) to one or more Agents as principal for resale to
purchasers.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333- ) for the
registration of the Notes under the Securities Act of 1933, as amended (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 has been declared effective by
the Commission and the Indenture has been qualified under the Trust Indenture
Act of 1939, as amended (the "1939 Act"). Such registration statement (and any
further registration statements which may be filed by the Company for the
purpose of registering additional Notes and in connection with which this
Agreement is included or incorporated by reference as an exhibit) and the
prospectus constituting a part thereof, and any prospectus supplements relating
to the Notes, including all documents incorporated therein by reference, as from
time to time amended or supplemented by the filing of documents pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or the 1933 Act or
otherwise, are referred to herein as the "Registration Statement" and the
"Prospectus", respectively, except that if any revised prospectus shall be
provided to the Agents by the Company for use in connection with the offering of
the Notes whether or not such revised prospectus is required to be filed by the
Company pursuant to Rule 424(b) of the 1933 Act Regulations, the term
"Prospectus" shall refer to such revised prospectus from and after the time it
is first provided to the Agents for such use.
SECTION 1. Appointment as 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 appoints the Agents, except as
otherwise provided in this Section 1(a), as the exclusive agents for the purpose
of soliciting purchases of the Notes from the Company by others and agrees that,
except as otherwise contemplated herein, whenever the Company determines to sell
Notes directly to one or more of the Agents as principal for resale to others,
it will enter into a Terms Agreement (as hereafter defined) relating to such
sale in accordance with the provisions of Section 3(b) hereof if requested by
such Agent. The Company agrees that, except as otherwise provided in this
Section 1(a), during the period the Agents are acting as the Company's agents
hereunder, the Company will not engage any other party to assist in the
placement of the Notes (other than any person or entity which, by executing a
counterpart of this Agreement, becomes an Agent hereunder). Notwithstanding the
foregoing, the Company reserves the right to (i) appoint additional agents for
the purpose of placing Notes in one or more discrete transactions during the
term of this Agreement under the terms of an agreement substantially identical
to this Agreement (provided that the
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commission to be paid to such additional agents in connection with the sale of
any Note shall be the applicable commission determined pursuant to Section 3(a)
hereof), and (ii) sell Notes to one or more underwriters in one or more
underwritten transactions so long as such underwriter or underwriters shall
execute an agreement substantially identical to this Agreement relating to such
underwritten transaction or transactions, provided that in each such case no
such agreement will appoint any such agent or underwriter as an agent under this
Agreement except as relates to the related transaction or transactions. The
Company shall give prompt written notice to the Agents of the occurrence of any
event described in clause (i) or (ii) above. As used herein, the term "Agent",
in addition to Merrill Lynch and Smith Barney, refers to each person or entity
which, at any particular time, is an agent or underwriter, as the case may be,
for the Company hereunder as evidenced by its execution of a counterpart of this
Agreement.
(b) Reasonable Efforts Solicitations; Right to Reject Offers. Upon
receipt of instructions from the Company, the Agents will use their reasonable
efforts to solicit offers to purchase such principal amount of the Notes as the
Company and the Agents shall agree upon from time to time during the term of
this Agreement, it being understood that the Company shall not approve the
solicitation of offers to purchase Notes in excess of the amount which shall be
authorized by the Company from time to time or in excess of the principal amount
of Notes registered pursuant to the Registration Statement. The Agents will have
no responsibility for maintaining records with respect to the aggregate
principal amount of Notes sold, or of otherwise monitoring the availability of
Notes for sale under the Registration Statement. Each Agent will communicate to
the Company, orally or in writing, each reasonable offer to purchase Notes,
other than those offers rejected by such Agent. Each Agent shall have the right,
in its discretion reasonably exercised, to reject any proposed purchase of
Notes, as a whole or in part, and any such rejection shall not be deemed a
breach of the Agent's agreement contained herein. The Company shall have the
sole right to accept or reject any proposed purchase of the Notes, in whole or
in part and any such rejection shall not be deemed a breach of the Company's
agreement contained herein.
(c) Solicitations as Agents; Purchases as Principals. In
soliciting offers to purchase the Notes on behalf of the Company and in
performing its other obligations hereunder (other than with respect to any
purchase by the Agents as principal, pursuant to a Terms Agreement or
otherwise), each Agent shall act solely as agent for the Company and not as
principal. Each Agent shall make reasonable efforts to assist the Company in
obtaining performance by each purchaser whose offer to purchase Notes has
been solicited by such Agent and accepted by the Company. No Agent shall have
any liability to the Company in the event 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 it has accepted, the Company shall (i) hold the
Agent
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harmless against any loss, claim or damage arising from or as a result of such
default by the Company and (ii) notwithstanding such default, pay to the Agent
any commission to which it would be entitled in connection with such sale. No
Agent shall have any obligation to purchase Notes from the Company as principal,
but an Agent may agree from time to time to purchase Notes as principal. Any
such purchase of Notes by an Agent as principal shall be made in accordance with
Section 3(b) hereof if requested by such Agent.
(d) Reliance. The Company and the Agents agree that any Notes the
placement of which the Agents arrange shall be placed by the Agents, and any
Notes purchased by the Agents shall be purchased, in reliance on the
representations, warranties, covenants and agreements of the Company contained
herein and on the terms and conditions and in the manner provided herein.
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 from 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 any time that the Registration Statement or the Prospectus shall be amended
or supplemented or there is filed with the Commission any document incorporated
by reference into the Prospectus (each of the times referenced above being
referred to herein as a "Representation Date") as follows:
(i) Registration Statement and Prospectus. At the time the
Registration Statement became effective, the Registration Statement
complied, and as of each Representation Date will comply, in all
material respects with the requirements of the 1933 Act, the 1933 Act
Regulations, the 1939 Act and the rules and regulations of the
Commission promulgated under the 1939 Act. The Registration Statement,
at the time it became effective, did not, and at each time thereafter
at which any amendment to the Registration Statement becomes effective
or any Annual Report on Form 10-K is filed by the Company with the
Commission and as of each Representation Date, will not, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus, as of the date hereof does not,
and as of each 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
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or Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by or on behalf of the Agents
expressly for use in the Registration Statement or Prospectus.
(ii) Incorporated Documents. The documents incorporated by
reference in the Prospectus pursuant to Item 12 of Form S-3 under the
1933 Act, 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 promulgated thereunder (the "1934 Act
Regulations"), and, when read together with the other information in
the Prospectus, 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 in order to make the statements therein, in the
light of the circumstances under which they were or are made, not
misleading.
(iii) Accountants. The accountants who certified the financial
statements and supporting schedules included or incorporated by
reference in the Prospectus are, to the best knowledge of the Company,
independent public accountants as required by the 1933 Act and the 1933
Act Regulations.
(iv) Financial Statements. The financial statements included in the
Registration Statement and the Prospectus present fairly the financial
position of the Company and its consolidated subsidiaries as at the
dates indicated and the results of their operations for the periods
specified; except as otherwise stated in the Registration Statement,
said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis;
and the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein.
(v) Material Changes or Material Transactions. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated herein, (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,
(b) there have been no transactions entered into by the Company or any
of its subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Company and its
subsidiaries considered as one enterprise, and (c) except for the
regular dividends, there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
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(vi) Due Incorporation and Qualification. The Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Utah with corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus; and 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 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 (a
"Material Adverse Effect").
(vii) Subsidiaries. Each 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 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 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; and all of the issued and
outstanding capital stock of each subsidiary has been duly authorized
and validly issued, is fully paid and nonassessable and is owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(viii) Capital Stock. The shares of issued and outstanding common
stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable.
(ix) Authorization and Validity of the Indenture and the Notes. The
Notes have been duly authorized for issuance and sale pursuant to this
Agreement and, when issued and delivered pursuant to this Agreement
against payment of the consideration therefor specified in the
Prospectus or pursuant to any Terms Agreement, the Notes will have been
duly executed, authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Company entitled to the
benefits provided by the Indenture, which will be substantially in the
form filed as an exhibit to the Registration Statement; the Indenture
has been duly authorized and the Indenture will be duly qualified under
the 1939 Act and will constitute a valid and legally binding instrument
of the Company, enforceable in accordance with
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its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and general equitable
principles; and the Notes and the Indenture conform to the descriptions
thereof in the Prospectus.
(x) No Defaults; Regulatory Approvals. Neither the Company nor
any of its subsidiaries is in violation of its charter or in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument 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, which violations or defaults in the
aggregate would have a Material Adverse Effect; and the execution and
delivery of this Agreement and the consummation of the transactions
contemplated herein and therein and pursuant to any applicable Terms
Agreement have been duly authorized by all necessary corporate action
and will not conflict with or constitute a breach of, or a 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, except as expressly contemplated in the Indenture,
pursuant to any contract, indenture, mortgage, loan agreement, note,
lease or other instrument 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, nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or any
applicable law, administrative regulation or administrative or court
decree.
(xi) Legal Proceedings; Contracts. 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, the Company or any of its subsidiaries, which is
required to be disclosed in the Registration Statement (other than as
disclosed therein) or which would 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 would materially and adversely
affect the properties or assets thereof or which would materially and
adversely affect the consummation of this Agreement or any Terms
Agreement; all pending legal or governmental proceedings to which the
Company of any subsidiary is a party or which any of their property is
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, are,
considered in the aggregate, not material; and there are no
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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.
(xii) No Governmental Authorization. No authorization, approval or
consent of any court or governmental authority or agency is necessary
in connection with the sale of the Notes hereunder, except such as may
be required under the 1933 Act, the 1933 Act Regulations and state
securities laws and except as have been obtained.
(xiii) Possession of Permits. The Company and its subsidiaries
possess such valid franchises, certificates of convenience and
necessity, easements, rights-of-way, operating rights, licenses,
permits, consents, authorizations and orders of governmental political
subdivisions or regulatory authorities as are necessary to conduct the
business now operated by them, except those the failure of which to
possess would not have a Material Adverse Effect, and neither the
Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification thereof which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding would have a Material Adverse Effect.
(xiv) Investment Company Act. Neither the Company nor any of its
subsidiaries is regulated or required to be registered as an
"investment company" under the Investment Company Act of 1940, as
amended (the "1940 Act").
(xv) Doing Business with Cuba. The Company has complied and will
comply with the provisions of Florida H.B. 1771, codified as Section
517.075 of the Florida Statutes, 1987, as amended, and all regulations
promulgated thereunder relating to issuers doing business in Cuba.
(xvi) Ratings. The Medium-Term Note Program under which the Notes are
issued (the "Program"), as well as the Notes, are rated at least Baa by
Moody's Investors Service, Inc. and at least BBB by Standard & Poor's
Ratings Services, or such other rating as to which the Company shall
have most recently notified the Agents pursuant to Section 4(a) hereof.
(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 one or
more Agents as principal shall be deemed a representation and warranty by the
Company to the Agents as to the matters covered thereby on the date of such
certificate and at each Representation Date subsequent thereto.
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SECTION 3. Solicitations as Agents; Purchases as Principals.
(a) Solicitations as Agents. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, each Agent agrees, when acting as an agent of the Company, to use its
reasonable efforts to solicit offers to purchase the Notes upon the terms and
conditions set forth herein and in the Prospectus. In connection with the
solicitation of offers to purchase Notes, the Agents are not authorized to
provide any written information relating to the Company to any prospective
purchaser other than the Prospectus and documents incorporated by reference in
the Prospectus.
The Company reserves the right, in its sole discretion, to suspend
solicitation of offers to purchase the Notes through the Agents, as agents,
commencing at any time for any period of time or permanently. Upon receipt of
instructions from the Company, the Agents will forthwith suspend solicitation of
offers to purchase from the Company until such time as the Company has advised
the Agents that such solicitation may be resumed.
The Company agrees to pay each Agent a commission, in the form of a
discount or otherwise as agreed to by the Company and the Agents, equal to the
applicable percentage of the principal amount of each Note sold by the Company
as a result of a solicitation made by such Agent as set forth in Schedule A
hereto; provided, however, that the Company shall only be obligated to pay one
such fee with respect to any particular Note so sold.
The purchase price, interest rate, maturity date and other terms of the
Notes shall be agreed upon by the Company and the Agents and set forth in a
pricing supplement to the Prospectus to be prepared following each acceptance by
the Company of an offer for the purchase of Notes. Except as may be otherwise
provided in such supplement to the Prospectus, the Notes will be issued in
denominations of $1,000 or any larger amount that is an integral multiple of
$1,000. All Notes sold through the Agents as agents will be sold at 100% of
their principal amount unless otherwise agreed to by the Company and the Agents.
Each Agent acknowledges and agrees that any funds which such Agent receives in
respect of a purchase of Notes, which purchase has been solicited by such Agent,
as agent of the Company, will be received, held and disposed of by such Agent,
as agent of the Company.
(b) Purchases as Principals. Each sale of Notes to one or more Agents
as principal shall be made in accordance with the terms contained herein and, if
requested by such Agent, pursuant to a separate agreement which will provide for
the sale of such Notes to, and the purchase and reoffering thereof by, such
Agent or Agents. Each such separate agreement (which may be an oral agreement)
between one or more Agents and the Company is herein referred to as a "Terms
Agreement". Unless the context otherwise requires, each reference contained
herein to "this Agreement"
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shall be deemed to include any Terms Agreement between the Company and one or
more Agents. Each such Terms Agreement, whether oral or in writing, shall be
with respect to such information (as applicable) as is specified in Exhibit A
hereto. An Agent's commitment to purchase Notes as principal pursuant to any
Terms Agreement or otherwise shall be deemed to have been made on the basis of
the representations and warranties of the Company herein contained and shall be
subject to the terms and conditions herein set forth. Each Terms Agreement shall
specify the principal amount of Notes to be purchased by each Agent pursuant
thereto, the price to be paid to the Company for such Notes (which, if not so
specified in a Terms Agreement, shall be at a discount equivalent to the
applicable commission set forth in Schedule A hereto), the time and place of
delivery of and payment for such Notes, any provisions relating to rights of,
and default by purchasers acting together with the Agents in the reoffering of
the Notes, and such other provisions (including further terms of the Notes) as
may be mutually agreed upon. The Agents may utilize a selling or dealer group in
connection with the resale of the Notes purchased by the Agents. Such Terms
Agreement shall also specify whether or not any officer's certificate, opinions
of counsel or comfort letter specified in Sections 7(b), 7(c) and 7(d) hereof
shall be required to be delivered by the Company on the related Settlement Date.
(c) Administrative Procedures. Administrative procedures with respect
to the sale of Notes shall be agreed upon from time to time by the Agents and
the Company (the "Procedures"). The initial Procedures, which are set forth in
Exhibit B hereto, shall remain in effect until changed by agreement between the
Company and the Agents or, with respect to the sale of the Notes to one or more
Agents as principal, unless modified by the applicable Terms Agreement. The
Agents and the Company agree to perform the respective duties and obligations
specifically provided to be performed by them in the Procedures.
(d) Delivery of Closing Documents. The documents required to be
delivered by Section 5 hereof shall be delivered at the office of Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022 on the
date hereof, or at such other time or place as the Agents and the Company may
agree.
SECTION 4. Covenants of the Company.
The Company covenants with the Agents as follows:
(a) Notice of Certain Events. The Company will notify the Agents
immediately (i) of the effectiveness of any amendment to the Registration
Statement, (ii) of the transmittal to the Commission for filing of any
supplement to the Prospectus or any document to be filed pursuant to the 1934
Act which will be incorporated by reference in the Prospectus, (iii) of the
receipt of any comments from the Commission with respect to the Registration
Statement or the Prospectus, (iv) of any request by the Commission for any
amendment to the Registration Statement or
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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) any change in the rating assigned by any nationally recognized
statistical rating organization to any the Program or debt securities (including
the Notes) of the Company or the public announcement 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 the withdrawal 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 the
Agents notice of its intention to file or prepare any additional registration
statement with respect to the registration of additional Notes, any amendment to
the Registration Statement or any amendment or supplement to the Prospectus
(other than an amendment or supplement providing solely for a change in the
interest rates, maturity or price of Notes or relating solely to an 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 the Agents
with copies of any such amendment or supplement or other documents proposed to
be filed or prepared a reasonable time in advance of such proposed filing or
preparation, as the case may be, and will not file any such amendment or
supplement or other documents in a form to which the Agents or counsel to the
Agents shall reasonably object.
(c) Copies of the Registration Statement and the Prospectus. The
Company will deliver to the Agents as many signed and conformed copies of the
Registration Statement (as originally filed) and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated by reference in the Prospectus) as the Agents may
reasonably request. The Company will furnish to the Agents as many copies of the
Prospectus (as amended or supplemented) as the Agents shall reasonably request
so long as each such Agent is required to deliver a Prospectus in connection
with sales or solicitations of offers to purchase the Notes.
(d) Preparation of Pricing Supplements. The Company will prepare, with
respect to any Notes to be sold through or to the Agents pursuant to this
Agreement, a Pricing Supplement with respect to such Notes in a form previously
approved by the Agents 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 fifth business day after the date on which such Pricing
Supplement is first used.
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(e) Revisions of Prospectus -- Material Changes. Except as otherwise
provided in subsection (l) of this Section, if at any time during the term of
this Agreement any event shall occur or condition exist as a result of which it
is necessary, in the reasonable opinion of counsel for the Agents or counsel for
the Company, to further amend or supplement the Prospectus in order that the
Prospectus will not include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time the Prospectus
is delivered to a purchaser, or if it shall be necessary, in the reasonable
opinion of either such counsel, to amend or supplement the Registration
Statement or the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, immediate notice shall be given, and confirmed
in writing, to the Agents to cease the solicitation of offers to purchase the
Notes in the Agents' capacity as agents and to cease sales of any Notes the
Agents may then own as principal pursuant to a Terms Agreement, and the Company
will promptly prepare and file with the Commission such amendment or supplement,
whether by filing documents pursuant to the 1934 Act, the 1933 Act or otherwise,
as may be necessary to correct such untrue statement or omission or to make the
Registration Statement and Prospectus comply with such requirements purchasing
prior to the date on which such financial information is released to the general
public.
(f) Prospectus Revisions -- Periodic Financial Information. Except as
otherwise provided in subsection (1) of this Section, 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 the
Agents, confirmed in writing, and shall, prior to the delivery of the Prospectus
to any purchaser of the Notes purchasing after the date on which such financial
information is released to the general public, by the filing of documents
pursuant to the 1934 Act in the ordinary course, the 1933 Act or otherwise cause
the Prospectus to be amended or supplemented to include or incorporate by
reference financial information with respect thereto and corresponding
information for the comparable period of the preceding fiscal year included in
such release (but not any narrative information included in each such release),
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 subsection (1) of this Section, 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 furnish such information to the
Agents, confirmed in writing, and shall, prior to the delivery of
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the Prospectus to any purchaser of the Notes purchasing after the date on which
such financial information is released to the general public, cause the
Registration Statement and the Prospectus to be amended, by the filing of
documents pursuant to the 1934 Act in the ordinary course, 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, by applying the provisions of
Rule 158 under the 1933 Act, will make generally available to its security
holders as soon as practicable, but not later than 90 days after the close of
the period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 1933 Act) covering each twelve month period
beginning, in each case, not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in such Rule 158) of the
Registration Statement. Nothing in this Section 4(h) shall require the Company
to make such earnings statement available more frequently than once in any
period of twelve months.
(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 to 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 above provided. The Company will promptly advise the Agents of the
receipt by the Company 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, will file promptly
all documents required to be filed with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the 1934 Act. Such documents will comply in all
material respects with the requirements of the 1934 Act and the 1934 Act
Regulations and to the extent such documents are incorporated by reference in
the Prospectus, when read together with the other information in or incorporated
by reference into the Prospectus, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
13
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. If required pursuant to the terms of a Terms
Agreement, between the date of any Terms Agreement and the Settlement Date with
respect to such Terms Agreement, the Company will not, without the prior written
consent of each Agent party to such Terms Agreement, directly or indirectly,
sell, offer to sell, contract to sell, grant any option for the sale of or
otherwise dispose of, or announce the offering of, any debt securities of the
Company (other than the Notes that are to be sold pursuant to such Terms
Agreement and commercial paper or borrowings from commercial banks or affiliates
of the Company in the ordinary course of business), except as may otherwise be
provided in any such Terms Agreement.
(l) Suspension of Certain Obligations. The Company shall not be
required to comply with the provisions of subsections (e), (f) or (g) of this
Section or the provisions of Section 7 hereof during any period from the time
(i) the Agents shall have been notified by the Company to suspend solicitation
of offers to purchase the Notes in their capacity as agents and (ii) the earlier
of the date on which no Agent shall then hold any Notes as principal purchased
pursuant to a Terms Agreement and the date which is 30 days (nine months with
respect to subsection (e) of this Section) from the date on which the Agents
shall have received written notice from the Company to suspend solicitation of
purchases of the Notes, to the time the Company shall determine that
solicitation of offers to purchase the Notes should be resumed or shall
subsequently enter into a new Terms Agreement with any Agent.
SECTION 5. Conditions of Obligations.
The obligations of the Agents to solicit offers to purchase the Notes
as agents of the Company, the obligations of any purchasers of the Notes sold
through the Agents as agents, and any obligation of the Agents to purchase Notes
as principals pursuant to a Terms Agreement or otherwise will be subject 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 officers made in any
certificate furnished pursuant to the provisions hereof, to the performance and
observance by the Company of all its covenants and agreements herein contained
and to the following additional conditions precedent:
(a) Legal Opinions. On the date hereof, the Agents shall
have received the following legal opinions, dated as of the date
hereof and in form and substance reasonably satisfactory to the
Agents and their counsel:
(1) Opinion of Gary G. Sackett. The opinion of
Gary G. Sackett, Esq., counsel for the Company, who may rely
as to all matters governed by Federal and New York law upon
14
the opinion of Skadden, Arps, Slate, Meagher & Flom LLP referred to
below, to the effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Utah.
(ii) The Company has corporate power and authority to
own its properties and conduct its business as described in
the Prospectus; and the Company is duly qualified to do
business as a foreign corporation and is in good standing in
all other jurisdictions in which it owns or leases substantial
properties or in which the conduct of its business requires
such qualification, except where the failure to be so
qualified would not have a material adverse effect on the
Company.
(iii) The sale and issuance of the Notes have been duly
authorized by the requisite corporate action on the part of
the Company and the Notes, when executed and authenticated in
accordance with the terms of the Indenture, will be valid and
binding obligations of the Company, enforceable against the
Company in accordance with their terms, except to the extent
that enforcement thereof may be limited by (a) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or
other similar laws now or hereinafter in effect relating to or
affecting creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); in expressing
the opinion set forth in this paragraph (iii), such counsel
may assume that the Trustee's certificates of authentication
of the Notes have been manually signed by one of the Trustee's
authorized officers and that the Notes, in the form delivered
to the Agents, conform to the specimens thereof examined by
such counsel, which facts need not be verified by an
inspection of the individual Notes.
(iv) The execution, delivery and performance of the
Indenture and of this Agreement and any applicable Terms
Agreement and the issuance and sale of the Notes and
compliance with the terms and provisions hereof and thereof
will not result in a breach or violation of any of the terms
or provisions of, or constitute a default under, (a) any order
known to such counsel of any governmental agency having
jurisdiction over the Company or any of its properties or any
agreement or instrument known to such counsel to which the
Company is a party or by which the Company is bound or to
which any of the properties of the Company is subject, which
would cause a material adverse change in the financial
position, shareholders' equity or results of operations of the
Company or affect the validity of the Notes or
15
the legal authority of the Company to comply with the terms of
the Notes, the Indenture, this Agreement or any applicable
Terms Agreement or (b) the charter or by-laws of the Company,
and the Company has full power and authority to authorize,
issue and sell the Notes as contemplated by this Agreement and
any Terms Agreement.
(v) The Indenture has been duly authorized, executed
and delivered by the Company and (assuming the due
authorization, execution and delivery by the Trustee) is a
valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to
the extent enforcement thereof may be limited by (a)
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws now or hereinafter in effect
relating to or affecting creditors' rights generally, and (b)
general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity).
(vi) This Agreement and any applicable Terms Agreement
have each been duly authorized, executed and delivered by the
Company.
(vii) No authorization, approval or consent of any
governmental authority or agency is necessary in connection
with the transactions contemplated by this Agreement and any
Terms Agreement, except such as may be required under the 1933
Act, state securities or Blue Sky laws and except as have been
obtained.
(2) Opinion of Company Counsel. The opinion of Skadden, Arps,
Slate, Meagher & Flom LLP, special counsel for the Company, who may
rely as to all matters governed by Utah law and as to the approval or
consent of governmental authorities of jurisdictions in which the
Company operates, upon the opinion of Gary G. Sackett, Esq., referred
to above, to the effect that:
(i) The sale and issuance of the Notes have been
authorized by the requisite corporate action on the part of
the Company, and the Notes, when executed and authenticated in
accordance with the terms of the Indenture, will be valid and
binding obligations of the Company, enforceable against the
Company in accordance with their terms, except to the extent
that enforcement thereof may be limited by (a) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or
other similar laws now or hereinafter in effect relating to or
affecting creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); in expressing
the opinion set forth in this paragraph (i), such counsel may
assume that the
16
Trustee's certificates of authentication of the Notes have
been manually signed by one of the Trustee's authorized
officers and that the Notes, in the form delivered to the
Agents, conform to the specimens thereof, examined by such
counsel, which facts need not be verified by an inspection of
the individual Notes.
(ii) The Notes and the Indenture conform in all
material respects to the descriptions thereof contained in the
Prospectus.
(iii) The Indenture has been qualified under the
1939 Act.
(iv) The Indenture has been duly authorized, executed
and delivered by the Company and, assuming the due
authorization, execution and delivery by the Trustee, is a
valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to
the extent enforcement thereof may be limited by (a)
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws now or hereinafter in effect
relating to or affecting creditors' rights generally and (b)
general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity).
(v) This Agreement and any applicable Terms Agreement
have each been duly authorized, executed and delivered by the
Company.
(vi) The Registration Statement and the Prospectus and
each amendment or supplement thereto, as of their respective
effective or issue dates (but excluding the Form T-1 and the
financial statements, schedules and other financial data
included in or excluded from the Registration Statement or the
exhibits thereto, as to which such counsel need express no
opinion), and the Indenture appeared on their face to be
appropriately responsive in all material respects to the
requirements of the 1933 Act, the 1933 Act Regulations and the
1939 Act, as applicable.
(vii) Such counsel does not know of any legal or
governmental proceedings required to be described in the
Registration Statement or Prospectus which are not described
as required, nor of any contracts or documents of a character
which are required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as
required.
17
(viii) No authorization, approval or consent of any
governmental authority or agency is necessary in connection
with the transactions contemplated by this Agreement and any
applicable Terms Agreement, except such as may be required by
the 1933 Act or state securities or Blue Sky laws and except
as have been obtained.
(3) Opinion of Counsel to the Agents. The opinion of Brown &
Wood LLP, counsel to the Agents, who may rely as to all matters
governed by Utah law and as to the approval or consent of governmental
authorities of jurisdictions in which the Company operates, upon the
opinion of Gary G. Sackett, Esq., referred to above, covering the
matters referred to in subparagraph (1) under the subheading (i) and
subparagraph (2) under the subheadings (i) through (vi), inclusive,
above.
(4) In giving their opinions as of the date hereof required by
subsection (a)(2) and (a)(3) of this Section, Skadden, Arps, Slate,
Meagher & Flom LLP and Brown & Wood LLP shall each additionally state
the time and date on which Registration Statement was declared
effective under the 1933 Act, or if such counsel have not received an
effectiveness order from the Commission, that such counsel have been
advised by the Commission of the time and date on which the
Registration Statement was declared effective and, to the best of such
counsel's knowledge, that no stop order suspending the Registration
Statement's effectiveness has been issued and no proceedings for that
purpose have been instituted or are pending or threatened by the
Commission. In addition, each such counsel shall state that they have
participated in conferences with officers and representatives of the
Company, representatives of the independent accountants of the Company,
and the Agents, at which the contents of the Registration Statement and
the Prospectus and related matters were discussed and, although such
counsel are not passing upon, and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in
the Registration Statement or the Prospectus and have made no
independent check or verification thereof, on the basis of the
foregoing, no facts have come to such counsel's attention that lead
them to believe that the Registration Statement, at the time it became
effective, and if an amendment to the Registration Statement or an
Annual Report on Form 10-K has been filed by the Company with the
Commission subsequent to the effectiveness of the Registration
Statement and prior to the date of such statement, then at the time
such amendment became effective or at the time of the most recent such
filing (to the extent deemed to be incorporated by reference in the
Registration Statement and Prospectus), or (if such opinion is being
delivered in connection with a Terms Agreement pursuant to Section 7(c)
hereof) at the date of any Terms Agreement and at the Settlement Date
with respect
18
thereto, 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 in order to make the statements therein not
misleading or that the Prospectus, as amended or supplemented at the
date hereof, or (if such opinion is being delivered in connection with
a Terms Agreement pursuant to Section 7(c) hereof) at the date of any
Terms Agreement and at the Settlement Date with respect thereto, as the
case may be, contains or contained an untrue statement of a material
fact or omits or omitted 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. Such counsel may state that they
express no opinion or belief with respect to the Form T-1 or to the
financial statements, schedules and other financial data included in or
excluded from the Registration Statement or the exhibits thereto or
incorporated by reference in such Registration Statement or Prospectus.
(5) In giving his opinion required by Section 7(c), Gary G.
Sackett, Esq. shall additionally state the time and date on which
Registration Statement was declared effective under the 1933 Act, or if
such counsel has not received an effectiveness order from the
Commission, that such counsel has been advised by the Commission of the
time and date on which the Registration Statement was declared
effective and, to the best of such counsel's knowledge, that no stop
order suspending the Registration Statement's effectiveness has been
issued and no proceedings for that purpose have been instituted or are
pending or threatened by the Commission. In addition, such counsel
shall state that he has participated in conferences with officers and
representatives of the Company, representatives of the independent
accountants of the Company, and the Agents, at which the contents of
the Registration Statement, the Prospectus and any amendments or
supplements thereto, and related matters were discussed and, although
such counsel is not passing upon, and does not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement, the Prospectus or
any amendments or supplements thereto and has made no independent check
or verification thereof, on the basis of the foregoing, no facts have
come to such counsel's attention that lead him to believe that the
Registration Statement, at the date thereof, and if an amendment to the
Registration Statement or an Annual Report on Form 10-K has been filed
by the Company with the Commission subsequent to the effectiveness of
the Registration Statement and prior to the date of such statement,
then at the time such amendment became effective or at the time of the
most recent such filing (to the extent deemed to be incorporated by
reference in the Registration Statement and Prospectus), or (if such
opinion is being delivered in connection with a Terms Agreement) at the
date of any Terms Agreement and at the
19
Settlement Date with respect thereto, 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 in order to make the
statements therein not misleading or that the Prospectus, as amended or
supplemented at the date thereof, or (if such opinion is being
delivered in connection with a Terms Agreement) at the date of any
Terms Agreement and at the Settlement Date with respect thereto, as the
case may be, contains or contained an untrue statement of a material
fact or omits or omitted 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. Such counsel may state that he
expresses no opinion or belief with respect to the Form T-1 or to the
financial statements, schedules and other financial data included in or
excluded from the Registration Statement or the exhibits thereto or
incorporated by reference in such Registration Statement or Prospectus.
(b) Officer's Certificate. At the date hereof the Agents shall have
received a certificate of the President or any Vice President and a principal
financial or accounting officer of the Company, dated as of the date hereof, to
the effect that (i) since the respective dates as of which information is given
in the Registration Statement and the Prospectus or since the date of any
applicable Terms Agreement, there has not been 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) 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) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the date of such certificate, and (iv) no stop order
suspending the effectiveness of the Registration Statement under the 1933 Act
has been issued and no proceedings for that purpose have been initiated or
threatened by the Commission. As used in this Section 5(b), the term
"Prospectus" means the Prospectus in the form first provided to the applicable
Agent or Agents for use in confirming sales of the Notes.
(c) Comfort Letter. On the date hereof, the Agents shall have received
a letter from Ernst & Young LLP, dated as of the date hereof and in form and
substance reasonably satisfactory to the Agents, to the effect that:
(i) They are independent public accountants with respect to
the Company and its subsidiaries within the meaning of the 1933 Act and
the 1933 Act Regulations and no information concerning their
relationship with or interest
20
in the Company is required by Item 10 of the Registration
Statement.
(ii) It is their opinion that the consolidated financial
statements and supporting schedules included or incorporated by
reference in the Registration Statement and covered by their opinions
incorporated therein comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations.
(iii) They have read any unaudited financial statements included
in the Registration Statement and Prospectus.
(iv) On the basis of the reading referred to in clause (iii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other specified
procedures, nothing came to their attention that caused them to
believe that: (A) the unaudited financial statements, if any, included
or incorporated by reference in the Registration Statement and
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the regulations promulgated under the
1934 Act or are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
audited financial statements included or incorporated by reference
therein; (B) at the date of the latest available balance sheet read by
such accountants, or at a subsequent specified date not more than five
days prior to the date of such letter, there was any change in the
capital stock or any increase in the short-term indebtedness or
long-term debt of the Company or, at the date of the latest available
balance sheet read by such accountants, or at a subsequent specified
date not more than five days prior to the date of such letter, there
was any decrease in the net current assets or net assets, in each case
as compared with amounts shown in the latest balance sheet included or
incorporated by reference in the Prospectus; or (C) for the
twelve-month period ending on the closing date of the latest available
income statement read by such accountants, or from such latest
available income statement read by such accountants to a specified
date not more than five days prior to the date of such letter, there
were any decreases, as compared with the corresponding period of the
previous year, in total revenues, operating income or income (in each
case, from continuing operations), or (with respect only to quarterly
accounting periods) in the ratio of earnings to fixed charges; except
in all cases set forth in clauses (B) and (C) above for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur.
(v) They have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
21
financial information included or incorporated by reference in the
Registration Statement and the Prospectus (in each case to the extent
that such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by analysis
or computation) with the results obtained from inquiries, a reading of
such general accounting records and other procedures specified in such
letter and have found such dollar amounts, percentages and other
financial information to be in agreement with such results.
(d) Other Documents. On the date hereof and on each Settlement Date
with respect to any applicable Terms Agreement, counsel to the Agents shall have
been furnished with such documents and opinions as such counsel may reasonably
require for the purpose of enabling such counsel to pass upon the issuance and
sale of Notes as herein contemplated and related proceedings, or in order to
evidence the accuracy and completeness of any of the representations and
warranties or the fulfillment of any of the conditions herein contained.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement (or, at the
option of the Agent party thereto, any applicable Terms Agreement) may be
terminated by any of the Agents (as to itself only) 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 covenant regarding provision of an earnings
statement set forth in Section 4(h) hereof, the provisions concerning payment of
expenses under Section 10 hereof, the indemnity and contribution agreements set
forth in Sections 8 and 9 hereof, the provisions concerning the representations,
warranties and agreements to survive delivery set forth in Section 11 hereof,
the provisions relating to governing law and forum set forth in Section 14 and
the provisions set forth under "Parties" of Section 15 hereof shall remain in
effect.
SECTION 6. Delivery of and Payment for Notes Sold through the Agents.
Delivery of Notes sold through an Agent as agent 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, the Agent shall promptly notify the Company and deliver
the Note to the Company, and, if the Agent has theretofore paid the Company for
such Note, the Company will promptly return such funds to the Agent. If such
failure occurred for any reason other than default by the Agent in the
performance of its obligations hereunder, the Company will reimburse such Agent
on an equitable basis for its reasonable
22
loss of the use of the funds for the period such funds were
credited to the Company's account.
SECTION 7. Additional Covenants of the Company.
The Company covenants and agrees with the Agents that:
(a) Reaffirmation of Representations and Warranties. Each
acceptance by it of an offer for the purchase of Notes, and each delivery of
Notes to one or more of the Agents pursuant to a Terms Agreement, shall be
deemed to be an affirmation that the representations and warranties of the
Company contained in this Agreement and in any certificate theretofore delivered
to the Agents 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 his agent, or to the Agent or Agents, 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(l) hereof, each time that the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or supplement
providing solely for the establishment of or a change in the interest rates,
maturity or price of Notes or similar changes or an amendment or supplement
which relates exclusively to an offering of debt securities other than the
Notes), or there is filed with the Commission any document incorporated by
reference into the Prospectus or (if required pursuant to the terms of a Terms
Agreement) the Company sells Notes to one or more Agents pursuant to a Terms
Agreement, the Company shall furnish or cause to be furnished to the Agents as
soon as practicable 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 the Agents
and to counsel to the Agents to the effect that the statements contained in the
certificate referred to in Section 5(b) hereof which was last furnished to the
Agents are true and correct at the time of such amendment, supplement, filing or
sale, as the case may be, as though made at and as of such time (except that
such statements shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented to such time) or, in lieu of such
certificate, a certificate of the same tenor as the certificate referred to in
said Section 5(b), modified as necessary to relate to the Registration Statement
and the Prospectus as amended and supplemented to the time of delivery of such
certificate.
(c) Subsequent Delivery of Legal Opinions. Subject to the provisions
of Section 4(l) hereof and unless the Agents shall otherwise specify, each time
that the Registration Statement or
23
the Prospectus shall be amended or supplemented (other than by an amendment or
supplement providing solely for a change in the interest rates, maturity or
price of the Notes or similar changes or solely for the inclusion of additional
financial information or an amendment or supplement which relates exclusively to
an offering of debt securities other than the Notes), or there is filed with the
Commission any document incorporated by reference into the Prospectus, or, if
required pursuant to the terms of a Terms Agreement, the Company sells Notes to
one or more Agents pursuant to a Terms Agreement, the Company shall furnish or
cause to be furnished as soon as practicable to the Agents and to counsel to the
Agents a written opinion of each of Gary G. Sackett, Esq., counsel for the
Company and Skadden, Arps, Slate, Meagher & Flom LLP, special counsel for the
Company, or other counsel satisfactory to the Agents 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 and
substance satisfactory to the Agents and to counsel to the Agents, of the same
tenor as the opinions referred to in Section 5(a)(1), 5(a)(2) and 5(a)(5)
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
opinions; or, in lieu of such opinions, counsel last furnishing such opinion to
the Agents shall furnish the Agents with a letter substantially to the effect
that the Agents may rely on such last opinion to the same extent as though it
was 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).
(d) Subsequent Delivery of Comfort Letters. Subject to the provisions
of Section 4(l) hereof and unless the Agents shall otherwise specify, each time
that the Registration Statement or the Prospectus shall be amended or
supplemented to include additional financial information or there is filed with
the Commission any document incorporated by reference into the Prospectus which
contains additional financial information or, (if required pursuant to the terms
of a Terms Agreement) the Company sells Notes to one or more Agents pursuant to
a Terms Agreement, the Company shall cause Ernst & Young LLP or other
independent certified public accountants reasonably satisfactory to the Agents,
as soon as practicable to furnish the Agents a letter, dated the date of 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 reasonably satisfactory to the Agents, of the same tenor as the letter
referred to in Section 5(c) hereof but modified to relate to the Registration
Statement and Prospectus, as amended and supplemented to the date of such
letter, and with such changes as may be necessary to reflect changes in the
financial statements and other information derived from the accounting records
of the Company; provided, however, that if the Registration Statement or the
Prospectus is amended or supplemented solely to include
24
financial information as of and for a fiscal quarter, Ernst & Young LLP 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 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 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 necessary to make the
statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Prospectus (or any amendment or supplement thereto) or the omission
or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred,
(including, subject to Section 8(c) hereof, the reasonable fees and
disbursements of counsel chosen by each Agent) in investigating,
preparing or defending against any litigation, or investigation or
proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement does 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 or
special
25
counsel for the Company by or on behalf of any Agent expressly for use in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto). The foregoing indemnity with respect to any
untrue statement contained in or omission from a preliminary prospectus shall
not inure to the benefit of any Agent (or any person controlling such Agent)
from whom the person asserting any such loss, liability, claim, damage or
expense purchased any of the Notes which are the subject thereof if such person
did not receive a copy of the Prospectus (or the Prospectus as amended or
supplemented) (in each case exclusive of the documents from which information is
incorporated by reference) at or prior to the written confirmation of the sale
of such Notes to such person and the untrue statement contained in or omission
from such preliminary prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented).
(b) Indemnification of Company. Each Agent severally agrees to
indemnify and hold harmless the Company, its directors, each of its officers who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section 8, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Registration Statement (or any amendment thereto) or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Agent
expressly for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto) and will reimburse any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, liability, claim, damage, expense or
action as such expenses are incurred.
(c) General. 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 which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of any such action. If it so elects within a reasonable time after
receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume the defense of such
action with counsel chosen by it and approved by the indemnified parties
defendant in such action (which approval shall not be unreasonably withheld),
unless such indemnified parties reasonably object to such assumption on the
ground that there may be legal defenses available to them which are different
from or in addition to those available to such indemnifying party. If an
indemnifying party assumes the defense of such action, the indemnifying party
shall not be liable for any fees and expenses
26
of counsel for the indemnified parties incurred thereafter in connection with
such action. In no event shall the indemnifying parties be liable for the fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
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 contribution could be sought
under Section 8 or 9 hereof (whether or not the indemnified parties are actual
or potential parties hereto), 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; provided
however, this provision does not limit the indemnifying party from contesting
the reasonableness and appropriateness of the attorneys fees and expenses.
SECTION 9. Contribution.
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 8 hereof
is for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company and the Agents shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Company and
one or more of the Agents, (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the Agents on
the other from the offering of the Notes or (ii) if the allocation provided by
clause (i) above is not permitted by law, in such proportion as
27
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
Agents on the other 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 Agents on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total discounts and commissions
received by the Agents. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Agents and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, liabilities, claims, damages and expenses referred to in
the first sentence of this Section 9 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
Section 9. Notwithstanding the provisions of this Section 9, no Agent shall be
required to contribute any amount in excess of the amount by which the total
price at which the Notes sold through or by it to the public exceeds the amount
of any damages which such Agent has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section 9,
each person, if any, who controls an Agent within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as such Agent, and each
director of the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act shall have the same rights to contribution as the
Company. The Agents' obligations in this Section 9 to contribute are several in
proportion to their respective obligations and not joint.
SECTION 10. Payment of Expenses.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:
(a) The printing and filing of the Registration Statement as
originally filed and each amendment thereto and the Prospectus and any
amendments or supplements thereto;
(b) The preparation, filing and reproduction of this
Agreement;
28
(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 the 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 fees and disbursements of counsel for the Agents in
connection therewith and in connection with the preparation of any Blue
Sky Survey and any Legal Investment Survey;
(g) The printing and delivery to the Agents of copies of the
Registration Statement and any amendments thereto, and of the
Prospectus and any amendments or supplements thereto, and the delivery
by the Agents of the Prospectus and any amendments or supplements
thereto in connection with solicitations or confirmations of sales of
the Notes;
(h) The preparation, printing, reproducing and delivery to the
Agents of copies of the Indenture and all supplements and amendments
thereto;
(i) Any fees charged by rating agencies for the rating
of the Notes;
(j) The fees and expenses, if any, incurred with respect to
any filing with the National Association of Securities Dealers, Inc.;
(k) Any advertising and other out-of-pocket expenses of the
Agent incurred with the prior written approval of the Company;
(l) The cost of providing any CUSIP or other identification
numbers for the Notes; and
(m) The fees and expenses of any Depositary (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 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
29
behalf of any Agent or controlling person of, or by or on behalf of the Company,
and shall survive each delivery of and payment for any of the Notes.
SECTION 12. Termination.
(a) Termination of this Agreement. This Agreement (excluding any Terms
Agreement) may be terminated for any reason, at any time by either the Company
or the Agents upon the giving of 30 days' written notice of such termination to
the other party hereto; provided, however, that the termination of this
Agreement by an Agent shall terminate this Agreement only between such Agent and
the Company and the Company's notice of termination as to any one Agent shall
terminate this Agreement only between itself and such Agent.
(b) Termination of a Terms Agreement. The Agent or Agents party to a
Terms Agreement may terminate any Terms 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 Terms Agreement or since the respective
dates as of which information is given in the Registration Statement, 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, or (ii) if there shall have occurred any material
adverse change in the financial markets in the United States or any outbreak of
hostilities or escalation thereof or other calamity or crisis, the effect of
which is such as to make it, in the reasonable judgment of the Agent or Agents
party to such Terms Agreement, impracticable to market the Notes subject to such
Terms Agreement or enforce contracts for the sale of such Notes, or (iii) if
trading in the Notes has been suspended by the Commission, or if trading
generally on either the American Stock Exchange or the New York Stock Exchange
shall have been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities have been required, by either
of said exchanges or by order of the Commission or any other governmental
authority, or if a banking moratorium shall have been declared by either
Federal, New York or Utah authorities, or (iv) the rating assigned by any
nationally recognized statistical rating organization to any debt securities of
the Company as of the date of such agreement shall have been lowered 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 any debt securities of the Company, or (v) if there shall have come to
the Agent's or Agents' attention any facts that would cause such Agent or Agents
to believe that the Prospectus, at the time it was required to be delivered to a
purchaser of Notes, contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
light of the circumstances existing at the time of such delivery, not
misleading. As used in this Section 12(b), the term "Prospectus"
30
means the Prospectus in the form first provided to the applicable Agent or
Agents for use in confirming sales of the related Notes.
(c) General. In the event of any such termination, neither party will
have any liability to the other party hereto, except that (i) each Agent shall
be entitled to any commission earned in accordance with the third paragraph of
Section 3(a) hereof, (ii) if at the time of termination (a) the Agents shall own
any Notes purchased pursuant to a Terms Agreement with the intention of
reselling them or (b) an offer to purchase any of the Notes has been accepted by
the Company but the time of delivery to the purchaser or his agent of the Note
or Notes relating thereto has not occurred, the 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 covenant set forth in Section 4(h)
hereof, the provisions of Section 10 hereof, the indemnity and contribution
agreements set forth in Sections 8 and 9 hereof, and the provisions of Sections
11 and 15 hereof shall remain in effect.
SECTION 13. Notices.
Unless otherwise provided herein, all notices required under the terms
and provisions hereof shall be in writing, either delivered by hand, by mail or
by telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.
If to the Company:
Mountain Fuel Supply Company
180 East First South Street
Salt Lake City, Utah 84111
or P.O. Box 45433
Salt Lake City, Utah 84145
Attention: Vice President, Treasurer and
Chief Financial Officer
Telecopy: (801) 324-5483
If to Merrill Lynch:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower - 10th Floor
World Financial Center
New York, New York 10281-1310
Attention: MTN Product Management,
Telecopy: (212) 449-2234
31
If to Smith Barney:
Smith Barney Inc.
390 Greenwich Street - 4th Floor
New York, New York 10013
Attention: MTN Product Management/Origination
Telecopy: (212) 723-8854
or at such other address as such party may designate from time to time by notice
duly given in accordance with the terms of this Section 13.
SECTION 14. Governing Law.
This Agreement and all 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. Any suit,
action or proceeding brought by the Company against the Agents in connection
with or arising under this Agreement shall be brought solely in the state or
federal court of appropriate jurisdiction located in the Borough of Manhattan,
The City of New York.
SECTION 15. Parties.
This Agreement shall inure to the benefit of and be binding upon the
Agents and the Company 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 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 16. Captions.
The captions in this Agreement are for convenience of reference only
and shall not define or limit any of the terms or provisions hereof.
32
If the foregoing is in accordance with the Agents' understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between the Agents and the Company in accordance with its terms.
Very truly yours,
MOUNTAIN FUEL SUPPLY COMPANY
By:
---------------------------
D.N. Rose
President and Chief Executive
Officer
Accepted:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
---------------------------------
Name:
Title:
SMITH BARNEY INC.
By:
---------------------------------
Name:
Title:
33
EXHIBIT A
Mountain Fuel Supply Company
180 East First South
Salt Lake City, Utah 84147
Re: Distribution Agreement among the Mountain Fuel Supply
Company, Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Smith Barney Inc. dated
June , 1997
The undersigned agrees to purchase the following principal amount of
the Medium-Term Notes, Series C, referred to in the above-mentioned
Agreement: $_______________
[The undersigned agrees to purchase the aggregate principal amount of
Medium-Term Notes, Series C, referred to in the above-mentioned Agreement set
forth below:]
[Merrill Lynch, Pierce, Fenner & Smith
Incorporated .............. $ ]
------------
[Smith Barney Inc. ......................... $ ]
------------
The terms of such Medium-Term Notes, Series C, shall be as set forth
below.
Interest Rate:
If Fixed Rate Note:
Interest Rate:
Interest Payment Dates (if other than April 1 and October 1):
Regular Record Dates (if other than March 15 and September 15):
If Floating Rate Note:
Base Rate or Rates:
Initial Interest Rate:
Initial Interest Reset Date:
Spread, if any:
Spread Multiplier, if any:
Interest Reset Date(s):
Interest Payment Date(s):
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Payment Period:
Interest Reset Period:
Calculation Agent (if other than First Security Bank,
N.A.):
A-1
If Redeemable:
Redemption Commencement Date:
Redemption Percentage:
Annual Redemption Percentage:
If Repayable:
Optional Repayment Date(s):
Principal Amount: $______________
Stated Maturity:
Trade Date:
Issue Price: ________%
Agent's Discount or Commission:
Original Issue Date:
Settlement Date and Time:
Additional Terms:
The Certificate referred to in Section 7(b), the opinions of counsel
referred to in Section 7(c) and the accountants' letter referred to in Section
7(d) of the above-mentioned Agreement will [not] be required, and the stand-off
agreement set forth in Section 4(k) of the above-mentioned Agreement will [not]
be applicable.
This Agreement and all of the rights and obligations of the parties
hereto shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in such
State.
A-2
If the foregoing is in accordance with our agreement, please indicate
your acceptance hereof in the space provided for that purpose below.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
----------------------------------
Authorized Signatory
SMITH BARNEY INC.
By:
----------------------------------
Authorized Signatory
CONFIRMED AND ACCEPTED,
as of the date first above written.
MOUNTAIN FUEL SUPPLY COMPANY
By:
------------------------------------
Name:
Title:
A-3
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company shall pay
the related 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
MATURITY RANGES PRINCIPAL AMOUNT
- --------------- ----------------
From 9 months to less than 1 year............. .125%
From 1 year to less than 18 months............ .150
From 18 months to less than 2 years........... .200
From 2 years to less than 3 years............. .250
From 3 years to less than 4 years............. .350
From 4 years to less than 5 years............. .450
From 5 years to less than 6 years............. .500
From 6 years to less than 7 years............. .550
From 7 years to less than 10 years............. .600
From 10 years to less than 15 years............ .625
From 15 years to less than 20 years............ .700
From 20 years to 30 years...................... .750
A-1
EXHIBIT B
MOUNTAIN FUEL SUPPLY COMPANY
ADMINISTRATIVE PROCEDURES
for Fixed and Floating Rate Medium-Term Notes, Series C
(Dated as of June , 1997)
Medium-Term Notes, Series C (the "Notes") are to be offered on a
continuing basis by Mountain Fuel Supply Company (the "Company") through Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Smith Barney
Inc. who, as agents (each an "Agent", and collectively, the "Agents"), have
agreed to use their reasonable efforts to solicit offers to purchase the Notes
from the Company. The Agents may also purchase Notes as principal for resale.
The Notes are being sold pursuant to a Distribution Agreement between
the Company and the Agents, dated June , 1997 (the "Distribution Agreement").
Additionally, the Company has reserved the right to sell Notes on its own behalf
directly to purchasers. The Notes will be issued as a series of securities under
an Indenture (the "Indenture"), dated as of May 1, 1992, between the Company and
First Security Bank, N.A., as successor trustee to Citibank, N.A. (the
"Trustee"). A Registration Statement (the "Registration Statement", which term
shall include any additional registration statements filed in connection with
the Notes as provided in the introductory paragraph of the Distribution
Agreement) with respect to the Notes has been filed with the Securities and
Exchange Commission (the "Commission"). The most recent basic Prospectus
included in the Registration Statement, as supplemented with respect to the
Notes, is herein referred to as the "Prospectus". The most recent supplement to
the Prospectus with respect to the specific terms of the Notes is herein
referred to as the "Pricing Supplement".
Unless otherwise specified in the applicable Pricing Supplement, each
Note will be issued (a) fully registered in book-entry form (each, a "Book-Entry
Note") delivered to the Trustee, as agent for The Depository Trust Company
("DTC"), and recorded in the book-entry system maintained by DTC, or (b) in
definitive form (each, a "Definitive Note") delivered to the purchaser thereof
or a person designated by such purchaser. Owners of beneficial interests in
Notes issued in book-entry form will be entitled to physical delivery of Notes
in definitive form equal in principal amount to their respective beneficial
interests only upon certain limited circumstances described in the Prospectus.
1
General procedures relating to the issuance of all Notes are set forth
in Part I hereof. Additionally, Notes issued in book-entry form will be issued
in accordance with the procedures set forth in Part II hereof and Notes issued
in definitive form will be issued in accordance with the procedures set forth in
Part III hereof. Capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Indenture or the Notes, as the
case may be.
PART I: PROCEDURES OF GENERAL
APPLICABILITY
Date of Issuance/
Authentication: Each Note will be dated as of the date
of its authentication by the Trustee.
Each Note shall also bear an original
issue date (each, an "Original Issue
Date"). The Original Issue Date shall
remain the same for all Notes
subsequently issued upon transfer,
exchange or substitution of an original
Note regardless of their dates of
authentication.
Maturities: Each Note will mature on a date no less
than nine months or more than 30 years
from its Original Issue Date (the
"Stated Maturity Date") selected by the
investor or other purchaser and agreed
to by the Company.
Registration: Unless otherwise provided in the
applicable Pricing Supplement, Notes
will be issued only in fully registered
form.
Denominations: Unless otherwise provided in the
applicable Pricing Supplement, the Notes
will be issued in denominations of
$1,000 and integral multiples thereof.
Interest Rate Bases
applicable to
Floating Rate
Notes: Unless otherwise provided in the
applicable Pricing Supplement, Floating
Rate Notes will bear interest at a rate
or rates determined by reference to the
Commercial Paper Rate, the Federal Funds
2
Rate, LIBOR, the Prime Rate, the
Treasury Rate, or such other interest
rate basis or formula as may be set
forth in applicable Pricing Supplement,
or by reference to two or more such
rates, as adjusted by the Spread and/or
Spread Multiplier, if any, applicable to
such Floating Rate Notes.
Redemption/Repayment: The Notes will be subject to redemption
by the Company in accordance with the
terms of the Notes, which will be fixed
at the time of sale and set forth in the
applicable Pricing Supplement. If no
Initial Redemption Date is indicated
with respect to a Note, such Note will
not be redeemable prior to its Stated
Maturity Date.
The Notes will be subject to repayment
at the option of the Holders thereof in
accordance with the terms of the Notes,
which will be fixed at the time of sale
and set forth in the applicable Pricing
Supplement. If no Optional Repayment
Date is indicated with respect to a
Note, such Note will not be repayable at
the option of the Holder prior to its
Stated Maturity Date.
Calculation of
Interest: In case of Fixed Rate Notes, interest
(including payments for partial periods)
will be calculated and paid on the basis
of a 360-day year of twelve 30-day
months.
The interest rate on each Floating Rate
Note will be calculated by reference to
the specified Interest Rate Basis or
Bases plus or minus the applicable
Spread, if any, and/or multiplied by the
applicable Spread Multiplier, if any.
Unless otherwise provided in the
applicable Pricing Supplement, interest
on each Floating Rate Note will be
calculated by multiplying its principal
amount by an accrued interest factor.
Such accrued interest factor is computed
by adding the interest factor calculated
for each day in the period for which
3
accrued interest is being calculated.
Unless otherwise provided in the
applicable Pricing Supplement, the
interest factor for each such day is
computed by dividing the interest rate
applicable to such day by 360 if the
Commercial Paper Rate, the Federal Funds
Rate, LIBOR or Prime Rate is an
applicable Interest Rate Basis, or by
the actual number of days in the year if
the Treasury Rate is an applicable
Interest Rate Basis. As provided in the
applicable Pricing Supplement, the
interest factor for Notes for which the
interest rate is calculated with
reference to two or more Interest Rate
Bases will be calculated in each period
in the same manner as if only the
lowest, highest or average of the
applicable Interest Rate Bases applied.
Interest: General. Each Note will bear interest
in accordance with its terms. Unless
otherwise provided in the applicable
Pricing Supplement, interest on each
Note will accrue from and including the
Original Issue Date of such Note for the
first interest period or from the most
recent Interest Payment Date (as defined
below) to which interest has been paid
or duly provided for all subsequent
interest periods to but excluding the
applicable Interest Payment Date or the
Stated Maturity Date or date of earlier
redemption or repayment, as the case may
be (the Stated Maturity Date or date of
earlier redemption or repayment is
referred to herein as the "Maturity
Date" with respect to the principal
repayable on such date).
If an Interest Payment Date or the
Maturity Date with respect to any Fixed
Rate Note falls on a day that is not a
Business Day (as defined below), the
required payment to be made on such day
need not be made on such day, but may be
made on the next succeeding Business Day
with the same force and effect as if
made on such day, and no interest shall
accrue on such payment for the period
from and after such day to the next
4
succeeding Business Day. If an Interest
Payment Date other than the Maturity
Date with respect to any Floating Rate
Note would otherwise fall on a day that
is not a Business Day, such Interest
Payment Date will be postponed to the
next succeeding Business Day, except
that in the case of a Note for which
LIBOR is an applicable Interest Rate
Basis, if such Business Day falls in the
next succeeding calendar month, such
Interest Payment Date will be the
immediately preceding Business Day. If
the Maturity Date with respect to any
Floating Rate Note falls on a day that
is not a Business Day, the required
payment to be made on such day need not
be made on such day, but may be made on
the next succeeding Business Day with
the same force and effect as if made on
such day, and no interest shall accrue
on such payment for the period from and
after the Maturity Date to the next
succeeding Business Day. Unless
otherwise provided in the applicable
Pricing Supplement, "Business Day" means
any day, other than a Saturday or
Sunday, that is neither a legal holiday
nor a day on which banking institutions
are authorized or required by law,
regulation or executive order to close
in The City of New York; provided,
however, that, with respect to Notes for
which LIBOR is an applicable Interest
Rate Basis, such day is also a London
Business Day (as defined below). "London
Business Day" means, unless otherwise
specified in the applicable Pricing
Supplement, any day on which dealings in
deposits in United States dollars are
transacted in the London interbank
market.
Regular Record Dates. Unless otherwise
provided in the applicable Pricing
Supplement, the "Regular Record Date"
for a Note shall be the date 15 calendar
days (whether or not a Business Day)
preceding the applicable Interest
Payment Date.
5
Interest Payment Dates. Interest
payments will be made on each Interest
Payment Date commencing with the first
Interest Payment Date following the
Original Issue Date; provided, however,
the first payment of interest on any
Note originally issued between a Regular
Record Date and an Interest Payment Date
will occur on the Interest Payment Date
following the next succeeding Regular
Record Date.
Unless otherwise provided in the
applicable Pricing Supplement, interest
payments on Fixed Rate Notes will be
made semiannually in arrears on April
1st and October 1st of each year and on
the Maturity Date, while interest
payments on Floating Rate Notes will be
made as specified in the applicable
Pricing Supplement.
Acceptance and
Rejection of Offers
from Solicitation
as Agents: If agreed upon by any Agent and the
Company, then such Agent acting solely
as agent for the Company and not as
principal will solicit purchases of the
Notes. Each Agent will communicate to
the Company, orally or in writing, each
reasonable offer to purchase Notes
solicited by such Agent on an agency
basis, other than those offers rejected
by such Agent. Each Agent has the
right, in its discretion reasonably
exercised, to reject any proposed
purchase of Notes, as a whole or in
part, and any such rejection shall not
be a breach of such Agent's agreement
contained in the Distribution Agreement.
The Company has the sole right to accept
or reject any proposed purchase of
Notes, in whole or in part, and any such
rejection shall not a breach of the
Company's agreement contained in the
Distribution Agreement. Each Agent has
agreed to make reasonable efforts to
assist the Company in obtaining
performance by each purchaser whose
offer to purchase Notes has been
6
solicited by such Agent and accepted by
the Company.
Preparation of
Pricing Supplement: If any offer to purchase a Note is
accepted by the Company, the Company
will promptly prepare a Pricing
Supplement reflecting the terms of such
Note. Information to be included in the
Pricing Supplement shall include:
1. the name of the Company;
2. the title of the Notes;
3. the date of the Pricing Supplement
and the date of the Prospectus to
which the Pricing Supplement
relates;
4. the name of the Offering Agent (as
defined below);
5. whether such Notes are being sold
to the Offering Agent as principal
or to an investor or other pur-
chaser through the Offering Agent
acting as agent for the Company;
6. with respect to Notes sold to the
Offering Agent as principal,
whether such Notes will be resold
by the Offering Agent to investors
and other purchasers at (i) a fixed
public offering price of a
specified percentage of their
principal amount or (ii) at varying
prices related to prevailing market
prices at the time of resale to be
determined by the Offering Agent;
7. with respect to Notes sold to an
investor or other purchaser through
the Offering Agent acting as agent
for the Company, whether such Notes
will be sold at (i) 100% of their
principal amount or (ii) a
specified percentage of their
principal amount;
8. the Offering Agent's discount
or commission;
7
9. Net proceeds to the Company;
10. the Principal Amount, Specified
Currency, Original Issue Date,
Stated Maturity Date, Interest
Payment Date(s), Authorized
Denomination, Initial Redemption
Date, if any, Initial Redemption
Percentage, if any, Annual
Redemption Percentage Reduction, if
any, Optional Repayment Date(s), if
any, Exchange Rate Agent, if any,
Default Rate, if any, and, in the
case of Fixed Rate Notes, the
Interest Rate, and whether such
Fixed Rate Note is an Original
Issue Discount Note (and, if so,
the Issue Price), and, in the case
of Floating Rate Notes, the
Interest Category, the Interest
Rate Basis or Bases, the Day Count
Convention, Index Maturity (if
applicable), Initial Interest Rate,
if any, Maximum Interest Rate, if
any, Minimum Interest Rate, if any,
Initial Interest Reset Date,
Interest Reset Dates, Spread and/or
Spread Multiplier, if any, and
Calculation Agent; and
11. any other additional provisions of
the Notes material to investors or
other purchasers of the Notes not
otherwise specified in the
Prospectus.
The Company shall use its reasonable
best efforts to send such Pricing
Supplement by telecopy or overnight
express (for delivery by the close of
business on the applicable trade date,
but in no event later than 11:00 a.m.
New York City time, on the Business Day
following the applicable trade date) to
the Agent which made or presented the
offer to purchase the applicable Note
(in such capacity, the "Offering Agent")
and the Trustee at the following
applicable address: if to Merrill Lynch
& Co., to: Tritech Services, 40 Colonial
Drive, Piscataway, New Jersey 08854,
Attention: Prospectus Operations/
8
Susannah Putnam, (908) 885-2769,
telecopier: (908) 885-2774/5/6; if to
Smith Barney Inc., 390 Greenwich Street,
4th Floor, New York, New York 10013,
Attention: MTN Product Management/
Origination, (212) 723-5123, telecopier:
(212) 723-8854; and by telecopy to Smith
Barney Inc., Brooklyn Army Terminal, 140
58th Street, 8th Floor, Brooklyn, New
York 11220, Attention: Prospectus
Fulfillment - Andrea Springer, (718)
921-8460, telecopier: (718) 921-8472;
and if to the Trustee, to: First
Security Bank, N.A., Attention:
Corporate Trust Department, 79 South
Main Street, Salt Lake City, Utah 84111,
telecopier: (801) 246-5053. For record
keeping purposes, one copy of such
Pricing Supplement shall also be mailed
or telecopied to Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated, World Financial Center,
North Tower, 10th Floor, New York, New
York, 10281-1310, Attention: MTN Product
Management, (212) 449-7476, telecopier:
(212) 449-2234, with a copy to Smith
Barney Inc., 390 Greenwich Street, 4th
Floor, New York, New York 10013,
Attention: MTN Product
Management/Origination, (212) 723-5123,
telecopier: (212) 723-8854 and with a
copy to Brown & Wood LLP, 555 California
Street, San Francisco, California 94104,
Attention: Paul C. Pringle, Esq.
In each instance that a Pricing
Supplement is prepared, the Offering
Agent will provide a copy of such
Pricing Supplement to each investor or
purchaser of the relevant Notes or its
agent. Pursuant to Rule 434 ("Rule 434")
of the Securities Act of 1933, as
amended, the Pricing Supplement may be
delivered separately from the
Prospectus. Outdated Pricing Supplements
(other than those retained for files)
will be destroyed.
Settlement: The receipt of immediately available
funds by the Company in payment for a
Note and the authentication and delivery
of such Note shall, with respect to such
9
Note, constitute "settlement". Offers
accepted by the Company will be settled
in three Business Days, or at such time
as the purchaser, the applicable Agent
and the Company shall agree, pursuant to
the timetable for settlement set forth
in Parts II and III hereof under
"Settlement Procedure Timetable" with
respect to Global Notes and Certificated
Notes, respectively (each such date
fixed for settlement is hereinafter
referred to as a "Settlement Date"). If
procedures A and B of the applicable
Settlement Procedures with respect to a
particular offer are not completed on or
before the time set forth under the
applicable "Settlement Procedures
Timetable", such offer shall not be
settled until the Business Day following
the completion of settlement procedures
A and B or such later date as the
purchaser and the Company shall agree.
The foregoing settlement procedures may
be modified with respect to any purchase
of Notes by an Agent as principal if so
agreed by the Company and such Agent.
Procedure for Changing
Rates or Other
Variable Terms: When a decision has been reached to
change the interest rate or any other
variable term on any Notes being sold by
the Company, the Company will promptly
advise the Agents and the Trustee by
facsimile transmission and the Agents
will forthwith suspend solicitation of
offers to purchase such Notes. The
Agents will telephone the Company with
recommendations as to the changed
interest rates or other variable terms.
At such time as the Company notifies the
Agents and the Trustee of the new
interest rates or other variable terms,
the Agents may resume solicitation of
offers to purchase such Notes. Until
such time, only "indications of
interest" may be recorded. Immediately
after acceptance by the Company of an
offer to purchase Notes at a new
interest rate or new variable term, the
Company, the Offering Agent and the
10
Trustee shall follow the procedures set
forth under the applicable "Settlement
Procedures".
Suspension of
Solicitation;
Amendment or
Supplement: The Company may instruct the Agents to
suspend solicitation of offers to
purchase Notes at any time. Upon
receipt of such instructions, the
Agents will forthwith suspend
solicitation of offers to purchase from
the Company until such time as the
Company has advised the Agents that
solicitation of offers to purchase may
be resumed. If the Company decides to
amend or supplement the Registration
Statement or the Prospectus (other than
to establish or change interest rates or
formulas, maturities, prices or other
similar variable terms with respect to
the Notes), it will promptly advise the
Agents and will furnish the Agents and
their counsel with copies of the
proposed amendment or supplement.
Copies of such amendment or supplement
will be delivered or mailed to the
Agents, their counsel and the Trustee in
quantities which such parties may
reasonably request at the following
respective addresses: Merrill Lynch &
Co., World Financial Center, North
Tower, 10th Floor, New York, New York
10281-1310, Attention: MTN Product
Management, (212) 449-7476, telecopier:
(212) 449-2234; and Smith Barney Inc.,
390 Greenwich Street, 4th Floor, New
York, New York 10013, Address,
Attention: MTN Product Management/
Origination, (212) 723-5123, telecopier:
(212) 723-8854; and if to the Trustee,
to: First Security Bank, N.A.,
Attention: Corporate Trust Department,
79 south Main Street, Salt Lake City,
Utah 84111, telecopier: (801) 246-5053.
For record keeping purposes, one copy of
each such amendment or supplement shall
also be mailed or telecopied to Brown &
Wood LLP, 555 California Street, San
Francisco, California 94104, Attention:
11
Paul C. Pringle, Esq., (415) 772-1200,
telecopier: (415) 397-4621.
In the event that at the time the
solicitation of offers to purchase from
the Company is suspended (other than to
establish or change interest rates or
formulas, maturities, prices or other
similar variable terms with respect to
the Notes) there shall be any offers to
purchase Notes that have been accepted
by the Company which have not been
settled, the Company will promptly
advise the Offering Agent and the
Trustee whether such offers may be
settled and whether copies of the
Prospectus as theretofore amended and/or
supplemented as in effect at the time of
the suspension may be delivered in
connection with the settlement of such
offers. The Company will have the sole
responsibility for such decision and for
any arrangements which may be made in
the event that the Company determines
that such offers may not be settled or
that copies of such Prospectus may not
be so delivered.
Delivery of Prospectus
and applicable
Pricing Supplement: A copy of the most recent Prospectus and
the applicable Pricing Supplement, which
pursuant to Rule 434 may be delivered
separately from the Prospectus, must
accompany or precede the earlier of (a)
the written confirmation of a sale sent
to an investor or other purchaser or its
agent and (b) the delivery of Notes to
an investor or other purchaser or its
agent.
Authenticity of
Signatures: The Agents will have no obligation or
liability to the Company or the Trustee
in respect of the authenticity of the
signature of any officer, employee or
agent of the Company or the Trustee on
any Note.
12
Documents Incorporated
by Reference: The Company shall supply the Agents with
an adequate supply of all documents
incorporated by reference in the
Registration Statement and the
Prospectus.
Taxes: Under the Indenture, Notes may be issued
at a discount from the stated principal
amount thereof or with such terms (such
as contingent interest, interest
holidays, irregular accrual periods,
interest payable in additional Notes,
stepped rates, rates based on multiple
or non-conventional interest indices or
Notes on which payments are tied to the
value of a single stock, a basket of
stocks, a commodity or a stock or
commodities index) so as to cause the
Notes to be subject to the original
issue discount rules of federal, state,
local or foreign tax laws. In the event
Notes are issued at such discount or
with such terms so as to cause original
issue discount rules to apply, the terms
of such Notes and additional disclosure
regarding the federal income tax
treatment of such Notes as well as
certain other considerations will be
provided in the applicable Pricing
Supplement relating thereto.
13
PART II: PROCEDURES FOR NOTES ISSUED
IN BOOK-ENTRY FORM
In connection with the qualification of Notes issued in book-entry form for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representations
from the Company and the Trustee to DTC, dated , 1997, and a Certificate
Agreement, dated _______________, 19__, between the Trustee and DTC, as amended
(the "Certificate Agreement"), and its obligations as a participant in DTC,
including DTC's Same-Day Funds Settlement System ("SDFS").
Issuance: All Fixed Rate Notes issued in
book-entry form having the same Original
Issue Date, Specified Currency, Interest
Rate, Default Rate, Interest Payment
Dates, redemption and/or repayment
terms, if any, and Stated Maturity Date
(collectively, the "Fixed Rate Terms")
will be represented initially by a
single Global Note; and all Floating
Rate Notes issued in book-entry form
having the same Original Issue Date,
Specified Currency, Interest Category,
formula for the calculation of interest
(including the Interest Rate Basis or
Bases, which may be the Commercial Paper
rate, the Federal Funds Rate, LIBOR, the
Prime Rate or the Treasury Rate or any
other interest rate basis or formula,
and Spread and/or Spread Multiplier, if
any), Day Count Convention, Initial
Interest Rate, Default Rate, Index
Maturity (if applicable), Minimum
Interest Rate, if any, Maximum Interest
Rate, if any, redemption and/or
repayment terms, if any, Interest
Payment Dates, Initial Interest Reset
Date, Interest Reset Dates and Stated
Maturity Date(collectively, the
"Floating Rate Terms") will be
represented initially by a single Global
Note.
For other variable terms with respect to
the Fixed Rate Notes and Floating Rate
Notes, see the Prospectus and the
applicable Pricing Supplement.
14
Owners of beneficial interests in Global
Notes will be entitled to physical
delivery of Certificated Notes equal in
principal amount to their respective
beneficial interests only upon certain
limited circumstances described in the
Prospectus.
Identification: The Company has arranged with the CUSIP
Service Bureau of Standard & Poor's
Corporation (the "CUSIP Service Bureau")
for the reservation of one series of
CUSIP numbers, which series consists of
approximately 900 CUSIP numbers which
have been reserved for and relating to
Global Notes and the Company has
delivered to each of the Trustee and DTC
such list of such CUSIP numbers. The
Company will assign CUSIP numbers to
Global Notes as described below under
Settlement Procedure B. DTC will notify
the CUSIP Service Bureau periodically of
the CUSIP numbers that the Company has
assigned to Global Notes. The Trustee
will notify the Company at any time when
fewer than 100 of the reserved CUSIP
numbers remain unassigned to Global
Notes, and, if it deems necessary, the
Company will reserve and obtain
additional CUSIP numbers for assignment
to Global Notes. Upon obtaining such
additional CUSIP numbers, the Company
will deliver a list of such additional
numbers to the Trustee and DTC. Notes
issued in book-entry form in excess of
$200,000,000 aggregate principal amount
and otherwise required to be represented
by the same Global Note will instead be
represented by two or more Global Notes
which shall all be assigned the same
CUSIP number.
Registration: Unless otherwise specified by DTC, each
Global Note will be registered in the
name of Cede & Co., as nominee for DTC,
on the register maintained by the
Trustee under the Indenture. The
beneficial owner of a Note issued in
book-entry form (i.e., an owner of a
beneficial interest in a Global Note)
(or one or more indirect participants in
DTC designated by such owner) will
15
designate one or more participants in
DTC (with respect to such Note issued in
book-entry form, the "Participants") to
act as agent for such beneficial owner
in connection with the book-entry system
maintained by DTC, and DTC will record
in book-entry form, in accordance with
instructions provided by such
Participants, a credit balance with
respect to such Note issued in
book-entry form in the account of such
Participants. The ownership interest of
such beneficial owner in such Note
issued in book-entry form will be
recorded through the records of such
Participants or through the separate
records of such Participants and one or
more indirect participants in DTC.
Transfers: Transfers of beneficial ownership
interests in a Global Note will be
accomplished by book entries made by DTC
and, in turn, by Participants (and in
certain cases, one or more indirect
participants in DTC) acting on behalf of
beneficial transferors and transferees
of such Global Note.
Exchanges: The Trustee may deliver to DTC and the
CUSIP Service Bureau at any time a
written notice specifying (a) the CUSIP
numbers of two or more Global Notes
outstanding on such date that represent
Global Notes having the same Fixed Rate
Terms or Floating Rate Terms, as the
case may be (other than Original Issue
Dates), and for which interest has been
paid to the same date; (b) a date,
occurring at least 30 days after such
written notice is delivered and at least
30 days before the next Interest Payment
Date for the related Notes issued in
book-entry form, on which such Global
Notes shall be exchanged for a single
replacement Global Note; and (c) a new
CUSIP number, obtained from the Company,
to be assigned to such replacement
Global Note. Upon receipt of such a
notice, DTC will send to its
Participants (including the Trustee) a
written reorganization notice to the
effect that such exchange will occur on
16
such date. Prior to the specified
exchange date, the Trustee will deliver
to the CUSIP Service Bureau written
notice setting forth such exchange date
and the new CUSIP number and stating
that, as of such exchange date, the
CUSIP numbers of the Global Notes to be
exchanged will no longer be valid. On
the specified exchange date, the Trustee
will exchange such Global Notes for a
single Global Note bearing the new CUSIP
number and the CUSIP numbers of the
exchanged Notes will, in accordance with
CUSIP Service Bureau procedures, be
canceled and not immediately reassigned.
Notwithstanding the foregoing, if the
Global Notes to be exchanged exceed
$200,000,000 in aggregate principal
amount, one replacement Note will be
authenticated and issued to represent
each $200,000,000 in aggregate principal
amount of the exchanged Global Notes and
an additional Global Note or Notes will
be authenticated and issued to represent
any remaining principal amount of such
Global Notes (See "Denominations"
below).
Denominations: Unless otherwise provided in the
applicable Pricing Supplement, Notes
issued in book-entry form will be issued
in denominations of $1,000 and integral
multiples thereof. Global Notes will
not be denominated in excess of
$200,000,000 aggregate principal amount.
If one or more Notes are issued in
book-entry form in excess of
$200,000,000 aggregate principal amount
and would, but for the preceding
sentence, be represented by a single
Global Note, then one Global Note will
be issued to represent each $200,000,000
in aggregate principal amount of such
Notes issued in book-entry form and an
additional Global Note or Notes will be
issued to represent any remaining
aggregate principal amount of such Note
or Notes issued in book-entry form. In
such a case, each of the Global Notes
representing Notes issued in book-entry
form shall be assigned the same CUSIP
number.
17
Payments of Principal
and Interest: Payments of Interest Only. Promptly
after each Regular Record Date, the
Trustee will deliver to the Company and
DTC a written notice specifying by CUSIP
number the amount of interest to be paid
on each Global Note on the following
Interest Payment Date (other than an
Interest Payment Date coinciding with
the Maturity Date) and the total of such
amounts. DTC will confirm the amount
payable on each Global Note on such
Interest Payment Date by reference to
the daily bond reports published by
Standard & Poor's Corporation. On such
Interest Payment Date, the Company will
pay to the Trustee in immediately
available funds an amount sufficient to
pay the interest then due and owing on
the Global Notes, and upon receipt of
such funds from the Company, the Trustee
in turn will pay to DTC such total
amount of interest due on such Global
Notes (other than on the Maturity Date)
which is payable in U.S. dollars, at the
times and in the manner set forth below
under "Manner of Payment". The Trustee
shall make payment of that amount of
interest due and owing on any Global
Notes that Participants have elected to
receive in foreign or composite cur-
rencies directly to such Participants.
Notice of Interest Rates. Promptly after
each Interest Determination Date or
Calculation Date, as the case may be,
for Floating Rate Notes issued in
book-entry form, the Trustee will notify
each of Moody's Investors Service, Inc.
and Standard & Poor's Corporation of the
interest rates determined as of such
Interest Determination Date.
Payments at Maturity. On or about the
first Business Day of each month, the
Trustee will deliver to the Company and
DTC a written list of principal,
premium, if any, and interest to be paid
on each Global Note maturing or
otherwise becoming due in the following
month. The Trustee, the Company and DTC
will confirm the amounts of such
18
principal, premium, if any, and interest
payments with respect to each such
Global Note on or about the fifth
Business Day preceding the Maturity Date
of such Global Note. On the Maturity
Date, the Company will pay to the
Trustee in immediately available funds
an amount sufficient to make the
required payments, and upon receipt of
such funds the Trustee in turn will pay
to DTC the principal amount of Global
Notes, together with premium, if any,
and interest due on the Maturity Date,
which are payable in U.S. dollars, at
the times and in the manner set forth
below under "Manner of Payment". The
Trustee shall make payment of the
principal, premium, if any, and interest
to be paid on the Maturity Date of each
Global Note that Participants have
elected to receive in foreign or
composite currencies directly to such
Participants. Promptly after (i) payment
to DTC of the principal, premium, if
any, and interest due on the Maturity
Date of such Global Note which are
payable in U.S. dollars and (ii) payment
of the principal, premium, if any, and
interest due on the Maturity Date of
such Global Note to those Participants
who have elected to receive such
payments in foreign or composite
currencies, the Trustee will cancel such
Global Note and deliver it to the
Company with an appropriate debit
advice. On the first Business Day of
each month, the Trustee will deliver to
the Company a written statement
indicating the total principal amount of
outstanding Global Notes as of the close
of business on the immediately preceding
Business Day.
Manner of Payment. The total amount of
any principal, premium, if any, and
interest due on Global Notes on any
Interest Payment Date or the Maturity
Date, as the case may be, which is
payable in U.S. dollars shall be paid by
the Company to the Trustee in funds
available for use by the Trustee no
later than 10:00 a.m., New York City
time, on such date. The Company will
19
make such payment on such Global Notes
to an account specified by the Trustee.
Upon receipt of such funds, the Trustee
will pay by separate wire transfer
(using Fedwire message entry
instructions in a form previously
specified by DTC) to an account at the
Federal Reserve Bank of New York
previously specified by DTC, in funds
available for immediate use by DTC, each
payment in U.S. dollars of principal,
premium, if any, and interest due on
Global Notes on such date. Thereafter on
such date, DTC will pay, in accordance
with its SDFS operating procedures then
in effect, such amounts in funds
available for immediate use to the
respective Participants in whose names
the beneficial interests in such Global
Notes are recorded in the book-entry
system maintained by DTC. Neither the
Company nor the Trustee shall have any
responsibility or liability for the
payment in U.S. dollars by DTC of the
principal of, or premium, if any, or
interest on, the Global Notes. The
Trustee shall make all payments of
principal, premium, if any, and interest
on each Global Note that Participants
have elected to receive in foreign or
composite currencies directly to such
Participants.
Withholding Taxes. The amount of any
taxes required under applicable law to
be withheld from any interest payment on
a Global Note will be determined and
withheld by the Participant, indirect
participant in DTC or other Person
responsible for forwarding payments and
materials directly to the beneficial
owner of such Global Note.
Settlement
Procedures: Settlement Procedures with regard to
each Note in book-entry form sold by an
Agent, as agent of the Company, or
purchased by an Agent, as principal,
will be as follows:
A. The Offering Agent will advise the
Company by telephone, confirmed by
20
facsimile, of the following
settlement information:
1. Principal amount, Authorized
Denomination, and Specified
Currency.
2. Exchange Rate Agent, if any.
3. (a) Fixed Rate Notes:
(i) Interest Rate.
(ii) Interest Payment Dates.
(iii) Whether such Note is
being issued with
Original Issue
Discount and, if so,
the terms thereof.
(b) Floating Rate Notes:
(i) Interest Category.
(ii) Interest Rate Basis or
Bases.
(iii) Initial Interest Rate.
(iv) Spread and/or Spread
Multiplier, if any.
(v) Initial Interest Reset
Date or Interest Reset
Dates.
(vi) Interest Payment Dates.
(vii) Index Maturity, if any.
(viii) Maximum and/or Minimum
Interest Rates, if any.
(ix) Day Count Convention.
(viii) Calculation Agent.
4. Price to public, if any, of
such Note (or whether such
Note is being offered at
varying prices relating to
prevailing market
21
prices at time of resale as
determined by the Offering
Agent).
5. Trade Date.
6. Settlement Date (Original
Issue Date).
7. Stated Maturity Date.
8. Redemption provisions, if
any.
9. Repayment provisions, if any.
10. Default Rate, if any.
11. Net proceeds to the Company.
12. The Offering Agent's
discount or commission.
13. Whether such Note is being
sold to the Offering Agent
as principal or to an
investor or other
purchaser through the
Offering Agent acting as
agent for the Company.
14. Such other information
specified with respect to
such Note (whether by
Addendum or otherwise).
B. The Company will assign a CUSIP
number to the Global Note
representing such Note and then
advise the Trustee by facsimile
transmission or other electronic
transmission of the above settlement
information received from the
Offering Agent, such CUSIP number
and the name of the Offering Agent.
The Company will also advise the
Offering Agent of the CUSIP number
assigned to the Global Note.
C. The Trustee will communicate to DTC
and the Offering Agent through DTC's
Participant Terminal System a
pending deposit message specifying
22
the following settlement
information:
1. The information set forth in
the Settlement Procedure A.
2. Identification numbers of the
participant accounts
maintained by DTC on behalf
of the Trustee and the
Offering Agent.
3. Identification of the Global
Note as a Fixed Rate Global
Note or Floating Rate Global
Note.
4. Initial Interest Payment
Date for such Note, number
of days by which such date
succeeds the related record
date for DTC purposes (or,
in the case of Floating Rate
Notes which reset daily or
weekly, the date five
calendar days preceding the
Interest Payment Date) and,
if then calculable, the
amount of interest payable on
such Interest Payment Date
(which amount shall have
been confirmed by the
Trustee).
5. CUSIP number of the Global
Note representing such Note.
6. Whether such Global Note
represents any other Notes
issued or to be issued in
book-entry form.
DTC will arrange for each pending
deposit message described above
to be transmitted to Standard &
Poor's Corporation, which will
use the information in the
message to include certain terms
of the related Global Note in the
appropriate daily bond report
published by Standard & Poor's
Corporation.
D. The Trustee will complete and
authenticate the Global Note
representing such Note.
23
++ E. DTC will credit such Note to the
participant account of the Trustee
maintained by DTC.
F. The Trustee will enter an SDFS
deliver order through DTC's
Participant Terminal System
instructing DTC (i) to debit such
Note to the Trustee's participant
account and credit such Note to the
participant account of the Offering
Agent maintained by DTC and (ii) to
debit the settlement account of the
Offering Agent and credit the
settlement account of the Trustee
maintained by DTC, in an amount
equal to the price of such Note less
such Offering Agent's discount or
underwriting commission, as
applicable. Any entry of such a
deliver order shall be deemed to
constitute a representation and
warranty by the Trustee to DTC that
(i) the Global Note representing
such Note has been issued and
authenticated and (ii) the Trustee
is holding such Global Note pursuant
to the Certificate Agreement.
G. In the case of Notes in book-entry
form sold through the Offering
Agent, as agent, the Offering Agent
will enter an SDFS deliver order
through DTC's Participant Terminal
System instructing DTC (i) to debit
such Note to the Offering Agent's
participant account and credit such
Note to the participant account of
the Participants maintained by DTC
and (ii) to debit the settlement
accounts of such Participants and
credit the settlement account of the
Offering Agent maintained by DTC in
an amount equal to the initial
public offering price of such Note.
H. Transfers of funds in accordance
with SDFS deliver orders
described in Settlement
Procedures F and G will be
settled in accordance with SDFS
operating procedures in effect on
the Settlement Date.
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I. Upon receipt, the Trustee will pay
the Company, by wire transfer of
immediately available funds to an
account specified by the Company to
the Trustee from time to time, the
amount transferred to the Trustee in
accordance with Settlement Procedure
F.
J. The Trustee will send a copy of the
Global Note by first class mail to
the Company together with a
statement setting forth the
principal amount of Notes
Outstanding as of the related
Settlement Date after giving effect
to such transaction and all other
offers to purchase Notes of which
the Company has advised the Trustee
but which have not yet been settled.
K. If such Note was sold through the
Offering Agent, as agent, the
Offering Agent will confirm the
purchase of such Note to the
investor or other purchaser either
by transmitting to the Participant
with respect to such Note a
confirmation order through DTC's
Participant Terminal System or by
mailing a written confirmation to
such investor or other purchaser.
Settlement Procedures
Timetable: For offers to purchase Notes accepted by
the Company, Settlement Procedures A
through K set forth above shall be com-
pleted as soon as possible following the
trade but not later than the respective
times (New York City time) set forth
below:
SETTLEMENT
PROCEDURE TIME
---------- ----
A 11:00 a.m. on the trade
date or within one hour
following the trade
B 12:00 noon on the trade
date or within one hour
following the trade
25
C No later than the close of
business on the trade date
D 9:00 a.m. on Settlement
Date
E 10:00 a.m. on Settlement
Date
F-G No later than 2:00 p.m. on
Settlement Date
H 4:00 p.m. on Settlement
Date
I-K 5:00 p.m. on Settlement
Date
Settlement Procedure H is subject to
extension in accordance with any
extension of Fedwire closing deadlines
and in the other events specified in the
SDFS operating procedures in effect on
the Settlement Date.
If settlement of a Note issued in
book-entry form is rescheduled or
canceled, the Trustee will deliver to
DTC, through DTC's Participant Terminal
System, a cancellation message to such
effect by no later than 5:00 p.m., New
York City time, on the Business Day
immediately preceding the scheduled
Settlement Date.
Failure to Settle: If the Trustee fails to enter an SDFS
deliver order with respect to a Note
issued in book-entry form pursuant to
Settlement Procedure F, the Trustee may
deliver to DTC, through DTC's
Participant Terminal System, as soon as
practicable a withdrawal message
instructing DTC to debit such Note to
the participant account of the Trustee
maintained at DTC. DTC will process the
withdrawal message, provided that such
participant account contains a principal
amount of the Global Note representing
such Note that is at least equal to the
principal amount to be debited. If
withdrawal messages are processed with
respect to all the Notes represented by
a Global Note, the Trustee will mark
such Global Note "canceled", make
appropriate entries in its records and
send certification of destruction of
26
such canceled Global Note to the
Company. The CUSIP number assigned to
such Global Note shall, in accordance
with CUSIP Service Bureau procedures, be
canceled and not immediately reassigned.
If withdrawal messages are processed
with respect to a portion of the Notes
represented by a Global Note, the
Trustee will exchange such Global Note
for two Global Notes, one of which shall
represent the Global Notes for which
withdrawal messages are processed and
shall be canceled immediately after
issuance and the other of which shall
represent the other Notes previously
represented by the surrendered Global
Note and shall bear the CUSIP number of
the surrendered Global Note.
In the case of any Note in book-entry
form sold through the Offering Agent, as
agent, if the purchase price for any
such Note is not timely paid to the
Participants with respect thereto by the
beneficial investor or other purchaser
thereof (or a person, including an
indirect participant in DTC, acting on
behalf of such investor or other
purchaser), such Participants and, in
turn, the related Offering Agent may
enter SDFS deliver orders through DTC's
Participant Terminal System reversing
the orders entered pursuant to
Settlement Procedures F and G,
respectively. Thereafter, the Trustee
will deliver the withdrawal message and
take the related actions described in
the preceding paragraph. If such failure
shall have occurred for any reason other
than default by the applicable Offering
Agent to perform its obligations
hereunder or under the Distribution
Agreement, the Company will reimburse
such Offering Agent on an equitable
basis for its reasonable loss of the use
of funds during the period when the
funds were credited to the account of
the Company.
Notwithstanding the foregoing, upon any
failure to settle with respect to a Note
in book-entry form, DTC may take any
27
actions in accordance with its SDFS
operating procedures then in effect. In
the event of a failure to settle with
respect to a Note that was to have been
represented by a Global Note also
representing other Notes, the Trustee
will provide, in accordance with
Settlement Procedure D, for the
authentication and issuance of a Global
Note representing such remaining Notes
and will make appropriate entries in its
records.
PART III: PROCEDURES FOR CERTIFICATED NOTES
Denominations: Unless otherwise provided in the
applicable Pricing Supplement, the
Certificated Notes will be issued in
denominations of $1,000 and integral
multiples thereof.
Payments of Principal,
Premium, if any,
and Interest: Upon presentment and delivery of the
Certificated Note, the Trustee upon
receipt of immediately available funds
from the Company will pay the principal
of, premium, if any, and interest on,
each Certificated Note on the Maturity
Date in immediately available funds.
All interest payments on a Certificated
Note, other than interest due on the
Maturity Date, will be made by check
mailed to the address of the person
entitled thereto as such address shall
appear in the Security Register;
provided, however, that Holders of
$10,000,000 or more in aggregate
principal amount of Certificated Notes
(whether having identical or different
terms and provisions) shall be entitled
to receive such interest payments by
wire transfer of immediately available
funds if appropriate wire transfer
instructions have been received in
writing by the Trustee not less than 15
calendar days prior to the applicable
Interest Payment Date.
28
The Trustee will provide monthly to the
Company a list of the principal,
premium, if any, and interest to be paid
on Certificated Notes maturing in the
next succeeding month. The Trustee will
be responsible for withholding taxes on
interest paid as required by applicable
law.
Certificated Notes presented to the
Trustee on the Maturity Date for payment
will be canceled by the Trustee. All
canceled Certificated Notes held by the
Trustee shall be destroyed, and the
Trustee shall furnish to the Company a
certificate with respect to such
destruction.
Settlement
Procedures: Settlement Procedures with regard to
each Certificated Note purchased by an
Agent, as principal, or through an
Agent, as agent, shall be as follows:
A. The Offering Agent will advise the
Company by telephone of the
following Settlement information
with regard to each Certificated
Note:
1. Exact name in which the
Certificated Note(s) is to be
registered (the "Registered
Owner").
2. Exact address or addresses of
the Registered Owner for
delivery, notices and payments
of principal, premium, if any,
and interest.
3. Taxpayer identification number
of the Registered Owner.
4. Principal amount, Authorized
Denomination and Specified
Currency.
5. Exchange Rate Agent, if any.
29
6. (a) Fixed Rate Notes:
(i) Interest Rate.
(ii) Interest Payment
Dates.
(iii) Whether such Note
is being issued with
Original Issue
Discount and, if so,
the terms thereof.
(b) Floating Rate Notes:
(i) Interest Category.
(ii) Interest Rate Basis
or Bases.
(iii) Initial Interest
Rate.
(iv) Spread and/or Spread
Multiplier, if any.
(v) Initial Interest
Reset Date and
Interest Reset
Dates.
(vi) Interest Payment
Dates.
(vii) Index Maturity, if
any.
(viii) Maximum and/or
Minimum Interest
Rates, if any.
(ix) Day Count
Convention.
(x) Calculation Agent.
7. Price to public of such
Certificated Note (or whether
such Note is being offered at
varying prices relating to
prevailing market prices at time
30
of resale as determined by the
Offering Agent).
8. Trade Date.
9. Settlement Date (Original Issue
Date).
10. Stated Maturity Date.
11. Redemption provisions, if any.
12. Repayment provisions, if any.
13. Default Rate, if any.
14. Net proceeds to the Company.
15. The Offering Agent's discount or
commission.
16. Whether such Note is being
sold to the Offering Agent
as principal or to an
investor or other
purchaser through the
Offering Agent acting as
agent for the Company.
17. Such other information specified
with respect to such Note
(whether by Addendum or
otherwise).
B. After receiving such settlement
information from the Offering Agent,
the Company will advise the Trustee
of the above settlement information
by facsimile transmission confirmed
by telephone. The Company will
cause the Trustee to issue, authen-
ticate and deliver the Certificated
Note.
C. The Trustee will complete the
Certificated Note in the form
approved by the Company and the
Offering Agent, and will make
three copies thereof (herein
called "Stub 1", "Stub 2" and
"Stub 3"):
1. Certificated Note with the
Offering Agent's confirmation,
31
if traded on a principal
basis, or the Offering
Agent's customer
confirmation, if traded on
an agency basis.
2. Stub 1 for Trustee.
3. Stub 2 for Offering Agent.
4. Stub 3 for the Company.
D. With respect to each trade, the
Trustee will deliver the
Certificated Note and Stub 2 thereof
to the Offering Agent at the follow-
ing applicable address: Merrill
Lynch, Pierce, Fenner & Smith
Incorporated, Merrill Lynch Money
Markets Clearance, 55 Water Street,
Concourse Level, N.S.C.C. Window,
New York, New York 10041, Attention:
Al Mitchell, (212) 558-2405, tele-
copier: (212) 558-2457; and Smith
Barney Inc., 390 Greenwich Street,
4th Floor, New York, New York 10013,
Attention: MTN Product Management/
Origination, (212) 723-5123,
telecopier: (212) 723-8854; and
the Trustee will keep Stub 1. The
Offering Agent will acknowledge
receipt of the Certificated Note
through a broker's receipt and will
keep Stub 2. Delivery of the
Certificated Note will be made only
against such acknowledgment of
receipt. Upon determination that
the Certificated Note has been
authorized, delivered and completed
as aforementioned, the Offering
Agent will wire the net proceeds of
the Certificated Note after deduc-
tion of its applicable commission to
the Company pursuant to standard
wire instructions given by the
Company.
E. In the case of a Certificated Note
sold through the Offering Agent, as
agent, the Offering Agent will
deliver such Certificated Note (with
the confirmation) to the purchaser
32
against payment in immediately
available funds.
F. The Trustee will send Stub 3 to the
Company.
Settlement
Procedures
Timetable: For offers to purchase Certificated
Notes accepted by the Company,
Settlement Procedures A through F set
forth above shall be completed as soon
as possible following the trade but not
later than the respective times (New
York City time) set forth below:
SETTLEMENT
PROCEDURE TIME
---------- ----
A 11:00 a.m. on the trade
date or within one hour
following the trade
B 12:00 noon on the trade
date or within one hour
following the trade
C-D 2:15 p.m. on Settlement
Date
E 3:00 p.m. on Settlement
Date
F 5:00 p.m. on Settlement
Date
Failure to Settle: In the case of Certificated Notes sold
through the Offering Agent, as agent, if
an investor or other purchaser of a
Certificated Note from the Company shall
either fail to accept delivery of or
make payment for such Certificated Note
on the date fixed for settlement, the
Offering Agent will forthwith notify the
Trustee and the Company by telephone,
confirmed in writing, and return such
Certificated Note to the Trustee.
The Trustee, upon receipt of such
Certificated Note from the Offering
Agent, will immediately advise the
Company and the Company will promptly
arrange to credit the account of the
Offering Agent in an amount of
immediately available funds equal to the
amount previously paid to the Company by
33
such Offering Agent in settlement for
such Certificated Note. Such credits
will be made on the Settlement Date if
possible, and in any event not later
than the Business Day following the
Settlement Date; provided that the
Company has received notice on the same
day. If such failure shall have occurred
for any reason other than failure by
such Offering Agent to perform its
obligations hereunder or under the
Distribution Agreement, the Company will
reimburse such Offering Agent on an
equitable basis for its reasonable loss
of the use of funds during the period
when the funds were credited to the
account of the Company. Immediately upon
receipt of the Certificated Note in
respect of which the failure occurred,
the Trustee will cancel and destroy such
Certificated Note, make appropriate
entries in its records to reflect the
fact that such Certificated Note was
never issued, and accordingly notify in
writing the Company.
34