-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WWkUsD9c8pn+CyMSLwYbTnAekm7AvjG+BwdAW6qEHy/hLHZtCKEqZ95VlDLKnNDI 9doab17RcOS7j8ltZFmF0g== 0000889812-97-001262.txt : 19970529 0000889812-97-001262.hdr.sgml : 19970529 ACCESSION NUMBER: 0000889812-97-001262 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19970528 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOUNTAIN FUEL SUPPLY CO CENTRAL INDEX KEY: 0000068589 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 870155877 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-27909 FILM NUMBER: 97615100 BUSINESS ADDRESS: STREET 1: 180 E FIRST SOUTH STREET 2: PO BOX 11368 CITY: SALT LAKE CITY STATE: UT ZIP: 84147 BUSINESS PHONE: 8015345555 MAIL ADDRESS: STREET 1: 180 EAST FIRST SOUTH ST STREET 2: P O BOX 11150 CITY: SALT LAKE CITY STATE: UT ZIP: 84147 S-3 1 REGISTRATION STATEMENT AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1997 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ MOUNTAIN FUEL SUPPLY COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) UTAH 4924 87-0155877 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
------------------------ 180 EAST FIRST SOUTH STREET P.O. BOX 45360 SALT LAKE CITY, UTAH 84145 (801) 324-5555 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------------ GARY G. SACKETT, ESQ. MOUNTAIN FUEL SUPPLY COMPANY 180 EAST FIRST SOUTH STREET SALT LAKE CITY, UTAH 84145 (801) 324-5563 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ Copies to: EDMUND C. DUFFY, ESQ. PAUL C. PRINGLE, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP BROWN & WOOD LLP 919 THIRD AVENUE 555 CALIFORNIA STREET NEW YORK, NEW YORK 10022 SUITE 5000 SAN FRANCISCO, CALIFORNIA 94104
------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable from time to time after the effective date of this Registration Statement as determined in light of market conditions. ------------------------ If the only securities being registered on this form are to be offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or reinvestment plans, check the following box. /x/ ------------------------ CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED TITLE OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF TO BE REGISTERED REGISTERED PRICE PER NOTE OFFERING PRICE REGISTRATION FEE Medium-Term Notes.................... $75,000,000 100%* $75,000,000* $22,728
* Estimated solely for purposes of calculating the Registration fee. ------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. SUBJECT TO COMPLETION, DATED MAY 28, 1997 PROSPECTUS $75,000,000 MOUNTAIN FUEL SUPPLY COMPANY (a subsidiary of Questar Corporation) MEDIUM-TERM NOTES, SERIES C DUE FROM NINE MONTHS TO 30 YEARS FROM DATE OF ISSUE ------------------------ Mountain Fuel Supply Company (the 'Company') may offer from time to time up to $75,000,000 aggregate initial offering amount of its Medium-Term Notes, Series C (the 'Notes'). Each Note will mature on a Business Day (as hereinafter defined) from nine months to 30 years from the date of issue, as selected by the purchaser and agreed to by the Company. Redemption provisions, if any, for each Note will be established by the Company at the date of issue and will be specified therein and in the applicable Pricing Supplement hereto (the 'Pricing Supplement'). Unless otherwise specified in the applicable Pricing Supplement, the Notes will be issued only in denominations of $1,000 or any amount in excess thereof which is an integral multiple of $1,000. See 'Description of Medium-Term Notes.' The interest rate or interest rate formula applicable to each Note and other variable terms of the Notes will be established by the Company at the date of issuance of such Note and will be set forth therein and specified in the applicable Pricing Supplement. Interest rates, interest rate formulae and such other variable terms are subject to change by the Company but no change will affect any Notes already issued or as to which offers to purchase have been accepted by the Company. Unless otherwise specified in the applicable Pricing Supplement, each Note will be issued in registered book-entry form (a 'Book-Entry Note') or in fully definitive form (a 'Definitive Note'), as set forth in the applicable Pricing Supplement. Each Book-Entry Note will be represented by a global security deposited with or on behalf of The Depository Trust Company (or such other depositary as is identified in an applicable Pricing Supplement) (the 'Depositary') and registered in the name of the Depositary's nominee. Interests in Book-Entry Notes will be shown on, and transfers thereof will be effected only through, records maintained by the Depositary (with respect to its participants) and the Depositary's participants (with respect to beneficial owners). Unless otherwise indicated in the applicable Pricing Supplement, the Notes will bear interest at a fixed rate or rates (the 'Fixed Rate Notes'), or at a rate or rates determined by reference to the Commercial Paper Rate (the 'Commercial Paper Rate Notes'), the Federal Funds Rate (the 'Federal Funds Rate Notes'), LIBOR (the 'LIBOR Notes'), the Prime Rate (the 'Prime Rate Notes') or the Treasury Rate (the 'Treasury Rate Notes') as adjusted by the Spread and/or Spread Multiplier (each as hereinafter defined), if any, applicable to such Notes. Commercial Paper Rate Notes, LIBOR Notes and Treasury Rate Notes are collectively referred to herein as 'Floating Rate Notes.' The Company may also issue Discount Notes. See 'Description of Medium-Term Notes.' Interest on Fixed Rate Notes will accrue from their date of issue and, unless otherwise specified in the applicable Pricing Supplement, will be payable semiannually in arrears on each April 1 and October 1 of each year and at Maturity. Unless otherwise specified in the applicable Pricing Supplement, the rate of interest on each Floating Rate Note will be reset monthly, quarterly, semi-annually or annually, as set forth therein and specified in the applicable Pricing Supplement, and interest on each Floating Rate Note will accrue from its date of issue and will be payable in arrears monthly, quarterly, semi-annually or annually, as set forth therein and specified in the applicable Pricing Supplement, and at Maturity. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY PRICING SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. [CAPTION] PRICE TO AGENTS' DISCOUNTS PROCEEDS TO PUBLIC (1) AND COMMISSIONS (2)(3) COMPANY (2)(4) Per Note.............................. 100% .125%-.750% 99.875%-99.250% Total................................. $75,000,000 $93,750-$562,500 $74,906,250-$74,437,500
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes will be issued at 100% of their principal amount. (2) The Company will pay a commission to Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Smith Barney Inc. (the 'Agents') in the form of a discount, ranging from .125% to .750% of the principal amount of any Note, depending upon its Stated Maturity, sold through such Agent, and may sell Notes to either Agent, as principal, at a discount for resale to investors or other purchasers at varying prices related to prevailing market prices at the time of resale to be determined by such Agent. No commission will be payable on any sales made directly by the Company. (3) The Company has agreed to indemnify the Agents against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See 'Plan of Distribution.' (4) Before deducting expenses payable by the Company estimated at $225,000. ------------------------ The Notes are being offered on a continuing basis by the Company to or through the Agents, who have agreed to use their reasonable efforts to solicit offers to purchase the Notes. The Notes may also be sold by the Company to either Agent at a discount for resale to one or more investors or other purchasers at varying prices related to prevailing market prices at the time of resale, as determined by such Agent. The Company may also sell the Notes directly to investors on its own behalf in those jurisdictions where it is authorized to do so or to or through other agents. Unless otherwise specified in the applicable Pricing Supplement, the Notes will not be listed on any securities exchange, and there can be no assurance that all of the Notes offered will be sold or that there will be a secondary market for the Notes. The Company reserves the right to withdraw, cancel or modify the offer made hereby without notice. The Company or an Agent, if it solicits the offer, may reject any offer to purchase Notes in whole or in part. See 'Plan of Distribution.' ------------------------ MERRILL LYNCH & CO. SMITH BARNEY INC. ------------------------ THE DATE OF THIS PROSPECTUS IS , 1997. AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the 'Commission') a Registration Statement on Form S-3 (which term shall encompass all amendments, exhibits and schedules thereto (the 'Registration Statement')) under the Securities Act of 1933, as amended (the 'Securities Act'), with respect to the Notes being offered hereby. This Prospectus does not contain all the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information with respect to the Company and the Notes being offered hereby, reference is hereby made to such Registration Statement, including the exhibits filed as part thereof. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and in accordance therewith files periodic reports and other information with the Commission. The Registration Statement and the exhibits thereto filed by the Company with the Commission, as well as the periodic reports and other information so filed under the Exchange Act, may be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the following regional offices: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048. Copies of such information may also be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition, such information may be accessed electronically by means of the Commission's home page on the Internet (http://www.sec.gov). INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the Commission are incorporated into this Prospectus by reference: 1. Annual Report on Form 10-K for the year ended December 31, 1996; and 2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1997. All documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Notes shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO: CORPORATE SECRETARY, MOUNTAIN FUEL SUPPLY COMPANY, 180 EAST FIRST SOUTH STREET, SALT LAKE CITY, UTAH 84145; TELEPHONE (801) 324-5202. In connection with an offering of Notes purchased by one or more Agents as principal on a fixed offering price basis, such Agent(s) may engage in transactions that stabilize, maintain or otherwise affect the market price of such Notes. For a description of these activities, see 'Plan of Distribution.' THE COMPANY The Company, a subsidiary of Questar Corporation ('Questar'), is a retail natural gas distribution utility serving approximately 623,000 sales and transportation customers in Utah, southwestern Wyoming and southeastern Idaho. Between 1929 and the present, the Company gradually expanded the boundaries of its distribution system to include over 90% of Utah's population. The principal communities served by the Company include the Salt Lake City metropolitan area, Ogden, Provo, Price, Logan, Richfield, Fillmore, Cedar City and St. 2 George in Utah, Rock Springs, Green River and Evanston in southwestern Wyoming and Preston in southeastern Idaho. The natural gas distribution activities and facilities of the Company are regulated by the Public Service Commission of Utah ('PSCU') and the Public Service Commission of Wyoming ('PSCW') in their respective states. The PSCU also regulates the Company's activities in southeastern Idaho pursuant to a contract with the Public Utilities Commission of Idaho. The Company has significant business relationships with certain affiliated companies, particularly Questar Pipeline Company ('Questar Pipeline'), Wexpro Company ('Wexpro'), Questar Gas Management Company and Questar InfoComm Inc. The Company has been directly responsible for its gas acquisition activities since September 1993. The Company has a balanced and diversified portfolio of approximately 58 gas supply contracts with more than 28 suppliers located in the Rocky Mountain states. The Company transports both its own production and purchased gas on Questar Pipeline's transmission system and purchases gas storage capacity at the Clay Basin storage facility and three other storage facilities owned by Questar Pipeline. In 1996, the Company satisfied approximately 54% of its total gas supply with volumes produced from reserves owned by the Company on properties operated by Wexpro. The population of the Company's service area is generally growing faster than the national average, and the Company expects to add 22,000 customers in 1997 and 15,000-20,000 customers per year for the remainder of the century. The Company's sales, particularly to general service customers, are seasonal with a substantial portion of such sales made during the heating season. The Company's natural gas sales and transportation services are made under rate schedules approved by the PSCU and the PSCW for their respective states. The Company is currently authorized to earn a rate of return on rate base of 10.22-10.34% in Utah and 10.4% in Wyoming. The Company and all other local distribution companies are faced with the challenges and opportunities posed by the unbundling and restructuring of traditional utility services. As a local distribution company, the Company owns and controls the lines through which gas is delivered, is the only supplier of natural gas to residential customers, measures the consumption of gas used by its customers, and bills for consumption and related services. The services provided by the Company are packaged and priced as a 'bundle.' Most unbundling discussions focus on extending to residential and commercial customers the same choices provided industrial customers, i.e., allowing them to separate the commodity supply from the transportation service. (Industrial customers have enjoyed the benefit of supplier choice for over 10 years.) The State of Wyoming and the Wyoming Public Service Commission have asked utilities in the state to consider filing proposals that will give residential and commercial customers in the state more choice in their energy service. While the Company will continue to offer full bundled service to residential and commercial customers in the State of Wyoming, it intends to file, during 1997, for regulatory approval to provide such customers the additional choice of transportation service. The Company currently has approximately 21,350 residential and commercial customers in southwestern Wyoming. The State of Utah and the PSCU are actively involved in reviewing the restructuring and unbundling of telephone and electric utility services. Given its attractive rates and high customer service ratings, the Company does not believe that Utah regulators or residential customers will push for rapid unbundling in Utah. The Company's principal executive and business office is located at 180 East First South Street, P.O. Box 45360, Salt Lake City, Utah 84145 and its telephone number is (801) 324-5555. USE OF PROCEEDS The net proceeds from the sale of the Notes will be used to finance a portion of the Company's capital expenditures and for general corporate purposes. 3 CAPITALIZATION The following table sets forth the capitalization of the Company as of March 31, 1997.
MARCH 31, 1997 ---------------------- AMOUNT PERCENTAGE -------- ---------- (DOLLARS IN THOUSANDS) Long-term debt............................................................................ $175,000 42.5% Redeemable cumulative preferred stock (1)................................................. 4,808 1.1% Common shareholder's equity............................................................... 232,205 56.4% -------- ---------- Total capitalization.................................................................... $412,013 100.0% -------- ---------- -------- ---------- Short-term debt........................................................................... $ 58,700 -------- --------
- ------------------ (1) The Company will redeem the cumulative preferred stock on July 1, 1997. RATIO OF EARNINGS TO FIXED CHARGES
12 MONTHS ENDED YEARS ENDED DECEMBER 31, MARCH 31, ------------------------------------ --------- 1992 1993 1994 1995 1996 1997 ---- ---- ---- ---- ---- --------- Ratio of earnings to fixed charges............................... 2.98 3.08 2.90 2.80 3.48 3.84
DESCRIPTION OF MEDIUM-TERM NOTES The Notes will be issued as a series of debt 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.), as trustee (the 'Trustee'). The following summary of certain provisions of the Notes and of the Indenture does not purport to be complete and is qualified in its entirety by reference to the Indenture, a form of which has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. Capitalized terms used but not defined herein have the meanings given to them in the Indenture or the Notes, as the case may be. The term 'Securities,' as used under this caption, refers to all debt securities issued and issuable from time to time under the Indenture and includes the Notes. The terms and conditions set forth below will apply to each Note unless otherwise specified in an applicable Pricing Supplement. GENERAL The Indenture provides that, in addition to the Notes, additional Securities in one or more series (including both interest bearing and original issue discount securities) may be issued thereunder, without limitation as to aggregate principal amount of all Securities issuable thereunder. The Indenture does not limit the amount of other debt which may be issued by the Company. The Notes will be unsecured obligations of the Company and will rank in parity with all other unsecured and unsubordinated indebtedness of the Company. The Notes being offered hereby are limited to $75,000,000 aggregate initial offering amount, and $175,000,000 aggregate principal amount of Securities have previously been issued under the Indenture and are outstanding as of the date of this Prospectus. The aggregate principal amount of the Notes may be increased from time to time. The Notes will be offered on a continuing basis, and each Note will mature on a Business Day (as defined below), not less than nine months nor more than 30 years from its date of issue, as selected by the initial purchaser and agreed to by the Company. The Notes will be denominated and be payable in United States dollars. The Pricing Supplement relating to any Note will set forth the principal amount, interest rate, issue price and Agent's commission, original issue and maturity dates, redemption and repayment provisions, if any, and other material terms of such Note. Unless otherwise specified in the applicable Pricing Supplement, each Note will be issued in registered book-entry form (a 'Book-Entry Note') or in fully definitive form (a 'Definitive Note'), in the denomination of $1,000 or any amount in excess thereof which is an integral multiple of $1,000. Book-Entry Notes may be transferred or exchanged only through a participating member of The Depository Trust Company (or such other depositary as is identified in an applicable Pricing Supplement) (the 'Depositary'). See 'Book-Entry Notes; Global Securities' below. Registration of transfers of Definitive Notes will be made at the Corporate Trust 4 Office of the Trustee. No service fee will be charged by the Company, the Trustee or the Security Registrar for any such registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith (other than exchanges pursuant to Sections 304, 906 or 1107 of the Indenture, not involving any transfer). As used herein, 'Business Day,' means any day that is not a Saturday or Sunday, and that in The City of New York is not a day on which banking institutions are generally authorized or obligated by law or executive order to close, and, with respect to any LIBOR Note, is a London Business Day. Unless otherwise specified in the applicable Pricing Supplement, 'London Business Day' means any day on which dealings in deposits in United States dollars are transacted in the London interbank market. As used herein, 'Maturity', when used with respect to any Note, means the date on which the principal of such Note or an installment of principal becomes due and payable as provided in the Note or the Indenture, whether at the Stated Maturity or by declaration of acceleration, call for redemption, repayment at the option of the Holder or otherwise. As used herein, 'Stated Maturity', when used with respect to any Note or any installment of principal thereof or interest thereon, means the date specified in such Note as the fixed date on which the principal of such Note or such installment of principal or interest is due and payable. 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 a 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. Unless otherwise indicated in a Pricing Supplement, the covenants contained in the Indenture and the Notes would not necessarily afford Holders of the Notes protection in the event of a highly leveraged or other transaction involving the Company that may adversely affect Holders. Interest rates offered by the Company with respect to the Notes may differ depending upon, among other factors, the aggregate principal amount of Notes purchased in any single transaction. Notes with similar variable terms other than interest rates, as well as Notes with different other variable terms, may be offered concurrently to different investors. Interest rates or formulas and other terms of Notes are subject to change by the Company from time to time, but no such change will affect any Note previously issued or as to which an offer to purchase has been accepted by the Company. PAYMENTS For Definitive Notes, payments of principal, premium, if any, and interest payable at Maturity will be made in immediately available funds at the Corporate Trust Office of the Trustee in Salt Lake City, Utah or at such other place as the Company may designate, provided that the Definitive Note is presented to the Trustee in time for the Trustee to make such payments in such funds in accordance with its normal procedures. Interest (other than interest payable at Maturity) will be paid by check mailed to the address of the Person entitled thereto as it appears in the Security Register as of the Regular Record Dates or, at the option of the Company, by wire transfer to an account maintained by such Person with a bank located in the United States. Notwithstanding the foregoing, a Holder of $10,000,000 or more in aggregate principal amount of Notes having the same Interest Payment Dates (as defined below) shall be entitled, upon written request received by the Trustee prior to the Regular Record Date in respect of an interest payment, or the date which is fifteen days before the Stated Maturity or date of redemption or repayment of the principal of the Notes, as the case may be, to receive payments of principal, premium, if any, and interest by wire transfer to an account maintained by such Holder with a bank located in the United States; provided, however, that no payment of principal and premium, if any, will be made without prior presentment and surrender of the Notes. If any Stated Maturity or date of redemption or repayment would otherwise be a day that is not a Business Day, payments due on any such day need not be made on such day, but may be made on the next succeeding Business Day (or, in the case of a LIBOR Note, if such day falls in the next succeeding calendar month, the immediately preceding Business Day), with the same force and effect as if made on the due date, and no interest shall accrue for the period from such due date to such succeeding Business Day. 5 The total amount of any principal, premium, if any, or interest due on any Global Security (as defined below) representing one or more Book-Entry Notes on any Interest Payment Date or at Maturity will be made available to the Trustee on such date. As soon as practicable thereafter, the Trustee will make such payments to the Depositary in accordance with existing arrangements between the Trustee and the Depositary. The Depositary will allocate such payments to each Book-Entry Note represented by such Global Security and make payments to the registered owners or Holders thereof in accordance with its existing operating procedures. Neither the Company nor the Trustee shall have any responsibility or liability for such payments by the Depositary. So long as the Depositary or its nominee is the registered owner of any Global Security, the Depositary or its nominee, as the case may be, will be considered the sole owner or Holder of the Book-Entry Note or Book-Entry Notes represented by such Global Security for all purposes under the Indenture. REDEMPTION Unless otherwise specified in an applicable Pricing Supplement, the Notes will not be subject to any optional or mandatory sinking fund. If provided in an applicable Pricing Supplement, the Notes may be subject to redemption, in whole or in part, prior to their Stated Maturity at the option of the Company or through operation of a mandatory or optional sinking fund or analogous provisions. Such Pricing Supplement will set forth the detailed terms of such redemption, including, but not limited to, the dates after or on which and the price or prices (including premium, if any) at which such Notes may be redeemed. REPAYMENT AT THE OPTION OF THE HOLDER If provided in an applicable Pricing Supplement, Notes will be subject to repayment at the option of the Holder thereof in accordance with the terms of such Notes on their respective optional repayment dates, if any, as agreed upon by the Company and the purchasers thereof at the time of sale (each, an 'Optional Repayment Date'). If no Optional Repayment Date is indicated with respect to a Note, such Note will not be repayable at the option of the Holder thereof prior to its Stated Maturity. If applicable, the Company will comply with the requirements of Section 14(e) of the Exchange Act, and the rules promulgated thereunder, and any other securities laws or regulations in connection with any such repayment. The Company may at any time purchase Notes at any price or prices in the open market or otherwise. Notes so purchased by the Company may, at the discretion of the Company, be held, resold or surrendered to the Trustee for cancellation. INTEREST AND INTEREST RATES General Unless otherwise specified in an applicable Pricing Supplement, each Note will bear interest from the date of original issue at the rate per annum or, in the case of a Floating Rate Note, pursuant to the interest rate formula, stated therein and in the applicable Pricing Supplement until the principal thereof is paid or made available for payment. Interest will be payable in arrears on each date specified in the applicable Pricing Supplement and in a Note on which an installment of interest is due and payable (an 'Interest Payment Date') and at Maturity. Interest will be payable generally to the person in whose name a Note (or any Predecessor Note) is registered at the close of business on the Regular Record Date next preceding the related Interest Payment Date; provided, however, that interest payable at Maturity will be payable to the person to whom principal shall be payable. Each interest payment shall be the amount of interest accrued from and including the later of the date of original issue or the most recent Interest Payment Date (in respect of which interest has been paid or duly provided for with respect to such Note) to but excluding the next succeeding Interest Payment Date (an 'Interest Accrual Period'). Unless otherwise specified in the applicable Pricing Supplement, the first payment of interest on any Note originally issued between a Regular Record Date and the related Interest Payment Date will be made on the Interest Payment Date immediately following the next succeeding Regular Record Date to the Holder on such next succeeding Regular Record Date. Interest rates, interest rate formulae and other terms of the Notes are subject to change by the Company from time to time but no such change will affect any Notes already issued or as to which offers to purchase have been accepted by the Company. 6 Fixed Rate Notes Unless otherwise specified in an applicable Pricing Supplement, the Interest Payment Dates with respect to any Fixed Rate Note will be April 1 and October 1 of each year, and the Regular Record Dates in respect of such Interest Payment Dates will be the immediately preceding March 15 and September 15 (whether or not a Business Day), respectively. If any Interest Payment Date or Maturity of a Fixed Rate Note falls on a day that is not a Business Day with respect to such Fixed Rate Note, the payment due on such Interest Payment Date or at Maturity will be made on the following day that is a Business Day with respect to such Fixed Rate Note as if it were made on the date such payment was due and no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date or Maturity, as the case may be. Unless otherwise specified in the applicable Pricing Supplement, interest on each Fixed Rate Note will be computed on the basis of a 360-day year of twelve 30-day months. Floating Rate Notes Unless otherwise specified in an applicable Pricing Supplement, Floating Rate Notes will be issued as described below. Interest on Floating Rate Notes will be determined by reference to a 'Base Rate,' which may be one or more of (a) the Commercial Paper Rate (as defined below), in which case such Note will be a 'Commercial Paper Rate Note;' (b) the Federal Funds Rate (as defined below), in which case such Note will be a 'Federal Funds Rate Note;' (c) LIBOR (as defined below), in which case such Note will be a 'LIBOR Note;' (d) the Prime Rate (as defined below) in which case such Note will be a 'Prime Rate Note;' (e) the Treasury Rate (as defined below), in which case such Note will be a 'Treasury Rate Note;' or (f) such other interest rate formula as may be set forth in the applicable Pricing Supplement and Floating Rate Note. In addition, a Floating Rate Note may bear interest at the lowest of two or more Base Rates determined in the same manner as the Base Rates are determined for the types of Floating Rate Notes described above (except the interest rate for such Floating Rate Notes will not be determined with reference to the Treasury Rate). Each Floating Rate Note will specify the Base Rate or Rates applicable thereto. The interest rate on each Floating Rate Note will be calculated by reference to the specified Base Rate or the lowest of two or more specified Base Rates, in either case plus or minus the applicable Spread, if any, or multiplied by the applicable Spread Multiplier, if any. The 'Spread' is the number of basis points to be added to or subtracted from the related Base Rate or Rates applicable to such Floating Rate Note. The 'Spread Multiplier' is the percentage of the related Base Rate or Rates applicable to such Floating Rate Note by which said Base Rate or Rates are to be multiplied to determine the applicable interest rate on such Floating Rate Note. The 'Index Maturity' is the period to maturity of the instrument or obligation with respect to which the related Base Rate or Rates are calculated. Each Floating Rate Note will specify the Index Maturity and the Spread, if any, and/or Spread Multiplier, if any, applicable thereto. Each Floating Rate Note and the applicable Pricing Supplement will specify whether the rate of interest on such Floating Rate Note will be reset monthly, quarterly, semiannually, annually or otherwise (each, an 'Interest Reset Period') and the date on which such interest rate will be reset (each, an 'Interest Reset Date'). Unless otherwise specified in a Floating Rate Note and the applicable Pricing Supplement, the Interest Reset Date will be, in the case of a Floating Rate Note which resets (a) monthly, the third Wednesday of each month; (b) quarterly, the third Wednesday of each March, June, September and December of each year; (c) semiannually, the third Wednesday of each of the two months specified in such Pricing Supplement; and (d) annually, the third Wednesday of the month specified in such Pricing Supplement. If any Interest Reset Date for any Floating Rate Note would otherwise be a day that is not a Business Day, such Interest Reset Date will be postponed to the next succeeding day that is a Business Day, except that in the case of a LIBOR Note (or a Floating Rate Note for which LIBOR is an applicable Base Rate), if such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the last Business Day in the preceding month. The interest rate applicable to each Interest Reset Period commencing on the Interest Reset Date or Dates with respect to such Interest Reset Period will be the rate determined with respect to the applicable 'Interest Determination Date.' Unless otherwise specified in an applicable Pricing Supplement, the Interest Determination Date with respect to the Commercial Paper Rate, the Federal Funds Rate and the Prime Rate will be the second Business Day preceding each Interest Reset Date for the related Note. Unless otherwise specified in an applicable Pricing Supplement, the Interest Determination Date with respect to LIBOR will be the second London Business Day preceding each Interest Reset Date. With respect to the Treasury Rate, unless otherwise specified in an 7 applicable Pricing Supplement, the Interest Determination Date will be the day in the week in which the Interest Reset Date falls on which day Treasury Bills are normally auctioned (Treasury Bills are normally sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday, except that such auction may be held on the preceding Friday); provided, however, that if, as a result of a legal holiday, an auction is held on the Friday of the week preceding the Interest Reset Date, the related Interest Determination Date shall be such preceding Friday; and provided, further, that if an auction shall fall on any Interest Reset Date, then the related Interest Reset Date shall instead be the first Business Day immediately following such auction. Unless otherwise specified in the applicable Pricing Supplement, the Interest Determination Date pertaining to a Floating Rate Note the interest rate of which is determined with reference to two or more Base Rates will be the first Business Day which is at least two Business Days prior to such Interest Reset Date for such a Floating Rate Note on which each Base Rate shall be determinable. Each Base Rate shall be determined and compared on such date, and the applicable interest rate shall take effect on the related Interest Reset Date. Any Floating Rate Note may also specify either or both a maximum limit and a minimum limit on the rate at which interest may accrue during any Interest Accrual Period. In addition to any maximum interest rate that may be applicable to any Floating Rate Note pursuant to the preceding sentence, the interest rate on Floating Rate Notes will in no event be higher than the maximum rate permitted by New York law, as the same may be modified by United States law of general application. Except as provided below or in the applicable Pricing Supplement, the Interest Payment Date, in the case of a Floating Rate Note which resets (a) monthly, on the third Wednesday of each month; (b) quarterly, on the third Wednesday of March, June, September and December of each year; (c) semiannually, on the third Wednesday of the two months of each year specified in the applicable Pricing Supplement; and (d) annually, on the third Wednesday of the month specified in the applicable Pricing Supplement (each, an 'Interest Payment Date'); and, in each case, at Maturity. If any Interest Payment Date for a Floating Rate Note falls on a day that is not a Business Day with respect to such Floating Rate Note, such Interest Payment Date will be the following day that is a Business Day with respect to such Floating Rate Note, except that, in the case of a LIBOR Note (or a Floating Rate Note for which LIBOR is an applicable Base Rate), if such Business Day is in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding day that is a Business Day with respect to such Floating Rate Note. If the Maturity of a Floating Rate Note falls on a day that is not a Business Day with respect to such Floating Rate Note, the payment of principal, premium, if any, and interest will be made on the next succeeding Business Day with respect to such Floating Rate Note, and no interest on such payment shall accrue for the period from and after Maturity. Unless otherwise specified in a Floating Rate Note and the applicable Pricing Supplement, the Regular Record Date or Dates for interest payable on such Floating Rate Note will be the fifteenth day (whether or not a Business Day) immediately preceding the related Interest Payment Date or Dates. The interest rate in effect with respect to a Floating Rate Note on each day that is not an Interest Reset Date will be the interest rate determined as of the Interest Determination Date pertaining to the immediately preceding interest Reset Date and the interest rate in effect on any day that is an Interest Reset Date will be the interest rate determined as of the Interest Determination Date pertaining to such Interest Reset Date, subject in either case to applicable provisions of law and any maximum or minimum interest rate limitation referred to in such Floating Rate Note; provided, however, that the interest rate in effect with respect to a Floating Rate Note for the period from the date of original issue to the first Interest Reset Date will be the rate specified as such in the applicable Pricing Supplement and the related Floating Rate Note (the 'Initial Interest Rate') and unless otherwise specified in the applicable Pricing Supplement the interest rate in effect for the ten calendar days immediately prior to a Maturity will be the interest rate in effect on the tenth calendar day preceding such Maturity. 8 Unless otherwise specified in the applicable Pricing Supplement, with respect to each Floating Rate Note, accrued interest is calculated by multiplying its face amount by an accrued interest factor. Such accrued interest factor is computed by adding the interest factor calculated for each day from the later of the date of issue, or from the last date to which interest has been paid or duly provided for, to the date for which accrued interest is being calculated. Unless otherwise specified 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, in the case of Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBOR Notes, or Prime Rate Notes or by the actual number of days in the year, in the case of Treasury Rate Notes. Unless otherwise specified in an applicable Pricing Supplement, the interest factor for Notes for which the interest rate is calculated with reference to two or more Base Rates will be calculated in each period in the same manner as if only the lowest of the applicable Base Rates applied. All percentages resulting from any calculation on Floating Rate Notes will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) will be rounded upward to 9.87655% (or. 0987655)), and all dollar amounts used in or resulting from such calculation on Floating Rate Notes will be rounded to the nearest cent (with one-half cent being rounded upward). Unless otherwise specified in an applicable Pricing Supplement, the Trustee will be the 'Calculation Agent'. Upon the request of the holder of any Floating Rate Note, the Calculation Agent will provide the interest rate then in effect and, if determined, the interest rate that will become effective as a result of a determination made for the next succeeding Interest Reset Date with respect to such Floating Rate Note. Unless otherwise specified in an applicable Pricing Supplement, the 'Calculation Date,' if applicable, pertaining to any Interest Determination Date will be the earlier of (i) the tenth calendar day after such Interest Determination Date or, if any such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or the Maturity Date, as the case may be. The interest rate in effect with respect to a Floating Rate Note from the date of original issue to the first Interest Reset Date will be the Initial Interest Rate. The interest rate for each subsequent Interest Reset Date will be determined by the Calculation Agent as follows: Commercial Paper Rate. Commercial Paper Rate Notes will bear interest at the interest rates (calculated with reference to the Commercial Paper Rate and the Spread or Spread Multiplier, if any) specified in such Commercial Paper Rate Notes and in an applicable Pricing Supplement. Unless otherwise specified in an applicable Pricing Supplement, 'Commercial Paper Rate' means, with respect to any Interest Determination Date relating to a Commercial Paper Rate Note or any Interest Determination Date for a Note for which the Commercial Paper Rate is one of the Base Rates (a 'Commercial Paper Rate Interest Determination Date'), the Money Market Yield (as defined below) on such date of the rate for commercial paper having the Index Maturity specified in the applicable Pricing Supplement as published by the Board of Governors of the Federal Reserve System in 'Statistical release H.15(519), Selected Interest Rates' or any successor publication ('H.15(519)') under the heading 'Commercial Paper.' In the event that such rate is not published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Commercial Paper Rate Interest Determination Date, then the Commercial Paper Rate will be the Money Market Yield on such Commercial Paper Rate Interest Determination Date for commercial paper having the Index Maturity specified in the applicable Pricing Supplement as published by the Federal Reserve Bank of New York in its daily statistical release 'Composite 3:30 P.M. Quotations for U.S. Governmental Securities' or any successor publication ('Composite Quotations') under the heading 'Commercial Paper' (with an Index Maturity of one month or three months being deemed to be equivalent to an Index Maturity of thirty days or ninety days, respectively). If such rate is not published in either H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on such Calculation Date, then the Commercial Paper Rate will be calculated by the Calculation Agent and will be the Money Market Yield of the arithmetic mean of the offered rates, as of approximately 11:00 A.M., New York City time, on such Commercial Paper Rate Interest Determination Date, of three leading dealers of commercial paper in The City of New York (which may include one or more of the Agents) selected by the Calculation Agent (after consultation with the Company) for commercial paper having the specified Index Maturity placed for an industrial issuer whose bond rating is 9 'AA,' or the equivalent, from a nationally recognized statistical rating agency; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Commercial Paper Rate in effect for the applicable period will be the Commercial Paper Rate in effect on such Commercial Paper Rate Interest Determination Date. 'Money Market Yield' shall be a yield (expressed as a percentage rounded upwards, if necessary, to the nearest one hundred-thousandth of a percentage point) calculated in accordance with the following formula: Money Market Yield = [ D x 360 ] [-------------] x 100 [ 360-(D x M) ] where 'D' refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal and 'M' refers to the actual number of days in the interest period for which interest is being calculated. Federal Funds Rate. Unless otherwise specified in the applicable Pricing Supplement, 'Federal Funds Rate' means, with respect to any Interest Determination Date relating to a Federal Funds Rate Note or a Floating Rate Note for which the interest rate is determined with reference to the Federal Funds Rate (a 'Federal Funds Rate Interest Determination Date'), the rate on such date for United States dollar federal funds as published in H.15(519) under the heading 'Federal Funds (Effective') or, if not published by 3:00 P.M., New York City time, on the related Calculation Date, the rate on such Federal Funds Rate Interest Determination Date as published in Composite Quotations under the heading 'Federal Funds/Effective Rate.' If such rate is not published in either H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the related Calculation Date, then the Federal Funds Rate on such Federal Funds Rate Interest Determination Date will be calculated by the Calculation Agent and will be arithmetic mean of the rates for the last transaction in overnight United States dollar federal funds arranged by three leading brokers of federal funds transactions in The City of New York (which may include the Agents or their affiliates) selected by the Calculation Agent prior to 9:00 A.M., New York City time, on such Federal Funds Rate Interest Determination Date; provided, however, that if the brokers so selected by the Calculation Agent are not quoting as mentioned in this sentence, the Federal Funds Rate determined as of such Federal Funds Rate Interests Determination Date will be the Federal Funds Rate in effect on such Federal Funds Rate Interest Determination Date. LIBOR. LIBOR Notes will bear interest at the interest rates (calculated with reference to LIBOR and the Spread or Spread Multiplier, if any) specified in such LIBOR Notes and in an applicable Pricing Supplement Unless otherwise specified in an applicable Pricing Supplement, 'LIBOR' means the rate determined by the Calculation Agent in accordance with the following provisions: (i) With respect to an Interest Determination Date relating to a LIBOR Note or any Floating Rate Note for which LIBOR is an applicable Base Rate (a 'LIBOR Interest Determination Date'), either, as specified in the applicable Pricing Supplement: (a) the arithmetic mean of the offered rates for deposits in U.S. dollars for the period of the Index Maturity specified in the applicable Pricing Supplement, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, which appear on the Reuters Screen LIBO Page as of 11:00 A.M., London time, on the LIBOR Interest Determination Date, if at least two such offered rates appear on the Reuters Screen LIBO Page ('LIBOR Reuters'), or (b) the rate for deposits in U.S. dollars having the Index Maturity designated in the applicable Pricing Supplement, commencing on the second London Business Day immediately following that LIBOR Interest Determination Date, that appears on the Telerate Page 3750 as of 11:00 A.M., London time, on that LIBOR Interest Determination Date ('LIBOR Telerate'). Unless otherwise indicated in the applicable Pricing Supplement, 'Reuters Screen LIBO Page' means the display designated as Page 'LIBO' on the Reuters Monitor Money Rate Service (or such other page as may replace the LIBO page on that service for the purpose of displaying London interbank offered rates of major banks). 'Telerate Page 3750' means the display designated as page '3750' on the Telerate Service (or such other page as may replace the 3750 page 10 on that service or such other service or services as may be nominated by the British Bankers' Association for the purpose of displaying London interbank offered rates for U.S. dollar deposits). If neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable Pricing Supplement, LIBOR will be determined as if LIBOR Telerate had been specified. If fewer than two offered rates appear on the Reuters Screen LIBO Page, or if no rate appears on the Telerate Page 3750, as applicable, LIBOR in respect of that LIBOR Interest Determination Date will be determined as if the parties had specified the rate described in (ii) below. (ii) With respect to a LIBOR Interest Determination Date on which fewer than two offered rates appear on the Reuters Screen LIBO Page, as described in (i)(a) above, or on which no rate appears on the Telerate Page 3750, as specified in (i)(b) above, as applicable, LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars having the Index Maturity designated in the applicable Pricing Supplement are offered at approximately 11:00 A.M., London time, on such LIBOR Interest Determination Date by four major banks ('Reference Banks') in the London interbank market selected by the Calculation Agent (after consultation with the Company) to prime banks in the London interbank market commencing on the second London Business Day immediately following such LIBOR Interest Determination Date and in a principal amount of not less than U.S. $1,000,000 that is representative for a single transaction in such market at such time. The Calculation Agent will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, LIBOR for such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR for such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 A.M., New York City time, on such LIBOR Interest Determination Date by three major banks (which may include the Agents) in The City of New York selected by the Calculation Agent (after consultation with the Company) for loans in U.S. dollars to leading European banks having the specified Index Maturity designated in the applicable Pricing Supplement commencing on the second London Business Day immediately following such LIBOR Interest Determination Date and in a principal amount equal to an amount of not less than U.S. $1,000,000 that is representative for a single transaction in such market at such time; provided, however, that if the banks selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR will be LIBOR then in effect on such LIBOR Interest Determination Date. Prime Rate. Unless otherwise specified in the applicable Pricing Statement, 'Prime Rate' means, with respect to any Interest Determination Date relating to a Prime Rate Note or a Floating Rate Note for which the interest rate is determined with reference to the Prime Rate (a 'Prime Rate Interest Determination Date'), the rate on such date as such rate is published in H.15(519) under the heading 'Bank Prime Loan.' If such rate is not published prior to 3:00 P.M., New York City time, on the related Calculation Date, then the Prime Rate shall be the arithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen USPRIME1 Page (as hereinafter defined) as such bank's prime rate or base lending rate as in effect for such Prime Rate Interest Determination Date. If fewer than four such rates appear on the Reuters Screen USPRIME1 Page for such Prime Rate Interest Determination Date, then the Prime Rate shall be the arithmetic mean of the prime rates or base lending rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on such Prime Rate Interest Determination Date by four major money center banks (which may include affiliates of the Agents) in The City of New York selected by the Calculation Agent. If fewer than four such quotations are so provided, then the Prime Rate shall be the arithmetic mean of four prime rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on such Prime Rate Interest Determination Date as furnished in The City of New York by the major money center banks, if any, that have provided such quotations and by a reasonable number of substitute banks or trust companies (which may include affiliates of the Agents) to obtain four such prime rate quotations, provided such substitute banks or trust companies are organized and doing business under the laws of the United States, or any State thereof, each having total equity capital of at least $500 million and being subject to supervision or examination by Federal or State authority. 11 'Reuters Screen USPRIME1 Page' means the display on the Reuter Monitor Money Rates Service (or any successor service) on the 'USPRIME1' page (or such other page as may replace the USPRIME1 page on such service) for the purpose of displaying prime rates or base lending rates of major United States banks. Treasury Rate. Treasury Rate Notes will bear interest at the interest rates (calculated with reference to the Treasury Rate and the Spread or Spread Multiplier, if any) specified in such Treasury Rate Notes and in an applicable Pricing Supplement. Unless otherwise specified in an applicable Pricing Supplement, 'Treasury Rate' means, with respect to any Interest Determination Date relating to a Treasury Rate Note or any Floating Rate Note for which the interest rate is determined by reference to the Treasury Rate (a 'Treasury Rate Interest Determination Date'), the rate applicable to the most recent auction of direct obligations of the United States ('Treasury Bills') having the Index Maturity specified in the applicable Pricing Supplement, as such rate is published in H.15(519) under the heading 'Treasury Bills--auction average (investment)' or, if not published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Treasury Rate Interest Determination Date, the auction average rate (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise announced by the United States Department of the Treasury. In the event that the results of the auction of Treasury Bills having the specified Index Maturity are not reported as provided by 3:00 P.M., New York City time, on such Calculation Date, or if no such auction is held in a particular week, then the Treasury Rate shall be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent on the basis of a year of 365 days or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 P.M., New York City time on such Treasury Rate Interest Determination Date, of three leading primary United States government securities dealers (which may include one or more of the Agents) selected by the Calculation Agent (after consultation with the Company), for the issue of Treasury Bills with a remaining maturity closest to the specified Index Maturity; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Treasury Rate in effect for the applicable period will be the Treasury Rate in effect on such Treasury Rate Interest Determination Date. OTHER PROVISIONS; ADDENDA Any provisions with respect to the determination of a Base Rate, the specification of a Base Rate, calculation of the interest rate applicable to a Floating Rate Note, its Interest Payment Dates or any other matter relating thereto may be modified by the terms as specified under 'Other Provisions' on the face thereof or in an Addendum relating thereto, if so specified on the face thereof and described in the applicable Pricing Supplement. DISCOUNT NOTES The Company may offer Notes ('Discount Notes') from time to time that have an Issue Price (as specified in the applicable Pricing Supplement) that is less than 100% of the principal amount thereof (i.e. par) by more than a percentage equal to the product of 0.25% and the number of full years to the Stated Maturity. Discount Notes may not bear any interest currently or may bear interest at a rate that is below market rates at the time of issuance. The difference between the Issue Price of a Discount Note and par is referred to herein as the 'Discount.' In the event of redemption, repayment or acceleration of maturity of a Discount Note, the amount payable to the Holder of such Discount Note will be equal to the sum of (i) the Issue Price (increased by any accruals of Discount) and, in the event of any redemption of such Discount Note (if applicable), multiplied by the Redemption Percentage (as defined in the Pricing Supplement) (as adjusted by the Annual Redemption Percentage Reduction (as defined in the Pricing Supplement, if applicable) and (ii) any unpaid interest accrued thereon to the date of such redemption, repayment or acceleration of maturity, as the case may be. Unless otherwise specified in the applicable Pricing Supplement, for purposes of determining the amount of Discount that has accrued as of any date on which a redemption, repayment or acceleration of maturity occurs for a Discount Note, such Discount will be accrued using a constant yield method. The constant yield will be 12 calculated using a 30-day month, 360-day year convention, a compounding period that, except for the Initial Period (as hereinafter defined), corresponds to the shortest period between Interest Payment Dates for the applicable Discount Note (with ratable accruals within a compounding period), a coupon rate equal to the initial coupon rate applicable to such Discount Note and an assumption that the maturity of such Discount Note will not be accelerated. If the period from the date of issue to the initial Interest Payment Date for a Discount Note (the 'Initial Period') is shorter than the compounding period for such Discount Note, a proportionate amount of the yield for an entire compounding period will be accrued. If the Initial Period is longer than the compounding period, then such period will be divided into a regular compounding period and a short period with the short period being treated as provided in the preceding sentence. The accrual of the applicable Discount may differ from the accrual of original issue discount for purposes of the Internal Revenue Code of 1986, as amended (the 'Code'), certain Discount Notes may not be treated as having original issue discount within the meaning of the Code, and Notes other than Discount Notes may be treated as issued with original issue discount for federal income tax purposes. BOOK-ENTRY NOTES; GLOBAL SECURITIES Upon issuance, all Book-Entry Notes having the same original issue date, Stated Maturity and otherwise having identical terms and provisions will be represented by a single global security (each, a 'Global Security'). Each Global Security representing Book-Entry Notes will be deposited with, or on behalf of, the Depositary. Except as set forth below, a Global Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any nominee to a successor of the Depositary or a nominee of such successor. Upon the issuance by the Company of Book-Entry Notes represented by a Global Security, the Depositary will credit, on its book-entry registration and transfer system, the respective principal amounts of the Book-Entry Notes represented by such Global Security to the accounts of participants. The accounts to be credited shall be designated by the applicable Agent or the underwriter of such Book-Entry Notes, as the case may be. Ownership of beneficial interests in a Global Security will be limited to participants or persons that hold interests through participants. Ownership of beneficial interests in Book-Entry Notes represented by a Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the Depositary (with respect to interest of participants in the Depositary), or by participants in the Depositary or persons that may hold interests through such participants (with respect to persons other than participants in the Depositary). The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interest in a Global Security. So long as the Depositary for a Global Security, or its nominee, is the registered owner of the Global Security, the Depositary or its nominee, as the case may be, will be considered the sole owner or Holder of the Book-Entry Notes represented by such Global Security for all purposes under the Indenture. Except as provided below, owners of beneficial interests in Book-Entry Notes represented by a Global Security will not be entitled to have Book-Entry Notes represented by such Global Security registered in their names, will not receive or be entitled to receive or be entitled to receive physical delivery of Book-Entry Notes in definitive form ('Certificated Notes') and will not be considered the owners or Holders thereof under the Indenture. Unless otherwise specified in the applicable Pricing Supplement, each Global Security representing Book-Entry Notes will be exchangeable for Certificated Notes of like tenor and terms and of differing authorized denominations in a like aggregate principal amount, only if (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for the Global Securities or the Company becomes aware that the Depositary has ceased to be a clearing agency registered under the Exchange Act and, in any such case, the Company shall not have appointed a successor to the Depositary within 60 days thereafter, (ii) the Company, in its sole discretion, determines that the Global Securities shall be exchangeable for Certificated Notes or (iii) an Event of Default shall have occurred and be continuing with respect to the Notes under the Indenture. Upon any such exchange, the Certificated Notes shall be registered in the names of the Beneficial Owners (as defined below) of the Global Security or Securities representing Book-Entry Notes, which names shall be provided by the Depositary's relevant Participants (as identified by the Depositary) to the Trustee. 13 The Depository Trust Company, New York, New York ('DTC') will be the initial Depositary with respect to the Book-Entry Notes. The following is based on information furnished by DTC: DTC will act as securities depository for the Book-Entry Notes. The Book-Entry Notes will be issued as fully registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully registered Global Security will be issued for each issue of Book-Entry Notes, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $200,000,000, one Global Security will be issued with respect to each $200,000,000 of principal amount and an additional Global Security will be issued with respect to any remaining principal amount of such issue. DTC is a limited-purpose trust company organized under the New York Banking Law, a 'banking organization' within the meaning of the New York Banking Law, a member of the Federal Reserve System, a 'clearing corporation' within the meaning of the New York Uniform Commercial Code, and a 'clearing agency' registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that is participants ('Participants') deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need of physical movement of securities certificates. Direct Participants of DTC ('Direct Participants') include securities brokers and dealers (including the Agents), banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to DTC's system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ('Indirect Participants'). The rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. Purchases of Book-Entry Notes under DTC's system must be made by or through Direct Participants, which will receive a credit for such Book-Entry Notes on DTC's records. The ownership interest of each actual purchaser of each Book-Entry Note represented by a Global Security ('Beneficial Owner') is in turn to be recorded on the records of Direct Participants and Indirect Participants. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct Participants or Indirect Participants through which such Beneficial Owner entered into the transaction. Transfer of ownership interests in a Global Security representing Book-Entry Notes are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners of a Global Security representing Book-Entry Notes will not receive Certificated Notes representing their ownership interests therein, except in the event that use of the book-entry system for such Book-Entry Notes is discontinued. To facilitate subsequent transfers, all Global Securities representing Book-Entry Notes which are deposited with, or on behalf of, DTC are registered in the name of DTC's nominee, Cede & Co. The deposit of Global Securities with, or on behalf of, DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Global Securities representing the Book-Entry Notes; DTC's records reflect only the identity of the Direct Participants to whose accounts such Book-Entry Notes are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. 14 Neither DTC nor Cede & Co. will consent or vote with respect to the Global Securities representing the Book-Entry Notes. Under its usual procedures, DTC mails an Omnibus Proxy to the Company as soon as possible after the applicable record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose account the Book-Entry Notes are credited on the applicable record date (identified in a listing attached to the Omnibus Proxy). Principal, premium, if any, and/or interest, if any, payments on the Global Securities representing the Book-Entry Notes will be made by the Company through the Trustee in immediately available funds to DTC as the registered owner of the Global Securities. DTC's practice is to credit Direct Participants' accounts on the applicable payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on such date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in 'street name', and will be the responsibility of such Participant and not of DTC, the Trustee or the Company, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, if any, and/or interest, if any, to DTC is the responsibility of the Company and the Trustee, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct Participants and Indirect Participants. None of the Company, the Trustee, the Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. If applicable, redemption notices shall be sent to Cede & Co. if less than all of the Book-Entry Notes of the tenor and terms are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. A Beneficial Owner shall give notice of any option to elect to have its Book-Entry Notes repaid by the Company, through its Participant, to the Trustee, and shall effect delivery of such Book-Entry Notes by causing the Direct Participant to transfer the Participant's interest in the Global Security or Securities representing such Book-Entry Notes, on DTC's records, to the Trustee. The requirement for physical delivery of Book-Entry Notes in connection with a demand for repayment will be deemed satisfied when the ownership rights in the Global Security or Securities representing such Book-Entry Notes are transferred by Direct Participants on DTC's records. The Depositary may discontinue providing its services as securities depository with respect to the Book-Entry Notes at any time upon reasonable notice to the Company or the Trustee. Under such circumstances, in the event that a successor Depository is not obtained, Certificated Notes are required to be printed and delivered. The Company may decide to discontinue use of the system of book-entry transfers through a Depositary. In that event, Certificated Notes will be printed and delivered. The information in this section concerning DTC and DTC's system has been obtained from sources that the Company believes to be reliable, but the Company takes no responsibility for the accuracy thereof. LIMITATIONS ON LIENS Subject to certain exceptions, the Company will not, and will not permit any Subsidiary to, create, assume or suffer to exist, otherwise than in favor of the Company or a Subsidiary, any mortgage, pledge, lien, encumbrance, or security interest (collectively, 'Liens') upon any of its properties or assets or upon any income or profits therefrom unless the Notes shall be equally and ratably secured. This prohibition will not apply to: (a) Liens existing as of the date of the Indenture; (b) any purchase money mortgage or Lien created to secure all or part of the purchase price of any property (or to secure a loan made to the Company or any Subsidiary to enable it to acquire such property), provided that such Lien shall extend only to the property so acquired, improvements thereon, replacements thereof and the income or profits therefrom; (c) Liens on any property at the time of the acquisition thereof, whether or not assumed by the Company or a Subsidiary; provided that such Lien shall 15 extend only to the property so acquired, improvements thereon, replacements thereof and income or profits therefrom; (d) Liens on property or any contract for the sale of any product or service or any rights thereunder or any proceeds therefrom, acquired or constructed by the Company or a Subsidiary and created within one year after the later of the completion of such acquisition or construction or the commencement of operation of the project, provided that such Lien shall extend only to the property so acquired or constructed, improvements thereon, replacements thereof and income or profits therefrom; (e) Liens of Subsidiaries outstanding at the time they become Subsidiaries; (f) Liens created or assumed by the Company or a Subsidiary on coal, geothermal, oil, natural gas, inert gas, other hydrocarbon or mineral properties owned or leased by the Company or a Subsidiary to secure loans to the Company or a Subsidiary, for the purpose of developing such properties; (g) Liens on any investment (as defined in the Indenture) of the Company or a Subsidiary in any Person other than a Subsidiary or on any security representing any investment of the Company or a Subsidiary; (h) any Lien not otherwise permitted by the Indenture, provided that after citing effect to such Liens the sum of (1) all indebtedness of the Company and its Subsidiaries secured by Liens not otherwise permitted by the Indenture and (2) all Attributable Debt of the Company and its Subsidiaries (to the extent not included in (1) above) does not exceed 10% of Consolidated Capitalization; (i) any refunding or extension of maturity, in whole or in part, of any obligation or indebtedness secured by certain permitted Liens, provided that the principal amount of the obligation or indebtedness secured by such refunding or extension shall not exceed the principal amount of the obligation or indebtedness then outstanding and shall be limited in lien to the same or substituted property and after-acquired property that secured the refunded or extended obligation or indebtedness; (j) Liens upon any office equipment, data processing equipment or any motor vehicles, tractors or trailers; (k) Liens of or upon or in current assets of the Company or a Subsidiary created or assumed to secure indebtedness incurred in the ordinary course of business; (l) any Lien which is payable, both with respect to principal and interest, solely out of the proceeds of natural gas, oil, coal, geothermal resources, inert gas, hydrocarbons or minerals to be produced from the property subject thereto and to be sold or delivered by the Company or a Subsidiary; (m) Liens to secure indebtedness incurred to finance advances made by the Company or any Subsidiary to any third party for the purpose of financing oil, natural gas, hydrocarbon, inert gas or other mineral exploration or development, provided that such Liens shall extend only to the receivables of the Company or such Subsidiary in respect of such advances; and (n) any rights reserved in others to take or reserve any part of the natural gas, oil, coal, geothermal resources, inert gas, hydrocarbons or minerals produced at any time on any property of the Company or a Subsidiary. Also excepted from the general prohibition are various other liens including, but not limited to: mechanics' or materialmen's liens, certain governmental liens, certain leases, certain judgment liens, and certain liens arising in connection with leases, easements and rights-of-way for pipeline or distribution plant purposes. CERTAIN DEFINITIONS Certain terms used in the Indenture are defined and are used in this Prospectus as follows: 'Attributable Debt' means, as of the date of determination, the present value of net rent for the remaining term of a capital lease, determined in accordance with generally accepted accounting principles ('GAAP'), which is part of a Sale and Leaseback Transaction (as defined), including any periods for which the lessee has the right to renew or extend the lease. For purposes of the foregoing, 'net rent' means the sum of capitalized rental payments required to be paid by the lessee, other than amounts required to be paid by the lessee for maintenance, repairs, insurance, taxes, assessments, energy, fuel, utilities and similar charges. In the case of a capital lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered to be required to be paid under such lease subsequent to the first date upon which it may be so terminated. 'Consolidated Capitalization' means, without duplication, the sum of (a) the principal amount of Consolidated Funded Debt of the Company and its Subsidiaries at the time outstanding, (b) the total capital represented by the capital stock of the Company and its Subsidiaries at the time outstanding based, in the case of stock having par value, upon its par value, and in the case of stock having no par value, upon the value stated on the books of the Company, (c) the total amount of (or less than the amount of any deficit in) retained earnings and paid-in capital of the Company and its Subsidiaries, (d) reserves for deferred federal and state income taxes arising from timing differences and (e) Attributable Debt, all as shown on a consolidated balance sheet of the Company and its Subsidiaries prepared in accordance with GAAP; 16 provided that in determining the consolidated retained earnings and paid-in capital of the Company and its Subsidiaries no effect shall be given to any unrealized write-up or write-down in the value of assets or any amortization thereof, except for accumulated provisions for depreciation, depletion, amortization and property retirement which shall have been created by charges made by the Company or any of its Subsidiaries on its books. 'Consolidated Funded Debt' means the Funded Debt of the Company and its Subsidiaries, consolidated in accordance with GAAP. 'Funded Debt' means all Indebtedness that will mature, pursuant to a mandatory sinking fund or prepayment provision or otherwise, and all installments of Indebtedness that will fall due, more than one year from the date of determination. In calculating the maturity of any Indebtedness, there shall be included the term of any unexercised right of the debtor to renew or extend such Indebtedness existing at the time of determination. 'Indebtedness' means all items of indebtedness for borrowed money (other than unamortized debt discount and premium) which would be included in determining total liabilities as shown on the liability side of a balance sheet prepared in accordance with GAAP as of the date as of which Indebtedness is to be determined, and shall include indebtedness for borrowed money (other than unamortized debt discount and premium) with respect to which the Company or any Subsidiary customarily pays interest secured by any mortgage, pledge or other lien or encumbrance of or upon, or any security interest in, any properties or assets owned by the Company or any Subsidiary, whether or not the Indebtedness secured thereby shall have been assumed, and shall also include guarantees of Indebtedness of others; provided that in determining Indebtedness of the Company or any Subsidiary there shall be included the aggregate liquidation preference of all outstanding securities of any Subsidiary senior to its Common Stock that are not owned by the company or a Subsidiary; and provided, further, that Indebtedness of any Person shall not include the following: (a) any indebtedness evidence of which is held in treasury (but the subsequent resale of such indebtedness shall be deemed to constitute the creation thereof); or (b) any particular indebtedness if, upon or prior to the maturity thereof, there shall have been deposited with a depository (or set aside and segregated, if permitted by the instrument creating such indebtedness), in trust, money (or evidence of such indebtedness as permitted by the instrument creating such indebtedness) in the necessary amount to pay, redeem or satisfy such indebtedness; or (c) any indebtedness incurred to finance oil, natural gas, hydrocarbon, inert gas or other mineral exploration or development to the extent that the issuer thereof has outstanding advances to finance oil, natural gas, hydrocarbon, inert gas or other mineral exploration or development, but only to the extent such advances are not in default; or (d) any indebtedness incurred without recourse to the Company or any Subsidiary; or (e) any indebtedness incurred to finance advance payments for gas (pursuant to take-or-pay provisions or otherwise), but only to the extent that such advance payments are pursuant to gas purchase contracts entered into in the normal course of business; or (f) any amount (whether or not included in determining total liabilities as shown on the liability side of a balance sheet prepared in accordance with GAAP) representing capitalized rent under any lease; or (g) any indirect guarantees or other contingent obligations in respect of indebtedness of other Persons, including agreements, contingent or otherwise, with such other Persons or with third parties with respect to, or to permit or assure the payment of, obligations of such other Persons, including, without limitation, agreements to purchase or repurchase obligations of such other Persons, to advance or supply funds to, or to invest in, such other Persons, or to pay for property, products or services of such other Persons (whether or not conveyed, delivered or rendered); demand charge contracts, through-put, take-or-pay, keep-well, make-whole or maintenance of working capital or similar 17 agreements; or guarantees with respect to rental or similar periodic payments to be made by such other Persons. 'Sale and Leaseback Transaction' means an arrangement in which the Company or a Subsidiary sells any of its property which was placed into service more than 120 days prior to such sale to a Person and leases it back from that Person within 180 days of the sale. CONSOLIDATION, MERGER AND SALE OF ASSETS Nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of the Company with or into any other Person (whether or not affiliated with the Company), or successive consolidations or mergers in which the Company or its successor shall be a party, or shall prevent any transfer or lease of the property of the Company as an entirety or substantially as an entirety, to any other Person (whether or not affiliated with the Company); provided, however, that: (a) in case of such a transaction, the entity formed by such consolidation or into which the Company is merged or the Person which acquires or leases the properties and assets of the Company substantially as an entirety shall be a Corporation organized under the laws of the United States of America, any state thereof or the District of Columbia and shall expressly assume the due and punctual payment of the principal of, premium, if any, and interest on all the Notes and the performance of every other covenant of the Indenture; (b) immediately after giving effect to such transaction, no event which, after notice or lapse of time, would become an Event of Default, shall have occurred and be continuing; and (c) each of the Company and the successor Person shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such transaction complies with the above paragraphs (a) and (b) and that all conditions precedent relating to such transaction have been complied with. EVENTS OF DEFAULT The following are Events of Defaults under the Indenture with respect to any Notes: (a) failure to pay the principal of (or premium, if any, on) any Note when due; (b) failure to make any mandatory sinking fund payment on any Note when due or failure to pay any interest installment on any Note when due, in each case, continued for 30 days; (c) failure to perform any other covenant of the Company, continued for 90 days after written notice as provided in the Indenture; (d) the occurrence of an event of default in other indebtedness of the Company (including Securities other than the Notes) resulting in indebtedness in excess of $10,000,000 principal amount being due and payable prior to maturity and such acceleration shall not have been rescinded or annulled or such indebtedness shall not have been discharged after written notice as provided in the Indenture; and (e) certain events of bankruptcy, insolvency or reorganization. If an Event of Default with respect to Notes at the time outstanding shall occur and be continuing, then and in every such case (unless the principal of all the Notes shall have already become due and payable) the Trustee or the Holders of at least 33 1/3% in principal amount of the outstanding Notes may declare to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), the entire principal amount of all the outstanding Notes. At any time after such declaration of acceleration has been made, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the Holders of a majority in principal amount of the outstanding Notes, by written notice to the Company and the Trustee, may, in certain circumstances, rescind and annul such declaration. No Holder of any Notes shall have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder previously shall have given to the Trustee written notice of a default and unless also the Holders of at least 25% of the principal amount of outstanding Notes shall have made written request upon the Trustee, and have offered reasonable indemnity, to institute such proceeding as the Trustee may request, and the Trustee shall not have received direction inconsistent with such request in writing by the Holders of a majority in principal amount of outstanding Notes and shall have neglected or refused to institute such proceeding within 60 days. However, the rights of any Holder of any Notes to enforce the payment of principal, 18 premium, if any, and interest due on such Notes on or after the dates expressed in such Notes may not be impaired or affected. WAIVER, MODIFICATION AND AMENDMENT The Holders of a majority in principal amount of the outstanding Notes may waive certain past defaults, except a default in the payment of the principal of (or premium, if any) or interest on any Note or in respect of any covenant or provision in the Indenture which under the terms of the Indenture cannot be modified or consent of all Holders of outstanding Notes. The Holders of a majority in aggregate principal amount of outstanding Notes may waive the Company's compliance with certain restrictive provisions. Modification and amendment of the Indenture may be made by the Company and the Trustee with the consent of the Holders of majority in aggregate principal amount of the outstanding Notes provided that no such modification or amendment may, without the consent of the Holder of each Note affected thereby, (a) change the Stated Maturity of the principal of, or any installment of principal of, or interest on, any Note; (b) reduce the principal amount of, or the rate of interest, if any, on, or any premium payable upon the redemption of any Note; (c) change the Place of Payment or change the currency of payment of principal, premium, if any, or interest on any Note; (d) impair the right to institute suit for the enforcement of any payment on or with respect to any Note; (e) reduce the percentages of Holders of outstanding Notes specified in this or the preceding paragraph; or (f) effect certain other modifications or amendments described in the Indenture. DEFEASANCE AND COVENANT DEFEASANCE The Indenture provides that the Company may elect either (A) to defease and be discharged from any and all obligations with respect to the Notes ('defeasance') or (B) to be released from its obligations with respect to such Notes described above under 'Limitations on Liens' and 'Consolidation, Merger and Sale of Assets' ('covenant defeasance'), upon the irrevocable deposit with the Trustee, in trust for such purpose, of money, and/or U.S. Government Obligations (as defined in the Indenture) which through the payment of principal and interest in accordance with their terms will provide money, in an amount sufficient to pay the principal of, and premium, if any, and interest on such Notes, and any mandatory sinking fund or analogous payments thereon, on the scheduled due date therefor. Unless otherwise specified in the applicable Pricing Supplement, defeasance and covenant defeasance are each conditioned upon the Company's delivery to the Trustee of an Opinion of Counsel to the effect that the Holders of the Notes will have no federal income tax consequences as a result of such deposit. The applicable Pricing Supplement may further describe the provisions, if any, permitting such defeasance or covenant defeasance with respect to the related Notes (including any modifications to the provisions described above) and the effect of such defeasance or covenant defeasance under federal tax law. CONCERNING THE TRUSTEE First Security Bank, N.A. is the Trustee under the Indenture. The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions with the Company; however, if it acquires a conflicting interest it must eliminate such conflict or resign or otherwise comply with the Trust Indenture Act of 1939, as amended. The Indenture also provides that the Company will indemnify the Trustee against loss, liability or expense incurred without negligence or bad faith on the part of the Trustee arising out of or in connection with the trust under the Indenture. PLAN OF DISTRIBUTION The Notes are being offered on a continuing basis for sale by the Company through the Agents, who have agreed to use their reasonable efforts to solicit offers to purchase the Notes, and the Company may also sell the Notes to an Agent, as principal, for resale to investors and other purchasers at varying prices related to prevailing market prices at the time of resale to be determined by such Agent. The Company also reserves the right to sell Notes directly on its own behalf or through additional agents, acting either as agent or principal, on substantially identical terms as those applicable to the Agents. The Company reserves the right to withdraw, cancel or modify 19 the offer made hereby without notice and may reject orders, in whole or in part, whether placed directly with the Company or through one of the Agents. The Agents will have the right, in their discretion reasonably exercised, to reject in whole or in part any offer to purchase Notes received by them. The Company will pay the Agents, in the form of a discount or otherwise, a commission which, depending on the Stated Maturity of the Note, will range from .125% to .750% of the principal amount of any Note sold through the Agents. In addition, the Agents may offer the Notes they have purchased as principal to other dealers. The Agents may sell Notes to any dealer at a discount and, unless otherwise specified in the applicable Pricing Supplement, such discount allowed to any dealer will not be in excess of the discount to be received by such Agent from the Company. Unless otherwise indicated in the applicable Pricing Supplement, any Note sold to an Agent as principal will be purchased by such Agent at a price equal to 100% of the principal amount thereof less a percentage equal to the commission applicable to any agency sale of a Note of identical maturity, and may be resold by the Agent to investors and other purchasers from time to time in one or more transactions, including negotiated transactions, at varying prices determined at the time of sale or, if so agreed, at a fixed public offering price. After the initial public offering of Notes to be resold to investors and other purchasers, the public offering price (if resold on a fixed public offering price basis), concession and discount may be changed. Unless otherwise specified in the applicable Pricing Supplement, payment of the purchase price of the Notes will be required to be made in immediately available funds in New York City on the date of settlement. In connection with the offering of the Notes purchased by one or more Agents as principal on a fixed price basis, the Agents are permitted to engage in certain transactions that stabilize the price of the Notes. Such transactions consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of the Notes. If the Agents create a short position in the Notes in connection with the offering i.e., if they sell Notes in an aggregate principal amount exceeding that set forth in the applicable Pricing Supplement, the Agents may reduce that short position by purchasing Notes in the open market. In general, purchases of a security for the purpose of stabilization or to reduce a short position could cause the price of the security to be higher than it might be in the absence of such purchases. Neither the Company nor any of the Agents makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Notes. In addition, neither the Company nor any of the Agents makes any representation that the Agents will engage in such transactions or that such transactions, once commenced, will not be discontinued without notice. The Notes are a new issue of securities with no established trading market. Unless otherwise specified in the applicable Pricing Supplement, the Notes will not be listed on any securities exchange. Each of the Agents may from time to time purchase and sell Notes in the secondary market, but no Agent is obligated to do so, and there can be no assurance that there will be a secondary market for the Notes or liquidity in the secondary market if one develops. From time to time, each of the Agents may make a market in the Notes. Each Agent may be deemed to be an 'underwriter' within the meaning of the Securities Act. The Company has agreed to indemnify each of the Agents against, or to make contributions relating to, certain civil liabilities, including civil liabilities under the Securities Act. The Company has agreed to reimburse each of the Agents for certain expenses. Each of the Agents has provided and will provide from time to time certain financial advisory services to the Company and Questar. No Agent has the right to designate or nominate a member of the Board of Directors of the Company or Questar. LEGAL OPINIONS The validity of the Notes offered hereby will be passed upon for the Company by Gary G. Sackett, Esq., Vice President and General Counsel of Questar, 180 East First South Street, Salt Lake City, Utah 84145, and by Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022. Brown & Wood LLP, 555 California Street, San Francisco, California 94104, will act as counsel for the underwriters or 20 Agents. In rendering their opinions, Skadden, Arps, Slate, Meagher & Flom LLP and Brown & Wood LLP may rely upon the opinion of Mr. Sackett as to all matters governed by Utah law and as to the approval or consent of governmental authorities of other jurisdictions in which the Company operates. As of March 31, 1997, Mr. Sackett beneficially owned 31,888 shares of Common Stock of Questar (inclusive of currently exercisable options to purchase 8,500 shares of Common Stock of Questar). EXPERTS The financial statements of Mountain Fuel Supply Company appearing in the Company's Annual Report (Form 10-K) for the year ended December 31, 1996 have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 21 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT (INCLUDING THE APPLICABLE PRICING SUPPLEMENT) IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND SUCH PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY AGENT. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT (INCLUDING THE APPLICABLE PRICING SUPPLEMENT) NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF. THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT (INCLUDING THE APPLICABLE PRICING SUPPLEMENT) SHALL NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. --------------------------- TABLE OF CONTENTS PAGE ---- Available Information............................. 2 Incorporation of Certain Documents by Reference....................................... 2 The Company....................................... 2 Use of Proceeds................................... 3 Capitalization.................................... 4 Ratio of Earnings to Fixed Charges................ 4 Description of Medium-Term Notes.................. 4 Plan of Distribution.............................. 19 Legal Opinions.................................... 20 Experts........................................... 21 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- $75,000,000 MOUNTAIN FUEL SUPPLY COMPANY (as subsidiary of Questar Corporation) [MOUNTAIN FUEL LOGO] ------------------------ PROSPECTUS ------------------------ MERRILL LYNCH & CO. SMITH BARNEY INC. , 1997 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the fees and expenses payable by the Company in connection with the offering of the Notes registered hereunder. All such fees and expenses other than the Securities and Exchange Commission Registration Fee are estimated. Securities and Exchange Commission Registration Fee..................... $ 22,728 Printing Expenses....................................................... 25,000 Legal Fees and Expenses................................................. 110,000 Accounting Fees and Expenses............................................ 15,000 Blue Sky Fees and Expenses.............................................. 5,000 Trustee's Fees and Expenses............................................. 5,000 Rating Agency Fees...................................................... 35,000 Miscellaneous........................................................... 7,272 -------- Total.............................................................. $225,000 -------- --------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Reference is made to Section 16-10a-901 through 16-10a-909 of the Utah Revised Business Corporation Act, which provides for indemnification of directors and officers in certain circumstances. The Company's Bylaws provide that the Company may voluntarily indemnify any individual made a party to a proceeding because he is or was a director, officer, employee or agent of the Company against liability incurred in the proceeding, but only if the Company has authorized the payment in accordance with the applicable statutory provisions of the Utah Revised Business Corporation Act (Sections 16-10a-902 and 16-10a-904) and a determination has been made in accordance with the procedures set forth in such provision that such individual conducted himself in good faith, that he reasonably believed his conduct, in his official capacity with the Company, was in its best interests and that his conduct, in all other cases, was at least not opposed to the Company's best interests, and that he had no reasonable cause to believe his conduct was unlawful in the case of any criminal proceeding. The foregoing indemnification in connection with a proceeding by or in the right of the Company is limited to reasonable expenses incurred in connection with the proceeding, which expenses may be advanced by the Company. The Company's Bylaws provide that the Company may not voluntarily indemnify a director, officer, employee or agent of the Company in connection with a proceeding by or in the right of the Company in which such individual was adjudged liable to the Company or in connection with any other proceeding charging improper personal benefit to him, whether or not involving action in his official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him. The Company's Bylaws provide further that the Company shall indemnify a director, officer, employee or agent of the Company who was wholly successful, on the merits or otherwise, in defense of any proceeding to which he was a party because he is or was such a director, officer, employee or agent, against reasonable expenses incurred by him in connection with the proceeding. The Company's Bylaws further provide that no director of the Company shall be personally liable to the Company or its stockholders for monetary damages for any action taken or any failure to take any action, as a director, except liability for (a) the amount of a financial benefit received by a director to which he is not entitled; (b) an intentional infliction of harm on the Company or the shareholders; (c) for any action that would result in liability of the director under the applicable statutory provision concerning unlawful distributions; or (d) an intentional violation of criminal law. Questar Corporation, the Company's parent, maintains an insurance policy on behalf of the officers and directors of the Company pursuant to which (subject to the limits and limitations of such policy) the officers and directors are insured against certain expenses in connection with the defense of actions or proceedings, and II-1 certain liabilities which might be imposed as a result of such actions or proceedings, to which any of them is made a party by reason of being or having been a director or officer. Reference is made to Sections 8 and 9 of the Distribution Agreement, the term of which is filed as Exhibit 1.01 hereto for the description of the indemnification and contribution arrangements for this offering. ITEM 16. EXHIBITS. (a) Exhibits:
EXHIBIT NUMBER DESCRIPTION - ------ ----------------------------------------------------------------------------------------------------------- 1.01 -- Form of Distribution Agreement (including the forms of Terms Agreement and Administrative Procedures). 4.01 -- Indenture, dated as of May 1, 1992, between the Company and Citibank, N.A., as trustee, relating to the Company's Debt Securities (incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992). 4.02 -- Instrument of Appointment and Acceptance of Successor Trustee, dated as of May 21, 1997, between the Company, First Security Bank, N.A. and Citibank, N.A. relating to First Security Bank, N.A.'s appointment as successor trustee under the Indenture. 4.03 -- Form of Fixed Rate Note (incorporated herein by reference to Exhibit 4.02 to the Company's Registration Statement on Form S-3 (No. 33-46910) filed with the Commission on April 2, 1992). 4.04 -- Form of Floating Rate Note (incorporated herein by reference to Exhibit 4.03 to the Company's Registration Statement on Form S-3 (No. 33-46910) filed with the Commission on April 2, 1992). 5.01 -- Opinion of Gary G. Sackett, Esq. 5.02 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP. 12.01 -- Statement of Computation of Ratio of Earnings to Fixed Charges. 23.01 -- Consent of Ernst & Young LLP. 23.02 -- Consent of Gary G. Sackett, Esq. (included in Exhibit 5.01). 23.03 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.02). 24.01 -- Form of Appointment of Power of Attorney (contained in, and incorporated herein by reference to, Page II-4 of this Registration Statement). 25.01 -- Statement of Eligibility of Trustee on Form T-1.
ITEM 17. UNDERTAKINGS. A. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. B. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions of Utah law and the registrant's bylaws, a summary of which is set forth in Item 15 hereof, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of II-2 appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. C. The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. D. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-3 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF SALT LAKE, STATE OF UTAH, ON THE 28TH DAY OF MAY, 1997. MOUNTAIN FUEL SUPPLY COMPANY By: /s/ D. N. ROSE ------------------------------------- D. N. Rose President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of D. N. Rose and S. E. Parks his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:
SIGNATURE TITLE DATE --------- ----- ---- /s/ R. D. CASH Chairman of the Board; Director May 28, 1997 - ------------------------------------------ R. D. Cash /s/ D. N. ROSE President and Chief Executive Officer; Director May 28, 1997 - ------------------------------------------ (Principal Executive Officer) D. N. Rose /s/ S. E. PARKS Vice President, Treasurer and Chief Financial May 28, 1997 - ------------------------------------------ Officer (Principal Financial Officer) S. E. Parks /s/ G. H. ROBINSON Vice President and Controller May 28, 1997 - ------------------------------------------- (Principal Accounting Officer) G. H. Robinson
II-4
SIGNATURE TITLE DATE --------- ----- ---- /s/ W. WHITLEY HAWKINS Director May 28, 1997 - ------------------------------------------- W. Whitley Hawkins /s/ R. E. KADLEC Director May 28, 1997 - ------------------------------------------- R. E. Kadlec /s/ DIXIE L. LEAVITT Director May 28, 1997 - ------------------------------------------- Dixie L. Leavitt /s/ GARY G. MICHAEL Director May 28, 1997 - ------------------------------------------- Gary G. Michael /s/ GARY L. NORDLOH Director May 28, 1997 - ------------------------------------------- Gary L. Nordloh /s/ HARRIS H. SIMMONS Director May 28, 1997 - ------------------------------------------- Harris H. Simmons
II-5 EXHIBIT INDEX
LOCATION IN SEQUENTIALLY EXHIBIT NUMBERED NO. DESCRIPTION PAGES - ------ --------------------------------------------------------------------------------------------- ------------- 1.01 -- Form of Distribution Agreement (including the forms of Terms Agreement and Administrative Procedures). 4.02 -- Instrument of Appointment and Acceptance of Successor Trustee, dated as of May 21, 1997, between the Company, First Security Bank, N.A. and Citibank, N.A. relating to First Security Bank, N.A.'s appointment as successor trustee under the Indenture. 5.01 -- Opinion of Gary G. Sackett, Esq. 5.02 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP. 12.01 -- Statement of Computation Ratio of Earnings to Fixed Charges. 23.01 -- Consent of Ernst & Young LLP. 23.02 -- Consent of Gary G. Sackett, Esq. (included in Exhibit 5.01). 23.03 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.02). 24.01 -- Form of Appointment of Power of Attorney (contained in, and incorporated herein by reference to, Page II-4 of this Registration Statement). 25.01 -- Statement of Eligibility of Trustee on Form T-1.
EX-1.01 2 FORM OF DISTRIBUTION AGREEMENT 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 2 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 3 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 4 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. 5 (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 6 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 7 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. 8 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" 9 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 10 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. 11 (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 12 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. 24 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 EX-4.02 3 INSTRUMENT OF ASSIGNMENT AND ACCEPTANCE OF SUCCESSOR TRUSTEE INSTRUMENT OF APPOINTMENT AND ACCEPTANCE OF SUCCESSOR TRUSTEE INSTRUMENT OF APPOINTMENT AND ACCEPTANCE OF SUCCESSOR TRUSTEE, dated as of May 21, 1997, by and between Mountain Fuel Supply Company (the "Company"), a Utah corporation having its principal office at 180 East 100 South, Salt Lake City, Utah, and First Security Bank, National Association (the "Successor Trustee"), a national banking association duly organized and existing under the laws of the United States of America, having its principal Corporate Trust office at 79 South Main Street, Salt Lake City, Utah, and Citibank, N.A., a national banking association duly incorporated and existing under the laws of the United States of America, having its principal Corporate Trust office at 120 Wall Street, New York, NY 10043 (herein called "Citibank"). RECITALS: WHEREAS, The Company and Citibank, N.A. (the "Resigning Trustee") entered into an Indenture (the "Indenture") dated as of May 1, 1992; WHEREAS, Section 606(b) of the Indenture provides that the trustee may at any time resign by giving written notice of such resignation to the Company, effective upon the appointment of a successor trustee and acceptance of such appointment by a successor trustee; WHEREAS, Section 606(e) of the Indenture provides that, if the trustee shall resign, the Company shall promptly appoint a successor trustee; WHEREAS, Resigning Trustee gave notice of resignation as trustee under the Indenture on May 1, 1997; WHEREAS, the Company by a Board Resolution dated May 20, 1997 has duly appointed the Successor Trustee as trustee to succeed Resigning Trustee under the Indenture; WHEREAS, Section 607 of the Indenture provides that any successor trustee appointed in accordance with Section 606(e) thereof shall execute, acknowledge and deliver to the Company and the retiring trustee an instrument accepting such appointment under the Indenture, and thereupon the resignation of the retiring trustee shall become effective and such successor trustee, without any further act, deed, or conveyance, shall become vested with all rights, powers, duties and obligations of the retiring trustee; and WHEREAS, Successor Trustee is willing to accept such appointment as successor trustee under the Indenture; NOW, THEREFORE, the Company and Successor Trustee, for and in consideration of the premises and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby consent and agree as follows; ARTICLE I THE BENEFICIARY SECTION 101. The Company hereby accepts the resignation of Citibank as Trustee under the Indenture, such resignation to be effective May 21, 1997. From May 21, 1997 Citibank shall have no further responsibility for the exercise of the rights and powers or of the performance of the trusts and duties vested in the Trustee under the Indenture. SECTION 102. The Company hereby appoints Successor Trustee as Trustee under the Indenture to succeed to, and hereby vests Successor Trustee with, all the rights, powers, duties and obligations of Resigning Trustee under the Indenture with like effect as if Successor Trustee were originally named as Trustee under the Indenture. SECTION 103. In accordance with Section 606(f) of the Indenture, the Company shall cause notice to be given of the resignation of Citibank and the appointment of the Successor Trustee. SECTION 104. The Company hereby represents and warrants that: (a) It has performed or fulfilled each covenant, agreement and condition on its part to be performed or fulfilled under the Indenture, or the other documents to which it is a party, on or prior to the date hereof; (b) No default or Event of Default or, to the best of its knowledge, any event which with notice or the passage of time or both would constitute an Event of Default under the Indenture has occurred and is continuing as of the date hereof. ARTICLE II THE SUCCESSOR TRUSTEE SECTION 201. Successor Trustee hereby represents and warrants to Resigning Trustee and to the Company, that Successor Trustee is eligible under the provisions of Section 609 of the Indenture. SECTION 202. Successor Trustee hereby accepts its appointment as Successor Trustee under the Indenture and accepts the rights, powers, duties and obligations of Resigning Trustee under the Indenture, upon the terms and conditions set forth therein, with like effect as if originally named as Trustee under the Indenture. ARTICLE III MISCELLANEOUS SECTION 301. Except as otherwise expressly provided herein or unless the context otherwise requires, all terms used herein which are defined in the Indenture shall have the meaning assigned to them in the Indenture. SECTION 302. This Agreement shall be governed by and construed in accordance with the laws of the jurisdiction whose laws govern the Indenture. SECTION 303. This Agreement may be executed in any number of counterparts each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. 2 IN WITNESS HEREOF, the parties have caused this Instrument of Appointment and Acceptance to be duly executed and acknowledged as of the day and year first above written. Mountain Fuel Supply Company By: /s/ S.E. Parks --------------------------- Its: Vice President, Treasurer and CFO First Security Bank, National Association, as Successor Trustee By: /s/ Brett R. King --------------------------- Its: Assistant Vice President Citibank, N.A., as Resigning Trustee By: /s/ Wafaa Orfy ----------------------------- Its: Senior Trust Officer EX-5.01 4 OPINION OF GARY G. SACKETT [QUESTAR CORPORATION Letterhead] May 28, 1997 Mountain Fuel Supply Company 180 East First South Street P.O. Box 45360 Salt Lake City, Utah 84145-0360 Gentlemen: Re: Mountain Fuel Supply Company, Registration Statement on Form S-3 Relating to $75,000,000 Aggregate Principal Amount of Medium-Term Notes I am acting as counsel for Mountain Fuel Supply Company, a Utah corporation (the "Company"), in connection with preparation of a Registration Statement on Form S-3 to be filed by the Company with the Securities and Exchange Commission (the "Commission") on May 28, 1997, (the "Registration Statement"). The Registration Statement relates to the issuance and sale from time to time, pursuant to Rule 415 of the General Rules and Regulations promulgated under the Securities Act of 1933 (the "1933 Act"), of up to $75,000,000 aggregate principal amount of the Company's Medium-Term Notes (the "Notes") to be issued pursuant to an Indenture dated as of May 1, 1992, (the "Indenture") by and between the Company First Security Bank, N.A., as successor trustee to Citibank, N.A. (the "Trustee"). The Indenture is filed as Exhibit 4 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1992, and is incorporated by reference as Exhibit 4.01 to the Registration Statement. The forms of the Fixed Rate Note and Floating Rate Note (collectively, the "Notes") issuable under the Indenture are filed as Exhibits 4.03 and 4.04, respectively, to the Registration Statement on Form S-3 (No. 33- 46910) filed with the Commission on April 2, 1992, and are incorporated by reference as Exhibits 4.03 and 4.04, respectively, to the Registration Statement. This opinion is delivered in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the 1933 Act. In connection with this opinion, I have examined and am familiar with origi- Mountain Fuel Supply Company -2- May 28, 1997 nals or copies, certified or otherwise identified to my satisfaction, of such documents, agreements, certificates and corporate or other records as I have deemed necessary or appropriate as a basis for this opinion, including (i) the Registration Statement (together with the form of preliminary prospectus forming a part of it), in the form to be filed by the Company with the Commission on May 28, 1997, (ii) the Indenture; (iii) the form of the Notes issuable under the Indenture; (iv) the Form T-1 of the Trustee to be filed with the Commission pursuant to the Trust Indenture Act of 1939, as amended (the "1939 Act"); (v) the Restated Articles of Incorporation and Bylaws of the Company, each as amended to the date of my opinion; (vi) resolutions of the Board of Directors of the Company relating to the filing of the Registration Statement, the proposed issuance of the Notes, the designation of a committee of the Board of Directors (the "Committee") authorized to take certain actions in connection with the issuance of Notes, and (vii) the form of Distribution Agreement to be entered into by and among the Company, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Smith Barney Inc. In my examination, I have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to me as originals, the conformity to the original documents of all documents submitted to me as certified or photostatic copies, and the authenticity of the originals of such latter documents. As to any facts material to my opinion that were not independently established or verified, I have relied on statements and representations of officers and other representatives of the Company and others. I am admitted to the Bar of the State of Utah, and I express no opinion as to the laws of any jurisdiction except Utah and the United States of America. To the extent that my opinion relates to matters under the laws of the State of New York, I have relied solely on the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel for the Company, which is being filed as Exhibit 5.02 to the Registration Statement. Based on and subject to the foregoing, I am of the opinion that when (i) the Registration Statement has become effective under the 1933 Act, (ii) the Indenture, in the form in which it is incorporated by reference as Exhibit 4.01 to the Registration Statement, has been qualified under the 1939 Act, (iii) the definitive terms of the Notes and of their issue and sale have been duly established in conformity with the Indenture so as not to violate any applicable law or agreement or instrument then binding on the Company, (iv) the Notes have been duly executed and authenticated in accordance with such Indenture, and (iiv) the Notes have been issued and sold as contemplated in the Registration Statement and the prospectus contained in it and any supplement to it (the "Prospectus"), the Notes will constitute valid and legally binding obligations of the Company, entitled to the benefits provided by the Indenture and enforceable against the Company in accordance with their terms, Mountain Fuel Supply Company -3- May 28, 1997 except to the extent that enforcement may be limited by (a) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). I further consent to the reference made to me under the heading "Legal Opinions" in the Prospectus and the filing of this opinion as Exhibit 5.01 to the Registration Statement. My consent should not be viewed as an admission that I am in the category of persons whose consent is required under Section 7 of the 1933 Act. Very truly yours, /s/ Gary G. Sackett Gary G. Sackett Attorney for Mountain Fuel Supply Company EX-5.02 5 OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP Skadden, Arps, Slate, Meagher & Flom LLP 919 Third Avenue New York, New York 10022 May 28, 1997 Mountain Fuel Supply Company 180 East First South Street Salt Lake City, Utah 84145-0360 Re: Mountain Fuel Supply Company, Registration Statement on Form S-3 Relating to $75,000,000 Aggregate Principal Amount of Medium-Term Notes Ladies and Gentlemen: We have acted as special counsel to Mountain Fuel Supply Company, a Utah corporation (the "Company"), in connection with the preparation of a Registration Statement on Form S-3 to be filed by the Company with the Securities and Exchange Commission (the "Commission") on the date hereof (the "Registration Statement"). The Registration Statement relates to the issuance and sale from time to time, pursuant to Rule 415 of the General Rules and Regulations promulgated under the Securities Act of 1933, as amended (the "1933 Act"), of up to $75,000,000 aggregate principal amount of the Company's Medium-Term Notes (the "Notes") to be issued pursuant to an indenture (the "Indenture"), dated as of May 1, 1992, by and between the Company and First Security Bank, N.A., as successor trustee to Citibank, N.A. (the "Trustee"). The Indenture is incorporated by reference as Exhibit 4.01 to the Registration Statement and the form of the Fixed Rate Note and Floating Rate Note (collectively, the "Notes") issuable thereunder are incorporated by reference as Exhibits 4.03 and 4.04, respectively, to the Registration Statement, respectively. This opinion is delivered in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the 1933 Act. In connection with this opinion, we have examined and are familiar with originals or copies, certified or otherwise identified to our satisfaction, of such documents, agreements, certificates and corporate or other records as we have deemed necessary or appropriate Mountain Fuel Supply Company May 28, 1997 Page 2 as a basis for the opinion set forth herein, including (i) the Registration Statement (together with the form of preliminary prospectus forming a part thereof), in the form to be filed by the Company with the Commission on the date hereof, (ii) the Indenture, (iii) the forms of the Notes issuable under the Indenture, (iv) the Form T-1 of the Trustee to be filed with the Commission pursuant to the Trust Indenture Act of 1939, as amended (the "1939 Act"), and (v) the form of Distribution Agreement by and among the Company, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Smith Barney Inc. being filed as an exhibit to the Registration Statement. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies and the authenticity of the originals of such copies. In addition, we have assumed that the Notes will be executed in substantially the form reviewed by us. We have also assumed that the terms of the Notes will have been established so as not to, and the execution and delivery by the Company of the Indenture and the Notes and the performance of its obligations thereunder do not and will not, violate, conflict with or constitute a default under (i) any agreement or instrument to which the Company or its properties is subject, (ii) any law, rule, or regulation to which the Company is subject, (iii) any judicial or regulatory order or decree of any governmental authority or (iv) any consent, approval, license, authorization or validation of, or filing, recording or registration with any governmental authority. As to any facts material to the opinion expressed herein which were not independently established or verified, we have relied upon statements and representations of officers and other representatives of the Company and others. Members of our firm are admitted to the bar in the State of New York, and we do not express any opinion as to the laws of any other jurisdiction. Based upon and subject to the qualifications, exceptions and assumptions set forth herein, we are of the opinion that, assuming that the Indenture and the issuance and sale of the Notes have been duly authorized by requisite action on the part of the Company, when (i) Mountain Fuel Supply Company May 28, 1997 Page 3 the Registration Statement has become effective under the 1933 Act, (ii) the Indenture, in the form in which it is incorporated by reference as Exhibit 4.01 to the Registration Statement, has been qualified under the 1939 Act, (iii) the definitive terms of the Notes and of their issue and sale have been duly established in conformity with the Indenture, (iv) the Notes have been duly executed and authenticated in accordance with the Indenture and (v) the Notes have been issued and sold as contemplated in the Registration Statement and the prospectus contained therein and any supplement thereof (the "Prospectus"), the Notes will constitute valid and binding obligations of the Company, entitled to the benefits provided by the Indenture and 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 hereafter in effect relating to creditors' rights generally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). We hereby consent to the reference to our firm under the heading "Legal Opinions" in the Prospectus and the filing of this opinion as Exhibit 5.02 to the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the 1933 Act. Very truly yours, /s/ Skadden, Arps, Slate, Meagher & Flom LLP EX-12.01 6 RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.01 MOUNTAIN FUEL SUPPLY COMPANY RATIO OF EARNINGS TO FIXED CHARGES
12 MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, --------------------------------------------------- --------- 1992 1993 1994 1995 1996 1997 ------- ------- ------- ------- ------- --------- (DOLLARS IN THOUSANDS) Earnings Income before income taxes................. $30,846 $32,778 $31,255 $31,374 $42,434 $48,603 Plus debt expense.......................... 15,254 15,423 15,886 16,580 16,637 16,707 Plus allowance for borrowed funds used during construction..................... 246 228 321 390 277 265 Plus interest portion of rental expense................................. 83 126 204 430 187 170 ------- ------- ------- ------- ------- --------- $46,429 $48,555 $47,666 $48,774 $59,535 $65,745 ------- ------- ------- ------- ------- --------- ------- ------- ------- ------- ------- --------- Fixed Charges Debt expense............................... $15,254 $15,423 $15,886 $16,580 $16,637 $16,707 Plus allowance for borrowed funds used during construction..................... 246 228 321 390 277 265 Plus interest portion of rental expense................................. 83 126 204 430 187 170 ------- ------- ------- ------- ------- --------- $15,583 $15,777 $16,411 $17,400 $17,101 $17,142 ------- ------- ------- ------- ------- --------- ------- ------- ------- ------- ------- --------- Ratio of Earnings to Fixed Charges(1)........ 2.98 3.08 2.90 2.80 3.48 3.84
- ------------------ (1) For the purposes of this presentation, earnings represent income before income taxes and fixed charges. Fixed charges consist of total interest charges, amortization of debt issuance costs and losses from repurchasing debt, and the interest portion of rental costs. EX-23.01 7 CONSENT OF ERNST & YOUNG LLP CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-3) and related Prospectus of Mountain Fuel Supply Company for the registration of $75,000,000 medium-term notes and to the incorporation by reference therein of our report dated February 7, 1997, with respect to the financial statements of Mountain Fuel Supply Company included in its Annual Report (Form 10-K) for the year ended December 31, 1996, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP May 27, 1997 Salt Lake City, Utah EX-25.01 8 FORM T-1: STATEMENT OF ELIGIBILITY FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 ------------------ STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) FIRST SECURITY BANK, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) NOT APPLICABLE 87-0131890 (Jurisdiction of Incorporation (I.R.S. Employer if not a U.S. national bank) identification No.) 79 SOUTH MAIN STREET SALT LAKE CITY, UTAH 84111 (Address of principal executive offices) (Zip Code) NOT APPLICABLE (Name, address and telephone number of agent for service) MOUNTAIN FUEL SUPPLY COMPANY (Exact name of obligor as specified in its charter) UTAH 87-0155877 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 180 East First South Street Salt Lake City, Utah 84111 (Address or principal executive offices) (Zip Code) Medium Term Notes (Title of the Indenture securities) Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining of supervising authority to which it is subject. Comptroller of the Currency, Washington, D.C. 20230; Federal Reserve Bank of San Francisco, San Francisco, CA 94120; Federal Deposit Insurance Corporation, Washington, D.C. 20429. (b) Whether it is authorized to exercise corporate trust powers. The Trustee is authorized to exercise corporate trust powers. Item 2. Affiliations With The Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. Neither the obligor nor any underwriter for the obligor is an affiliate of the Trustee. Item 16. List of Exhibits. List below all exhibits filed as part of this statement of eligibility and qualification. Exhibit 1: copy of the articles of association as now in effect Exhibit 2: certificate of authority to commence business including a certificate of the Comptroller of the Currency evidencing the change of the Trustee's name Exhibit 3: copy of the authorization of the trustee to exercise corporate trust powers Exhibit 4: copy of the bylaws of the trustee Exhibit 5: Not applicable Exhibit 6: Not applicable Exhibit 7: A copy of the latest report published pursuant to law or its supervising or examining authority Exhibit 8: Not applicable Exhibit 9: Not applicable Signature Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, First Security Bank, National Association, a national banking association organized and existing under the laws of the United States, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned thereunder duly authorized, all in the City of Salt Lake City, and State of Utah, on the 9th day of May, 1997. FIRST SECURITY BANK, NATIONAL ASSOCIATION, Trustee By: /s/ Brett R. King --------------------------- Brett R. King Assistant Vice President EXHIBIT 1 ARTICLES OF ASSOCIATION OF FIRST SECURITY BANK NATIONAL ASSOCIATION (As Amended) FIRST. The title of this Association, which shall carry on the business of banking under the laws of the United States, shall be "First Security Bank, National Association." SECOND. The place where the main banking house or office of this Association shall be located shall be Ogden, County of Weber, State of Utah. Its general business and its operations of discount and deposit shall also be carried on in said city, and the branch or branches established or maintained by it in accordance with the provisions of Section 36 of Title 12, United States Code. The Board of Directors shall the power to change the location of the main office of this Association (i) to any other authorized branch location within the limits of Ogden, Utah, without the approval of the shareholders of this Association and upon notice to the Comptroller of the Currency or, (ii) to any other place within Ogden, Utah, or within thirty (30) miles of Ogden, Utah, with the approval of the shareholders and the Comptroller of the Currency. The Board of Directors shall have the power to change the location of any branch or branches of this Association to any other location, without the approval of the shareholders of this Association but subject to the approval of the Comptroller of the Currency. THIRD. The Board of Directors of the consolidated association shall consist of not less than five (5) nor more than twenty-five (25) of its shareholders. FOURTH. There shall be an annual meeting of the shareholders the purpose of which shall be the election of Directors and the transaction of whatever other business may be brought before said meeting. It shall be held at the main office of the Bank or other convenient place as the Board of Directors may designate, on the third Monday of March of each year, but if no election is held on that day, it may be held on any subsequent day according to such lawful rules as may be prescribed by the Board of Directors. Nominations for election to the Board of Directors may be made by the Board of Directors or by any stockholder of any outstanding class of capital stock of the Bank entitled to vote for election of directors. Nominations, other than those made by or on behalf of the existing management of the Bank, shall be made in writing and shall be delivered or mailed to the President of the Bank and to the Comptroller of the Currency, Washington, D.C., not less than 14 days nor more than 50 days prior to any meeting of stockholders called for the election of directors, provided, however, that if less than 21 days notice of the meeting is given to shareholders, such nomination shall be mailed or delivered to the President of the Bank and to the Comptroller of the Currency not later than the close of business on the seventh day following the day on which the notice of meeting was mailed. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the total number of shares of capital stock of the Bank that will be voted for each proposed nominee; (d) the name and residence address of the notifying shareholder; and (e) the number of shares of capital stock of the Bank owned by the notifying shareholder. Nominations not made in accordance herewith may, in his discretion, be disregarded by the Chairman of the meeting, and upon his instructions, the voting inspectors may disregard all votes cast for each such nominee. FIFTH. The authorized amount of capital stock of this Association shall be One Hundred Million Dollars ($100,000,000.00), divided into 4,000,000 shares of common stock of the par value of Twenty-five Dollars ($25.00) each; provided, however, that said capital stock may be increased or decreased from time to time, in accordance with the provision of the laws of the United States. The shareholders of this Association shall not have any pre-emptive rights to acquire unissued shares of this Association. SIXTH. (1) The Board of Directors shall appoint one of its members President of this Association. It may also appoint a Chairman of the Board, and one or more Vice Chairman. The Board of Directors shall have the power to appoint one or more Vice Presidents, at least one of whom shall also be a member of the Board of Directors, and who shall be authorized, in the absence of the President, to perform all acts and duties pertaining to the office of the President; to appoint a Cashier and such other officers and employees as may be required to transact the business of this Association; to fix the salaries to be paid to such officers or employees and appoint others to take their place. (2) The Board of Directors shall have the power to define the duties of officers and employees of this Association and to require adequate bonds from them for the faithful performance of their duties; to make all By-Laws that may be lawful for the general regulation of the business of this Association and the management of its affairs, and generally to do and perform all acts that may be lawful for a Board of Directors to do and perform. (3) Each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, administrative or investigative (other than an action by or in the right of the Association) by reason of the fact that he is or was a director, officer, employee or agent of the Association or is or was serving at the request of the Association as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust, estate or other enterprise or was acting in furtherance of the Association's business shall be indemnified against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Association; provided, however, no indemnification shall be given to a person adjudged guilty of, or liable for, willful misconduct, gross neglect of duty, or criminal acts or where there is a final order assessing civil money penalties or requiring affirmative action by such person in the form of payments to the Association. The termination of any action, suit or proceeding by judgment, order, settlement, or its equivalent, shall not of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Association. (4) Each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Association (such action or suit being known as a "derivative proceeding") to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Association or is or was serving at the request of the Association as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust, estate or other enterprise shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Association; provided, however, that no indemnification shall be given where there is a final order assessing civil money penalties or requiring affirmative action by such person in the form of payments to the Association; and provided further that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Association, unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. (5) To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in (3) or (4) of this Article or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection therewith. (6) Any indemnification under (3) or (4) of this Article (unless ordered by a court) shall be made by the Association only as authorized in the specific case upon a reasonable determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in (3) or (4) of this Article. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in written opinion, or (c) by the stockholders. (7) Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Association in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided in (6) of this Article (i) if the Board of Directors determines, in writing, that (1) the director, officer, employee or agent has a substantial likelihood or prevailing on the merits; (2) in the event the director, officer, employee or agent does not prevail, he or she will have the financial capability or reimburse the Association; and (3) payment of expenses by the Association will not adversely affect its safety and soundness; and (ii) upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Association as authorized in this Article. (8) The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any By-Law, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors, successors in interest, and administrators of such a person. SEVENTH. This Association shall have succession from the date of its organization certificate until such time as it be dissolved by the act of its shareholders in accordance with the provisions of the banking laws of the United States, or until its franchise becomes forfeited by reason of violation of law, or until terminated by either a general or a special act of Congress, or until its affairs be placed in the hands of a receiver and finally wound up by him. EIGHTH. The Board of Directors of this Association, or any three or more shareholders owning, in the aggregate, not less than ten per centum of the stock of this Association, may call a special meeting of shareholders at any time: Provided, however, that unless otherwise provided by law, not less than ten days prior to the date fixed for any such meeting, a notice of the time, place and purpose of the meeting shall be given by first-class mail, postage prepaid, to all shareholders of record of this Association. These Articles of Association may be amended at any regular or special meeting of the Shareholders by the affirmative vote of the shareholders owning at least a majority of the stock of this Association, subject to the provisions of the banking laws of the United States. The notice of any shareholders' meeting, at which an amendment to the Articles of Association of this Association is to be considered shall be given as hereinabove set forth. EXHIBIT 2 CERTIFICATE TREASURY DEPARTMENT ) Office of ) ss: Comptroller of the Currency ) I, Thomas G. DeShazo, Deputy Comptroller of the Currency, do hereby certify that: Pursuant to Revised Statutes 324, et seq., as amended, 12 U.S.C. 1, et seq., the Comptroller of the Currency charters and exercises regulatory and supervisory authority over all national banking associations; On December 9, 1881, The First National Bank of Ogden, Ogden, Utah was chartered as a National Banking Association under the laws of the United States and under Charter No. 2597; The document hereto attached is a true and complete copy of the Comptroller Certificate issued to The First National Bank of Ogden, Ogden, Utah, the original of which certificate was issued by this Office on December 9, 1881; On October 2, 1922, in connection with a consolidation of The First Bank of Ogden, Ogden, Utah, and The Utah National Bank of Ogden, Ogden, Utah, the title was charged to "The First & Utah National Bank of Ogden"; on January 18, 1923, The First & Utah National Bank of Ogden changed its title to "First Utah National Bank of Ogden"; on January 19, 1926, the title was changed to "First National Bank of Ogden"; and on February 24, 1934, the title was changed to "First Security Bank of Utah, National Association"; and First Security Bank of Utah, National Association, Ogden, Utah, continues to hold a valid certificate to do business as a National Banking Association. IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused the seal of Office of the Comptroller of the Currency to be affixed to these presents at the Treasury Department, in the City of Washington and District of Columbia, this fourth day of April, A.D. 1972. Thomas G. DeShazo ---------------------------------- Deputy Comptroller of the Currency TREASURY DEPARTMENT Comptroller of the Currency, Washington, December 9th, 1881 WHEREAS, by satisfactory evidence presented to the undersigned it has been made to appear that "The First National Bank of Ogden" in Ogden City in the County of Weber, and Territory of Utah has complied with all the provisions of the Revised Statutes of the United States, required to be complied with before an association shall be authorized to commence the business of Banking. Now, therefore, I, John Jay Knox, Comptroller of the Currency, do hereby certify that "The First National Bank of Ogden" in Ogden City in the County of Weber, and Territory of Utah is authorized to commence the business of Banking, as provided in Section Fifty-one hundred and sixty-nine of the Revised Statutes of the United States. In testimony whereof, witness my hand and seal of office this 9th day of December, 1881. John Jay Knox ---------------------------------------- Comptroller of the Currency EXHIBIT 3 FEDERAL RESERVE BOARD WASHINGTON, D.C. I, S.R. Carpenter, Assistant Secretary of the Federal Reserve Board, do hereby certify that it appears from the records of the Federal Reserve Board that: (1) Pursuant to authority vested in the Federal Reserve Board by an Act of Congress approved December 23, 1913, known as the Federal Reserve Act, as amended, the Federal Reserve Board has heretofore granted to the First National Bank of Ogden, Ogden, Utah, the right to act when not in contravention of State or local law, as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary capacity in which State banks, trust companies or other corporations which come into competition with national banks are permitted to act under the laws of the State of Utah; (2) On February 24, 1934, the First National Bank of Ogden, Ogden, Utah, changed its title to First Security Bank of Utah, National Association, under the provisions of an Act of Congress approved May 1, 1886, whereby all of the rights, liabilities and powers of such national bank under its old name devolved upon and inured to the bank under its new name; and (3) Pursuant to the permission heretofore granted by the Federal Reserve Board to the First National Bank of Ogden, Ogden, Utah, as aforesaid, and by virtue of the change in the title of such bank, the First Security Bank of Utah, National Association has authority to act, when not in contravention of State or local law, as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates of lunatics, or in any other fiduciary capacity in which State banks, trust companies or other corporations which come into competition with national banks are permitted to act under the laws of the State of Utah, subject to regulations prescribed by the Federal Reserve Board. IN WITNESS WHEREOF, I have hereunto subscribed my name and caused the seal of the Federal Reserve Board to be affixed at the City of Washington, in the District of Columbia, on the 1st day of March, 1934. S.R. Carpenter ------------------------------------------------ Assistant Secretary, Federal Reserve Board. FEDERAL RESERVE BOARD WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD March 1, 1934. First Security Bank of Utah, National Association, Ogden, Utah. Dear Sirs: Reference is made to the change in the name of the First National Bank of Ogden, Ogden, Utah, pursuant to the provisions of the Act of May 1, 1886, to First Security Bank of Utah, National Association, and there is inclosed a certificate issued by the Federal Reserve Board showing the trust powers heretofore granted to the bank under its former name and that it is authorized to exercise such powers under its new name. Very truly yours, S.R. Carpenter S.R. Carpenter, Assistant Secretary. Enclosure [LOGO] - -------------------------------------------------------------------------------- Comptroller of the Currency Administrator of National Banks - -------------------------------------------------------------------------------- Licensing Unit (Applications) 50 Fremont Street, Suite 3900 San Francisco, CA 94105 (415) 545-5900, FAX (415) 545-5925 June 20, 1996 Board of Directors First Security Bank of Utah, N.A. c/o First Security Corporation Attn: Brad D. Hardy, EVP Post Office Box 30006 Salt Lake City, Utah 84130 Re: Merger - First Security Bank of Idaho, N.A., Boise, Idaho into First Security Bank of Utah, N.A., Ogden, Utah, under the title of First Security Bank, N.A., Odgen, Utah. Control No: 96-WE-02-010 Dear Members of the Board: This letter is the official certification of the Comptroller of the Currency to merge First Security Bank of Idaho, National Association, Boise, Idaho into First Security Bank of Utah, National Association, Ogden, Utah, effective as of June 21, 1996. The resulting bank title is First Security Bank, National Association and charter number is 2597. This is also the official authorization given to First Security Bank, National Association to operate the branches of the target institution and to operate the main office of the target institution as a branch. Branches of a national bank target are not listed since they are automatically carried over to the resulting bank and retain their current OCC branch numbers. Please be advised that the Charter Certificate for the merged bank, First Security Bank of Idaho, National Association, must be returned to the Western District Office for cancellation. Very truly yours, Robert G. Tornborg Robert G. Tornborg Acting Director of Bank Supervision - Compliance and Analysis EXHIBIT 4 BY-LAWS OF THE FIRST SECURITY BANK, NATIONAL ASSOCIATION Organized under the National Banking laws of the United States. MEETINGS SECTION 1. Unless otherwise provided by the articles of association a notice of each shareholder's meeting, setting forth clearly the time, place and purpose of the meeting, shall be given, by mail, to each shareholder of record of this bank at lease 10 days prior to the date of such meeting. Any failure to mail such notice or any irregularity therein, shall not affect the validity of such meeting or of any of the proceedings thereat. SECTION 2. A record shall be made of the shareholders represented in person and by proxy, after which the shareholders shall proceed to the transaction of any business that may properly come before the meeting. A record of the shareholder's meeting, giving the names of the shareholders present and the number of shares of stock held by each, the names of the shareholders represented by proxy and the number of shares held by each, and the names of the proxies, shall be entered in the records of the meeting in the minute book of the bank. This record shall show the names of the shareholders and the number of shares voted for each resolution or voted for each candidate for director. Proxies shall be secured for the annual meeting alone, shall be dated, and shall be filed with the records of the meeting. No officer, director, employee, or attorney for the bank may act as proxy. The chairman or Secretary of the meeting shall notify the directors-elect of their election and of the time at which they are required to meet at the banking house for the purpose of organizing the new board. At the appointed time, which as closely as possible shall follow their election, the directors-elect shall convene and organize. The president or cashier shall then forward to the office of the Comptroller of the Currency a letter stating that a meeting of the shareholders was held in accordance with these by-laws, stating the number of shares represented in person and the number of shares represented by proxy, together with a list of the directors elected and the report of the appointment and signatures of officers. OFFICERS SECTION 3. Each officer and employee of this bank shall be responsible for all such moneys, funds, valuables, and property of every kind as may be entrusted to his care or otherwise come into his possession, and shall faithfully and honestly discharge his duties and apply and account for all such moneys, funds, valuables and other property that may come into his hands as such officer or employee and pay over and deliver the same to the order of the Board of Directors or to such person or persons as may be authorized to demand and receive same. SECTION 4. If the Board of Directors shall not require separate bonds, it shall require a blanket bond in an amount deemed by it to be sufficient. SECTION 5. The following is an impression of the seal adopted by the Board of Directors of this bank: (Here in the original resolution was imprinted the Association's seal). SECTION 6. The various branches of this bank shall be open for business during such hours as shall be customary in the vicinity, or as shall be fixed, as to any branch, by the clearing house association of which such branch shall be a member. SECTION 7. The regular meeting of the board of directors shall be held on the first Wednesday after the first Tuesday of each month. When any regular meeting of the board of directors falls upon a holiday, the meeting shall be held on such other day as the board may previously designate. Special meetings may be called by the president, any vice-president, the secretary or the cashier, or at the request of three or more directors. MINUTE BOOK SECTION 8. The organization papers of this bank, the returns of the elections, the proceedings of all regular and special meetings of the directors and of the shareholders, the by-laws and any amendments thereto, and reports of the committees of directors shall be recorded in the minute book; and the minutes of each meeting shall be signed by the chairman and attest by the secretary of the meeting. TRANSFERS OF STOCK SECTION 9. The stock of this bank shall be assignable and transferable only on the books of this bank, subject to the restrictions and provisions of the national banking laws; and a transfer book shall be provided in which all assignments and transfers of stock shall be made. SECTION 10. Certificates of stock, signed by the president or vice-president, and the secretary or the cashier or any assistant cashier, may be issued to shareholders, and when stock is transferred the certificates thereof shall be returned to the association, cancelled, preserved, and new certificates issued. Certificates of stock shall state upon the face thereof that the stock is transferable only upon the books of the association, and shall meet the requirements of section 5139, United States Revised Statutes, as amended. EXPENSES SECTION 11. All the current expenses of the bank shall be paid by the cashier, except that the current expenses of each branch shall be paid by the manager thereof; and such officer shall, every six months, or more often if required, make to the board a report thereof. EXAMINATIONS SECTION 12. There shall be appointed by the board of directors a committee of three members, exclusive of the active officers of the bank, whose duty it shall be to examine, at least once in each period of eighteen months, the affairs of each branch as well as the head office of the association, count its cash, and compare its assets and liabilities with the accounts of the general ledgers, ascertain whether the accounts are correctly kept and that the condition of the bank corresponds therewith, and whether the bank is in a sound and solvent condition, and to recommend to the board such changes in the manner of doing business, etc., as shall seem to be desirable, the result of which examination shall be reported in writing to the board at the next regular meeting thereafter, provided that the appointment of such committee and the examinations by it may be dispensed with if the board shall cause such examination to be made and reported to the board by accountants approved by it. CHANGES IN BY-LAWS SECTION 13. These by-laws may be changed or amended by the vote of a majority of the directors at any regular or special meeting of the board, provided, however, that the directors shall have been given 10 days notice of the intention to change or offer an amended thereto. REPEAL SECTION 14. All by-laws heretofore adopted are repealed. -----END PRIVACY-ENHANCED MESSAGE-----