<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT FILED PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) - November 22, 1995
UNITED CITIES GAS COMPANY
(Exact name of registrant as specified in charter)
<TABLE>
<S> <C> <C>
Illinois and Virginia D-1284-3 38-1801540
(State or other jurisdiction (Commission File Number) (IRS Employer Identification Number)
of incorporation)
5300 Maryland Way, Brentwood, TN 37027
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (615) 373-0104
<PAGE> 2
5.
Events
On November 22, 1995, United Cities Gas Company (the "Company") entered into a
Distribution Agreement with Smith Barney Inc., PaineWebber Incorporated and A.G.
Edwards & Sons, Inc., as agents, pursuant to which the Company agreed to issue
and sell its Medium-Term Notes, Series A, as contemplated by the Company's
registration statement on Form S-3; SEC File No. 33-56983.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(1) Distribution Agreement, dated November 22, 1995, by and among United
Cities Gas Company, Smith Barney, Inc., PaineWebber Incorporated and
A.G. Edwards & Sons, Inc., as agents.
<PAGE> 3
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned and thereunto duly authorized.
UNITED CITIES GAS COMPANY
By: /s/ O. Calvin Welck
-----------------------
O. Calvin Welck
Director Finance
On behalf of the registrant
Date: November 22, 1995
<PAGE> 1
UNITED CITIES GAS COMPANY
MEDIUM-TERM NOTES DUE FROM
NINE MONTHS TO THIRTY YEARS FROM DATE OF ISSUE
DISTRIBUTION AGREEMENT
November 22, 1995
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, New York 10019
A.G. EDWARDS & SONS, INC.
One North Jefferson
St. Louis, Missouri 63103
Dear Sirs:
United Cities Gas Company, a corporation organized and existing under the
laws of the State of Illinois and the Commonwealth of Virginia (the "Company"),
confirms its agreement with Smith Barney Inc., PaineWebber Incorporated and
A.G. Edwards & Sons, Inc. (each referred to as an "Agent" and collectively
referred to as the "Agents") with respect to the issue and sale by the Company
of its Medium-Term Notes, Series A described herein (the "Notes"). The Notes
are to be issued pursuant to an indenture (the "Indenture") dated as of
November 15, 1995 between the Company and Bank of America Illinois, as trustee
(the "Trustee"). As of the date hereof, the Company has authorized the
issuance and sale of up to $30,000,000 aggregate principal amount of Notes
through the Agents pursuant to the terms of this Agreement and, as used herein,
"Notes" shall refer to such Medium-Term Notes, Series A, in the aggregate
principal amount of up to $30,000,000. It is understood, however, that the
Company may from time to time authorize the issuance of additional Medium-Term
Notes, Series A and that such additional notes may be sold 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.
The Notes will be issued in minimum denominations of $1,000 and in integral
multiples thereof, will be issued only in fully registered form and will have
the interest rates, maturities and, if appropriate, other terms set forth in a
pricing supplement to the Prospectus referred to below. The Notes will be
issued, and the terms thereof established, in accordance with the Indenture and
<PAGE> 2
the Medium-Term Notes, Series A Administrative Procedures attached hereto as
Exhibit A (the "Procedures"). The Procedures may only be amended by written
agreement of the Company and you after notice to, and with the approval of, the
Trustee.
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 applicable Agent) to an Agent as principal for resale to
purchasers.
The Company has filed with the Securities and Exchange Commission (the "SEC")
a registration statement on Form S-3 (No. 33-56983) for the registration of
equity and debt securities, including 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 SEC under the 1933
Act (the "1933 Act Regulations"). Such registration statement has been
declared effective by the SEC and the Indenture has been qualified under the
Trust Indenture Act of 1939, as amended (the "1939 Act"). The Company has
filed or will file with the SEC pursuant to the applicable paragraph or Rule
424 of the 1933 Act Regulations ("Rule 424"), a supplement to the form of
prospectus included in such registration statement relating to the Notes and
the plan of distribution thereof (such supplement being hereinafter called the
"Prospectus Supplement"). In connection with the sale of the Notes, the
Company proposes to file with the SEC pursuant to the applicable paragraph of
Rule 424 further supplements to the Prospectus Supplement providing for the
specification of the interest rates, if any, maturity dates, issuance prices,
redemption terms and prices, if any, and, if appropriate, other terms of the
Notes sold pursuant hereto or the offering thereof (any such supplement being
hereinafter called a "Pricing Supplement").
When used in this Agreement, the following terms shall have the meanings
indicated. The term "Effective Date" shall mean the later of (i) each date
that the Registration Statement and any post-effective amendment or amendments
thereto became or become effective or (ii) the time and date of the filing of
the Company's most recent Annual Report on Form 10-K. "Basic Prospectus" shall
mean the form of prospectus relating to the equity and debt securities,
including the Notes, contained in the Registration Statement at the Effective
Date (unless such prospectus has been amended by the Company subsequent to the
Effective Date, in which case "Basic Prospectus" shall mean the form of
prospectus as so amended through the particular time referred to).
"Prospectus" shall mean the Basic Prospectus as supplemented by the Prospectus
Supplement and as it may be further amended or supplemented at the particular
time referred to. "Registration Statement" shall mean the registration
statement referred to in the preceding paragraph, including all incorporated
documents, exhibits and financial
-2-
<PAGE> 3
statements, as it may be amended at the particular time referred to. Any
reference herein to the Registration Statement, the Basic Prospectus, the
Prospectus Supplement or the Prospectus shall be deemed to refer to and include
the documents deemed to be incorporated by reference therein pursuant to Item
12 of Form S-3 which were filed under the Securities Exchange Act of 1934, as
amended (the "1934 Act").
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 as its
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 an Agent as principal for resale
to others, it will enter into a Terms Agreement (hereafter defined) relating to
such sale in accordance with the provisions of Section 3(b) hereof. The Agents
are authorized to appoint sub-agents or to engage the services of any other
broker or dealer in connection with the offer or sale of the Notes. The
Company agrees that, during the period the Agents are acting as the Company's
agents hereunder, the Company will not contact or solicit potential investors
introduced to it by an Agent to purchase the Notes. The Company may appoint
additional persons to serve as agents for the sale of Notes; provided that (i)
the Company gives advance written notice to the Agents of such appointment and
(ii) the commission paid to any such additional person with respect to the sale
of Notes by the Company as a result of a solicitation made by such additional
person does not exceed that percentage of principal amount specified in
Schedule A hereto with respect to each maturity of such Notes sold by the
Company; and provided further that, unless the appointment of such additional
person is expressly limited to the solicitation of offers to purchase a
specified principal amount of Notes on specified terms, such additional person
enters into an agreement with the Company making such person an Agent under
this Agreement.
(b) Reasonable Best Efforts Solicitations; Right to Reject Offers. Upon
receipt of instructions from the Company, each Agent will use its reasonable
best efforts to solicit purchases of such principal amount of the Notes as the
Company and such Agent shall agree upon from time to time during the term of
this Agreement, it being understood that the Company shall not approve the
solicitation of purchases of Notes in excess of the amount which shall be
authorized by the Company from time to time or in excess of the 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
-3-
<PAGE> 4
communicate to the Company, orally or in writing, each 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, in whole or in part, and any such rejection shall not be deemed a
breach of such Agent's agreement contained herein. The Company may accept or
reject any proposed purchase of the Notes, in whole or in part.
(c) Solicitations as Agent; Purchases as Principal. In soliciting purchases
of the Notes on behalf of the Company, the Agents shall act solely as agents
for the Company and not as principal. Each Agent shall make reasonable best
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. The Agents shall not have any liability to the Company in the event
any such purchase is not consummated for any reason. The Agents shall not have
any obligation to purchase Notes from the Company as principal, but each Agent
may agree from time to time to purchase Notes as principal. Any such purchase
of Notes by an Agent as principal shall be made pursuant to a Terms Agreement
in accordance with Section 3(b) hereof.
(d) Reliance. The Company and each Agent agree that any Notes the placement
of which such Agent arranges shall be placed by such Agent, and any Notes
purchased by such Agent shall be purchased, in reliance on the representations,
warranties, covenants and agreements of the Company contained herein and on the
terms and 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 to an Agent as principal), as of
the date of each delivery of Notes (whether through such Agent as agent or to
the 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 (other than by (i) an amendment or supplement relating to any
offering of equity securities or debt securities other than the Notes or (ii) a
Pricing Supplement) or there is filed with the SEC any document incorporated by
reference into the Prospectus (other than any Current Report on Form 8-K
relating exclusively to the issuance of equity or debt securities under the
Registration Statement) (each of the times referenced above being referred to
herein as a "Representation Date") as follows:
(i) Due Incorporation and Qualification. The Company has
been duly incorporated and is validly existing as a corporation and in
good standing under the laws of the State
-4-
<PAGE> 5
of Illinois and the Commonwealth of Virginia and duly licensed or qualified to
do business as a foreign corporation in the States of Georgia, Iowa, Kansas,
Kentucky, Missouri, South Carolina and Tennessee. The Company has full power
and authority (corporate and other) to conduct all the activities conducted by
it, to own or lease all of the assets owned or leased by it and to conduct its
business as described in the Registration Statement and the Prospectus; and the
Company is duly licensed or qualified to do business as a foreign corporation
in all jurisdictions in which the nature of the activities conducted by it or
the character of the assets owned or leased by it makes such licensing or
qualification necessary and where the failure to so qualify would have a
material adverse effect upon the business or financial condition of the Company
and the Subsidiaries (as hereinafter defined), taken as a whole.
(ii) Subsidiaries. The Company owns all of the outstanding common
stock of UCG Energy Corporation, a Delaware corporation ("UCG Energy") and
United Cities Gas Storage Company, a Delaware corporation ("UCG Storage"), each
of which is engaged in the business described in the Registration Statement and
the Prospectus and is a corporation duly organized and existing under the laws
of its state of incorporation. UCG Energy is duly qualified to do business as
a foreign corporation in the States of Alabama, Georgia, Illinois, Iowa,
Kansas, Louisiana, Mississippi, Missouri, North Carolina, South Carolina,
Tennessee, Texas and Virginia, with full power and authority (corporate and
other) to conduct all of the activities conducted by it, to own or lease all
the assets owned or leased by it and to conduct its business as described in
the Registration Statement and the Prospectus. UCG Storage is duly qualified
to do business as a foreign corporation in the States of Kansas, Kentucky and
Tennessee with full power and authority (corporate and other), to conduct all
of the activities conducted by it, to own or lease all the assets owned or
leased by it and to conduct its business as described in the Registration
Statement and the Prospectus. Each of UCG Energy and UCG Storage is licensed
or qualified to do business as a foreign corporation in each other state or
jurisdiction in which such licensing or qualification is necessary for UCG
Energy and UCG Storage to conduct their respective businesses as presently
conducted and where the failure to so qualify would have a material adverse
effect upon the business or financial condition of the Company and the
Subsidiaries, taken as a whole. Other than UCG Energy, UCG Storage, UCG
Leasing, Inc., a Georgia corporation ("UCG Leasing"), and United Cities Propane
Gas of Tennessee, Inc., a Tennessee corporation ("UCPGT"), none of the Company,
UCG Energy, UCG Storage, UCG Leasing or UCPGT has any subsidiaries. UCG
Energy, UCG Storage, UCG Leasing and UCPGT are herein sometimes referred to
individually as a
-5-
<PAGE> 6
"Subsidiary" and collectively as the "Subsidiaries." UCG Energy owns all of
the outstanding common stock of each of UCG Leasing and UCPGT, each of which is
engaged in the business described in the Prospectus and is a corporation duly
organized and existing under the laws of its state of incorporation. UCG
Leasing and UCPGT are each qualified or licensed to do business as a foreign
corporation in each state or jurisdiction in which such licensing or
qualification is necessary for UCG Leasing or UCPGT, as applicable, to conduct
its business as presently conducted and where the failure to so qualify would
have a material adverse effect upon the business or financial condition of the
Company and the Subsidiaries, taken as a whole, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus. All of the outstanding shares of capital stock of
UCG Energy and UCG Storage have been duly and validly authorized and issued and
are fully paid and nonassessable and are legally owned by the Company free and
clear of all liens, claims, security interests or other encumbrances. All of
the outstanding shares of UCG Leasing and UCPGT have been duly and validly
authorized and issued and are fully paid and nonassessable and are legally
owned by UCG Energy free and clear of all liens, claims, security interests or
other encumbrances, except for any liens, claims, security interests or other
encumbrances relating to the pledge of the capital stock of UCPGT as collateral
for indebtedness of UCPGT and except as otherwise described in the Registration
Statement and Prospectus. Other than as described in the Registration
Statement and Prospectus, there are no rights to subscribe for or to purchase
(by way of the exercise of any option or warrant, the conversion or redemption
of any other security, or otherwise), or any restriction upon the voting or
transfer of, any of the capital stock of any Subsidiary.
(iii) Registration Statement and Prospectus. At the Effective Date,
the Registration Statement complied, and as of the applicable Representation
Date will comply, in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations and the 1934 Act and the 1939 Act and the
rules and regulations of the SEC promulgated thereunder. The Registration
Statement, at the Effective Date 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 SEC 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 its date, as
of the date it is first filed with (or transmitted for filing to) the SEC
pursuant to Rule 424, and as of each Representation Date will not, contain an
untrue statement of
-6-
<PAGE> 7
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by the Agents
expressly for use in the Registration Statement or Prospectus.
(iv) Incorporated Documents. The documents incorporated by
reference in the Prospectus, at the time they were or hereafter are filed with
the SEC, 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 and 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.
(v) Accountants. Any accounting firm who audited the financial
statements included or incorporated by reference in the Registration Statement
and the Prospectus are independent accountants within the meaning of the 1933
Act and the 1933 Act Regulations.
(vi) Financial Statements. The financial statements, selected
financial information and any supporting schedules of the Company and its
consolidated subsidiaries included or incorporated by reference in the
Registration Statement and the Prospectus fairly present the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates indicated and the consolidated results of their operations for the
periods specified; and, except as stated therein, said financial statements
have been prepared in conformity with generally accepted accounting principles
in the United States applied on a consistent basis; and the supporting
schedules included or incorporated by reference in the Registration Statement
present fairly the information required to be stated therein. No other
financial statements or schedules of the Company are required by the 1933 Act,
1933 Act Regulations, 1934 Act or 1934 Act Regulations to be included in the
Registration Statement or the Prospectus.
(vii) Authorization and Validity of this Agreement, the Indenture
and the Notes. This Agreement has been duly and validly authorized, executed
and delivered by the Company and,
-7-
<PAGE> 8
upon execution and delivery by the Agents, will be a valid and binding
agreement of the Company, enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting enforcement of creditors'
rights generally or by general equity principles or by possible limitations on
the validity or enforceability of the indemnification and contribution
provisions contained in this Agreement as a result of the application of
securities laws or public policy; the Indenture has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting enforcement of creditors'
rights generally, by general equity principles; the Notes have been duly and
validly authorized for issuance, offer and sale pursuant to this Agreement and,
when issued, authenticated and delivered pursuant to the provisions of this
Agreement and the Indenture against payment of the consideration therefor
specified in the Prospectus or pursuant to any Terms Agreement, the Notes will
constitute valid and legally binding obligations of the Company entitled to the
benefits provided by the Indenture and enforceable in accordance with their
terms, except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting enforcement
of creditors' rights generally or by general equity principles; the Notes and
the Indenture will conform in all material respects to all statements relating
thereto contained in the Prospectus.
(viii) Material Changes or Material Transactions. Since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, except as may otherwise be stated therein or contemplated
thereby, (a) there has been no material adverse change, or any development
known to the Company involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings or business affairs of
the Company and the Subsidiaries taken as a whole, whether or not arising in
the ordinary course of business and (b) there has not been any material
transaction entered into by the Company or any Subsidiary, other than
transactions in the ordinary course of business and transactions contemplated
by the Registration Statement and the Prospectus.
(ix) No Defaults. Neither the Company nor any Subsidiary is in
violation of its certificate or articles of incorporation or by-laws. No
default exists, and no event has occurred which, with notice or lapse of time
or both, would constitute a default in the due performance and observance of
-8-
<PAGE> 9
any obligation, agreement or condition by the Company or any Subsidiary
contained in any mortgage, indenture, deed of trust, note, loan agreement or
other agreement or instrument to which the Company or any Subsidiary is a party
or by which the Company or any Subsidiary is bound or to which any property or
asset of the Company or any Subsidiary is subject, except for defaults the
effect of which would not be material to the Company and the Subsidiaries taken
as a whole. The execution and delivery of this Agreement and the Indenture and
the consummation of the transactions contemplated herein, therein and pursuant
to any applicable Terms Agreement have been duly authorized by all necessary
corporate action and will not conflict with, result in a breach of any of the
terms or provisions of, or constitute a default under, or, except for the
issuance of Notes secured by any assets of the Company, result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any Subsidiary pursuant to the terms or provisions of, or give
any party a right to terminate any of its obligations under, or result in the
acceleration of any obligation under the certificate or articles of
incorporation or bylaws (or equivalent documents) of the Company or any
Subsidiary, any indenture, mortgage, deed of trust, loan agreement, bond,
debenture, note or other evidence of indebtedness, lease, contract or other
material agreement or instrument to which the Company or any Subsidiary is a
party or by which it or any of them may be bound or to which any of the
property or assets of the Company or any such Subsidiary is subject, nor will
such action violate or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental agency or body
applicable to the business or properties of the Company or any Subsidiary.
(x) Legal Proceedings; Contracts. Except as may be set forth
in the Registration Statement and Prospectus, there is no action, suit or
proceeding before or by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Company, threatened against
or affecting, the Company or any Subsidiary, wherein an unfavorable ruling,
decision or finding might materially and adversely affect the Company and the
Subsidiaries taken as a whole or the business, properties, condition (financial
or otherwise) or results of operations of the Company and the Subsidiaries as a
whole; and there are no contracts or documents of the Company or any Subsidiary
which are required to be described in or filed as exhibits to the Registration
Statement by the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934
Act Regulations which have not been so described or filed as required.
-9-
<PAGE> 10
(xi) Authorization, Approval or Consent Required. The Company
has filed with the state public utility regulatory commissions in Georgia,
Illinois, Kansas, Missouri, Tennessee and Virginia (the "State Authorities")
seeking appropriate orders relating to the issuance and sale of the Notes.
Such orders have been entered by such commissions and are effective and
sufficient to permit the issuance and sale of the Notes on the terms
contemplated by this Agreement and any applicable Terms Agreement. The Company
is not subject to the jurisdiction of the Federal Energy Regulatory Commission
or the state public utility regulatory commissions in Iowa, Kentucky and South
Carolina with respect to the issuance and sale of the Notes. 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 (i) for
such orders as are required by the State Authorities authorizing the issuance
and sale of the Notes on terms consistent with this Agreement and any
applicable Terms Agreement, which orders have been obtained and are in full
force and effect, and (ii) as otherwise may be required and obtained under the
state securities or Blue Sky laws or the by-laws and rules of the National
Association of Securities Dealers ("NASD").
(xii) Franchises, Permits, Easements and Consents. Each of the
Company and the Subsidiaries has valid and sufficient grants, franchises,
miscellaneous permits and easements, free from unduly burdensome restrictions,
adequate for the conduct of its business in the territories in which it is now
conducting such business and the ownership of the properties now owned by it
and, except as otherwise set forth in the Registration Statement and the
Prospectus, there are no legal or governmental proceedings pending or
threatened which might result in a material modification, suspension or
revocation thereof. Each of the Company and the Subsidiaries has, and is
operating in compliance with, in all material respects, all requisite corporate
power and authority, and all material and necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all governmental
regulatory officials and bodies, to own, lease, license and operate its
properties and conduct its business as presently conducted and as contemplated
by the Registration Statement and the Prospectus, and the Company and the
Subsidiaries have filed all reports and taken all other action required by the
authority issuing the same where the failure to file or take other action might
reasonably be expected to give rise to a right in such authority to seek to
revoke, suspend or materially limit any such material license, certificate or
permit. The Company has all requisite power, authority, authorizations,
approvals, orders, licenses, certificates and permits to enter into this
Agreement and to carry out the provisions and conditions hereof. Neither the
-10-
<PAGE> 11
Company nor any Subsidiary has received any notice (nor does the Company know
of any basis therefor) of conflict with asserted rights of others in any
respect which could materially adversely affect its business, except as
described in the Registration Statement and Prospectus. The foregoing
representations of the Company contained in the first sentence of this
paragraph (xii) shall not apply with respect to grants, franchises,
miscellaneous permits and easements relating to the operations of the Company
in the State of Missouri as to which matters the Company represents only that
there are no legal or governmental proceedings pending or threatened which
might result in a material modification, suspension or revocation of any such
grants, franchises, miscellaneous permits and easements, and that any
revocation, suspension or limitation of any or all such grants, franchises,
miscellaneous permits and easements would not have a material adverse effect
upon the business or financial condition of the Company and the Subsidiaries,
taken as a whole.
(xiii) No Labor Disputes. Except as set forth in the Registration
Statement and the Prospectus, no labor disturbance by the employees of the
Company or any Subsidiary exists or is imminent which might be expected to
materially adversely affect the conduct of the business, operations, financial
condition or income of the Company and the Subsidiaries, taken as a whole.
(xiv) Public Utility Holding Company Act. In the opinion of
counsel for the Company, the Company is not a "holding company" or a
"subsidiary company" of a "public utility company" or of a "holding company" or
an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended (the "Holding Company Act").
(xv) Environmental and Other Matters. Except as set forth in
the Registration Statement and the Prospectus, neither the Company nor any
Subsidiary (in the case of matters relating to environmental protection,
occupational safety and health and equal employment opportunity, to the best of
its knowledge) is in violation of any laws, ordinances, governmental rules and
regulations to which it is subject, which violation is likely to materially
adversely affect the financial condition, business, operations or prospects of
the Company and the Subsidiaries taken as a whole.
(xvi) Investment Company Act. The Company is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment
-11-
<PAGE> 12
company," as such terms are defined in the Investment Company
Act of 1940, as amended.
(xvii) Effectiveness of Registration Statement. No
stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose are pending or, to
the best knowledge of the Company, threatened by the SEC.
(xviii) Registration Amount Not Exceeded. Immediately
after any sale of Notes by the Company hereunder or under any Terms
Agreement, the aggregate amount of equity and debt securities which
shall have been issued and sold by the Company will not exceed the
aggregate amount of equity and debt securities registered under the
Registration Statement.
(b) Additional Certifications. Any certificate signed by any
director or officer of the Company and delivered to the Agents or to counsel
for the Agents in connection with an offering of Notes or the sale of Notes to
an Agent as principal shall be deemed a representation and warranty by the
Company to the Agents as to the matters covered thereby on the date of such
certificate and, except for any certificate expressly superseded by a
subsequently dated certificate, at each Representation Date subsequent thereto.
SECTION 3. Solicitations as Agent; Purchases as Principal.
(a) Solicitations as Agent. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, each Agent agrees, as an agent of the Company, to use its reasonable
best efforts to solicit offers to purchase the Notes upon the terms and
conditions set forth herein and in the Prospectus.
Upon reasonable advance written notice to the Agents, the Company
reserves the right, in its sole discretion, to suspend solicitation of
purchases of the Notes through an Agent, as agent, commencing at any time for
any period of time or permanently. Upon receipt of written instructions from
the Company, such Agent will forthwith suspend solicitation of purchases from
the Company until such time as the Company has advised such Agent that such
solicitation may be resumed.
The Company agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Note sold by the Company as a result of a solicitation made by such Agent as
set forth in Schedule A hereto. An Agent may reallow any portion of the
commission payable pursuant hereto to dealers or purchasers in connection with
the offer and sale of any Notes.
-12-
<PAGE> 13
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 be prepared following each acceptance by the Company of
an offer for the purchase of Notes. Except as may be otherwise provided in
such Pricing Supplement, 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 an Agent as agent will be sold at 100% of their principal amount unless
otherwise agreed to by the Company and such Agent.
(b) Purchases as Principal. Each sale of Notes to an Agent as
principal shall be made in accordance with the terms contained herein and
(unless the Company and such Agent shall otherwise agree) pursuant to a
separate agreement which will provide for the sale of such Notes to, and the
purchase and reoffering thereof by, such Agent. Each such separate agreement
between such Agent and the Company is herein referred to as a "Terms
Agreement". Unless the context otherwise requires, each reference contained
herein to "this Agreement" shall be deemed to include any applicable Terms
Agreement between the Company and the applicable Agent. Each such Terms
Agreement shall be in substantially the form of Exhibit B 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 such 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 such Agent in the reoffering of the Notes, and such other
provisions (including further terms of the Notes) as may be mutually agreed
upon. Each Agent may utilize a selling or dealer group in connection with the
resale of the Notes purchased. Such Terms Agreement shall also specify the
requirements for the officers' certificate, opinions of counsel and comfort
letter pursuant to Sections 7(b), 7(c) and 7(d) hereof.
(c) Administrative Procedures. The procedures with respect to the
sale of Notes are attached hereto as Exhibit A and the Agents and the Company
agree to perform the respective duties and obligations specifically provided to
be performed by them in such procedures.
-13-
<PAGE> 14
SECTION 4. Covenants of the Company.
The Company covenants with each Agent as follows:
(a) Notice of Certain Events. The Company will notify the Agents
immediately (i) of the effectiveness of any post-effective amendment to the
Registration Statement, (ii) of the receipt of any comments from the SEC with
respect to the Registration Statement or the Prospectus, (iii) of any request
by the SEC for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, and (iv) of the
issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose.
The Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof at
the earliest possible moment.
(b) Notice of Certain Proposed Filings. The Company will give the
Agents notice of its intention to file any amendment to the Registration
Statement or any amendment or supplement to the Prospectus, including any
document to be filed pursuant to the 1934 Act which will be incorporated by
reference in the Registration Statement and the Prospectus (other than (i) a
Pricing Supplement, (ii) an amendment or supplement relating to an offering of
equity securities or debt securities other than Notes or (iii) in the event
notice of suspension pursuant to Section 4(k) hereof has been given by the
Company and remains in effect, filing of documents pursuant to the 1934 Act),
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.
(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 (or, to the extent a signed copy is not available, a true,
correct and complete copy, as certified by an officer of the Company, of a
signed copy). 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 the Agents are 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 any Agent pursuant to this
Agreement, a Pricing Supplement with respect to such Notes in a form previously
approved by such Agent and will file, or transmit for filing, such Pricing
Supplement pursuant to
-14-
<PAGE> 15
Rule 424(b) under the 1933, Act as soon as reasonably practicable after the
Company and such Agent agree to sell such Notes and, in any event, not later
than the close of business of the SEC on the day required by Rule 424.
(e) Revisions of Prospectus -- Material Changes. Except as otherwise
provided in Section 4(k) hereof, if at any time during the term of this
Agreement any event shall occur or condition exist as a result of which it is
necessary, in the 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
SEC such amendment or supplement as may be necessary to correct such untrue
statement or omission or to make the Registration Statement and Prospectus
comply with such requirements.
(f) Prospectus Revisions -- Periodic Financial Information. Except
as otherwise provided in Section 4(k) hereof, promptly after 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.
(g) Earnings Statements. The Company 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 with respect to each sale of
Notes.
(h) Blue Sky Qualifications. The Company will endeavor, in
cooperation with the Agents, to qualify the Notes for offering and sale under
the applicable securities laws of such states and other jurisdictions of the
United States as the Agents may designate, and will maintain such
qualifications in effect for as long as may be
-15-
<PAGE> 16
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.
(i) 1934 Act Filings. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act, will file promptly
all documents required to be filed with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act.
(j) 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
applicable Agent's prior consent, offer or sell, or enter into any agreement to
sell, any debt securities of the Company (other than the Notes that are to be
sold pursuant to such Terms Agreement and commercial paper in the ordinary
course of business).
(k) Suspension of Certain Obligations. The Company shall not be
required to comply with the specified provisions of Section 4(b) or the
provisions of Section 4(e) or (f) or Section 7(b), (c) or (d) hereof during any
period from the time (i) the Agents shall have suspended solicitation of
purchases of the Notes in their capacity as agents pursuant to Section 3(a)
hereof and (ii) the Agents shall not then hold any Notes as principal purchased
pursuant to a Terms Agreement, to the time the Company shall determine that
solicitation of purchases of the Notes should be resumed or shall subsequently
enter into a new Terms Agreement with any or all of the Agents.
SECTION 5. Conditions of Obligations.
The obligations of each Agent to solicit offers to purchase the Notes
as agent of the Company, the obligations of any purchasers of the Notes sold
through each Agent as agent, and any obligation of an Agent to purchase Notes
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:
-16-
<PAGE> 17
(a) Legal Opinions. On the date hereof, the Agents shall have
received the following legal opinions, dated as of the date hereof and in form
and substance satisfactory to the Agents:
(1) Opinion of Company Counsel. The opinion of Chapman and Cutler,
counsel to the Company, to the effect that:
(i) The Company (A) is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Illinois and the Commonwealth of Virginia, (B) is duly qualified and
in good standing as a foreign corporation in the States of Georgia,
Iowa, Kansas, Kentucky, Missouri, South Carolina and Tennessee, and to
the best of the knowledge, information and belief of such counsel, the
Company is duly qualified and in good standing as a foreign
corporation in each other state or jurisdiction in which the location
of its properties or the conduct of its business makes such
qualification necessary and where the failure to so qualify would have
a material adverse effect upon the business or financial condition of
the Company and the Subsidiaries, taken as a whole, and (C) has due
corporate authority to carry on its business as described in the
Prospectus and to own, lease, license and operate the properties used
in said business;
(ii) Each Subsidiary (A) is a corporation duly
incorporated, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, (B) to the best of the
knowledge, information and belief of such counsel, is duly qualified
and in good standing as a foreign corporation in each jurisdiction in
which the location of its properties or the conduct of its business
makes such qualification necessary and where the failure to so qualify
would have a material adverse effect upon the business or financial
condition of the Company and the Subsidiaries, taken as a whole, and
(C) has due corporate authority to carry on its business as described
in the Prospectus and to own, lease, license and operate the
properties used in said business;
(iii) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company, enforceable in accordance with its terms,
subject, however, to bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and by
the exercise of judicial discretion in accordance with general
principles applicable to equitable and similar remedies and to
possible limitations on the validity or enforceability of the
indemnification and contribution provisions contained in this
Agreement as a result of securities laws or public policy;
-17-
<PAGE> 18
(iv) The Indenture has been duly authorized, executed and
delivered by the Company and (assuming the Indenture has been duly authorized,
executed and delivered by the Trustee) constitutes a legal, valid and binding
agreement of the Company, enforceable in accordance with its terms, subject,
however, to bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditors' rights generally and by the exercise of judicial
discretion in accordance with general principles applicable to equitable and
similar remedies;
(v) The creation, issuance and sale of the Notes by the Company
pursuant to this Agreement and the Indenture have been duly authorized by all
necessary corporate action and, when issued within the limitations set forth in
the orders referred to in (xi) below and executed, authenticated and delivered
pursuant to the provisions of this Agreement and the Indenture against payment
of the consideration therefor, will constitute valid and legally binding
obligations of the Company, enforceable in accordance with their terms,
subject, however, to bankruptcy, insolvency, reorganization, moratorium and
other laws affecting creditors' rights generally and by the exercise of
judicial discretion in accordance with general principles applicable to
equitable and similar remedies, and will be entitled to the benefits of the
Indenture;
(vi) The Indenture has been qualified under the 1939 Act and the
Notes and the Indenture conform as to legal matters with the statements
concerning them made in the Prospectus.
(vii) The Registration Statement has become effective under the 1933
Act and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending before or are contemplated
by the SEC. Any required filing of the Basic Prospectus and the Prospectus
Supplement has been made in accordance with Rule 424(b) of the 1933 Act
Regulations;
(viii) The Registration Statement, at the Effective Date, and the
Basic Prospectus and the Prospectus Supplement, when it was filed with the SEC
pursuant to Rule 424 and on the date hereof, complied as to form in all
material respects with the 1933 Act Regulations and the 1939 Act and the
applicable rules and regulations of the SEC thereunder, and the documents or
portions thereof filed with the SEC pursuant to the 1934 Act and deemed to be
incorporated by reference in the Registration Statement and the Prospectus, at
the time they were filed with the SEC, complied as to form in all material
respects with the applicable requirements of the 1934 Act and the 1934
Regulations (except in each case, for the financial statements, schedules and
financial and statistical data, as to which no opinion need be expressed);
-18-
<PAGE> 19
(ix) Such counsel does not know of any legal or governmental
proceeding pending or threatened to which the Company or any Subsidiary is a
party or to which any of the properties of the Company or any Subsidiary is
subject which is required to be described in the Registration Statement or the
Prospectus and is not so described, or of any contract or other document which
is required to be described in the Registration Statement or the Prospectus or
is required to be filed as an exhibit to the Registration Statement which is
not described or has not been filed as required. The statements in the
Prospectus, insofar as such statements constitute a summary of documents
referred to therein or of statutes, laws or legal or governmental proceedings,
are accurate summaries in all material respects and fairly and correctly
present the information called for with respect to such documents and matters;
(x) The issue and sale of the Notes by the Company and the
execution, delivery and performance of this Agreement, and any Terms Agreement
and of the Indenture and the consummation of the transactions contemplated
herein and by the Notes and the incurrence of the obligations therein
contemplated will not result in a material breach or violation of any of the
terms or provisions of, or constitute a material default under, any indenture,
mortgage, deed of trust, loan agreement, partnership agreement, joint venture,
stock purchase agreement, or other material agreement or instrument filed as an
exhibit to the Registration Statement, nor will such action result in any
violation of the provisions of the Amended Articles of Incorporation, as
amended, or By-laws, as amended, of the Company, or any statute or, to the best
of such counsel's knowledge, any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
properties;
(xi) All authorizations, approvals, consents or other orders of any
governmental authority or agency required in connection with the authorization,
issuance and sale of the Notes by the Company, pursuant to this Agreement or
any Terms Agreement and the consummation by the Company of the transactions
contemplated by this Agreement or any Terms Agreement (other than qualification
under state securities laws, Blue Sky laws or the by-laws and rules of the
NASD) have been obtained and continue in full force and effect;
(xii) The Company is not a "holding company" or a "subsidiary
company" of a "public utility company" or of a "holding company" or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," as such terms are defined in the Holding Company Act.
-19-
<PAGE> 20
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, counsel for the Agents, representatives of the independent public
accountants for the Company and the Agents at which the contents of the
Registration Statement and Prospectus and related matters were discussed and,
although, except for the matters referred to under the heading "Legal Opinions"
in the Prospectus, such counsel is not passing upon and does not assume
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus on the basis of the
foregoing, no facts have come to the attention of such counsel that lead them
to believe that the Registration Statement, at the Effective Date, and at the
date hereof, or (if such opinion is being delivered in connection with a Terms
Agreement pursuant to Section 3(b) 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 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 3(b) hereof) at the date
of any Terms Agreement and at the Settlement Date with respect thereto, as the
case may be, contains an untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no comment with respect to (i) the
financial statements, schedules and other financial and statistical data
included in the Registration Statement or the Prospectus or (ii) the Statements
of Eligibility on Forms T-1 and T-2 filed as exhibits to the Registration
Statement).
With respect to the matters covered by foregoing clauses (i) and (ii),
Chapman and Cutler may rely upon certificates of responsible officers of the
Company as to the nature and extent of business being conducted by the Company
and the Subsidiaries in states or jurisdictions wherein they are not licensed
or qualified as foreign corporations. With respect to the matters covered by
foregoing clause (xi) above, such counsel may rely upon the opinion of Mark G.
Thessin, Esq., Vice President, Regulatory Affairs for the Company. Such
opinion of counsel for the Company shall state that the opinion of such other
counsel is in form and substance satisfactory to counsel for the Company and,
in their opinion, they and the Agents are justified in relying on such other
opinion. In addition, such counsel need not express any opinion with respect
to the Federal Energy Regulatory
-20-
<PAGE> 21
Commission's jurisdiction with respect to the Barnsley, Kentucky
storage field and UCG Storage.
(2) Opinion of Counsel to the Agents. The opinion of Jones, Day,
Reavis & Pogue, counsel to the Agents, in form and covering such matters
referred to in subparagraph (1) as the Agents may require.
(b) Officers' Certificate. At the date hereof, the Agents shall have
received a certificate of the President or any Vice President and the chief
financial officer, chief accounting officer, treasurer or controller 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 or business affairs of the Company and the
Subsidiaries taken as a whole, 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 performed or complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to the date
of such certificate, and (iv) that no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been initiated or, to the best knowledge of such officers,
threatened by the SEC.
(c) Comfort Letter. On the date hereof, the Agents shall have
received a letter from the Company's outside accounting firm dated as of the
date hereof and in form and substance 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.
(ii) In their opinion, the consolidated financial
statements and supporting schedules of the Company and its
subsidiaries examined by them and included or incorporated by
reference in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
1933 Act and the 1933 Act Regulations with respect to registration
statements on Form S-3 and the 1934 Act and the 1934 Act Regulations.
(iii) They have performed specified procedures, not
constituting an audit, including a reading of the latest available
interim financial statements of the Company and its indicated
subsidiaries, a reading of the minute books of the
-21-
<PAGE> 22
Company and such subsidiaries since the end of the most recent fiscal year with
respect to which an audit report has been issued, inquiries of and discussions
with certain officials of the Company and such subsidiaries responsible for
financial and accounting matters with respect to the unaudited consolidated
financial statements included in the Registration Statement and Prospectus and
the latest available interim unaudited financial statements of the Company and
its subsidiaries, and such other inquiries and procedures as may be specified
in such letter, and on the basis of such inquiries and procedures nothing came
to their attention that caused them to believe that: (A) the unaudited
consolidated financial statements of the Company and its subsidiaries included
in the Registration Statement and Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the 1934 Act
and the 1934 Act Regulations or were not fairly presented in conformity with
generally accepted accounting principles in the United States applied on a
basis substantially consistent with that of the audited financial statements
included therein, or (B) at a specified date not more than five days prior to
the date of such letter, there was any change in the consolidated capital stock
or any increase in consolidated long-term debt of the Company and its
subsidiaries or any decrease in the consolidated net assets of the Company and
its subsidiaries, in each case as compared with the amounts shown on the most
recent consolidated balance sheet of the Company and its subsidiaries included
in the Registration Statement and Prospectus or, during the period from the
date of such balance sheet 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 in the preceding year, in consolidated revenues or net
income of the Company and its subsidiaries, except in each such case as set
forth in or contemplated by the Registration Statement and Prospectus or except
for such exceptions enumerated in such letter as shall have been agreed to by
the Agents and the Company.
(iv) In addition to the examination referred to in their report
included or incorporated by reference in the Registration Statement and the
Prospectus, and the limited procedures referred to in clause (iii) above, they
have carried out certain other specified procedures, not constituting an audit,
with respect to certain amounts, percentages and financial information which
are included or incorporated by reference in the Registration Statement and
Prospectus and which are specified by the Agents, and have found such amounts,
percentages and financial information to be in agreement with the relevant
accounting, financial and other records of the Company and its subsidiaries
identified in such letter.
-22-
<PAGE> 23
(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. In
addition, the Company shall provide the Agents with such documents and opinions
reasonably requested by the Agents in order to evidence the accuracy and
completeness of any of the representations and warranties, or the fulfillment
of any of the conditions, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of Notes as herein
contemplated shall be satisfactory in form and substance to the Agents and to
counsel to the Agents.
(e) Condition to Agency Transactions. Any person who has agreed to
purchase Notes as the result of an offer to purchase solicited by an Agent
shall have the right to refuse to purchase and pay for such Notes if, on the
related settlement date fixed pursuant to the Procedures, (i) there has been,
since the date on which such person agreed to purchase the Notes (the "Trade
Date"), any material adverse change in the financial condition or in the
earnings or business affairs of the Company and the Subsidiaries taken as a
whole, whether or not arising in the ordinary course of business, or (ii) there
shall have occurred any outbreak or escalation of hostilities or other national
or international calamity or crisis the effect of which is such as to make it,
in the judgment of such person, impracticable or inadvisable to purchase the
Notes, or (iii) trading in any securities of the Company has been suspended by
the SEC or a national securities exchange, or if trading generally on either
the American Stock Exchange or the New York Stock Exchange shall have been
suspended, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required, by either of said
exchanges or by order of the SEC or any other governmental authority, or if a
banking moratorium shall have been declared by either Federal or New York
authorities, or (iv) the rating assigned by any nationally recognized
securities rating agency to any debt securities of the Company as of the Trade
Date shall have been lowered since that date or if any such rating agency shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any debt securities of the Company.
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 applicable Agent, any applicable Terms Agreement) may be
terminated by the Agents 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(g) hereof, the provisions concerning payment of expenses under
-23-
<PAGE> 24
Section 9 hereof, the indemnity and contribution agreement set forth in Section
8 hereof, the provisions concerning the representations, warranties and
agreements to survive delivery of Section 10 hereof and the provisions set
forth under "Parties" of Section 14 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 applicable Agent shall promptly notify the Company
and deliver the Note to the Company, and, if such Agent has therefore paid the
Company for such Note, the Company will promptly return such funds to such
Agent. If such failure occurred for any reason other than default by such
Agent in the performance of its obligations hereunder, the Company will also
reimburse such Agent on an equitable basis for its loss of the use of the funds
for the period such funds were credited to the Company's account.
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 the Company of an offer for the purchase of Notes, and each delivery of
Notes to the applicable Agent pursuant to a Terms Agreement, shall be deemed to
be an affirmation that the representations and warranties of the Company
contained in this Agreement and in any certificate theretofore delivered to the
Agents 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 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. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented
(other than by a Pricing Supplement or an amendment or supplement relating to
an offering of equity securities or debt securities other than Notes) or there
is filed with the SEC any document incorporated by reference into the
Prospectus (other than any Current Report on Form 8-K) or (if required pursuant
to the terms of a Terms Agreement) the Company sells Notes to an Agent pursuant
to a Terms Agreement, the Company shall furnish or cause
-24-
<PAGE> 25
to be furnished to the Agents forthwith a certificate dated the date of filing
with the SEC 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 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. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented
(other than by a Pricing Supplement or an amendment or supplement relating to
an offering of equity securities or debt securities other than the Notes) or
there is filed with the SEC any document incorporated by reference into the
Prospectus (other than any Current Report on Form 8-K) or (if required pursuant
to the terms of a Terms Agreement) the Company sells Notes to an Agent pursuant
to a Terms Agreement, the Company shall furnish or cause to be furnished
forthwith to the Agents and to counsel to the Agents a written opinion of
Chapman and Cutler, counsel to the Company, or other counsel satisfactory to
the Agents dated the date of filing with the SEC 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, of
the same tenor as the opinion referred to in Section 5(a)(1) hereof, but
modified, as necessary, to relate to the Registration Statement and the
Prospectus as amended and supplemented to the time of delivery of such opinion;
or, in lieu of such opinion, counsel last furnishing such opinion to the Agents
shall furnish the Agents with a letter 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. 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 SEC any
document incorporated by reference into the Prospectus which contains
additional financial information (other than any amendment or supplement
relating to the offering of equity securities or debt securities other than the
Notes or, unless expressly requested by the Agents, other than any Current
Report on Form 8-K) or, (if required pursuant to the terms of a
-25-
<PAGE> 26
Terms Agreement) the Company sells Notes to an Agent pursuant to a Terms
Agreement, the Company shall cause its outside accounting firm forthwith to
furnish the Agents a letter, dated the date of effectiveness of such amendment,
supplement or document with the SEC, or the date of such sale, as the case may
be, in form satisfactory to the Agents, of the same tenor as the portions of
the letter referred to in clauses (i) and (ii) of 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 of the same general tenor as the
portions of the letter referred to in clauses (iii) and (iv) of said Section
5(c) with such changes as may be necessary to reflect changes in the financial
statements and other information derived from the accounting records of the
Company; provided, however, that if the Registration Statement or the
Prospectus is amended or supplemented solely to include financial information
as of and for a fiscal quarter, such accountants may limit the scope of such
letter to the unaudited financial statements included in such amendment or
supplement unless any other information included therein of an accounting,
financial or statistical nature is of such a nature that, in the reasonable
judgment of the Agents, such letter should cover such other information.
SECTION 8. Indemnification.
(a) Indemnification of the Agents. The Company will
indemnify and hold harmless each Agent, the directors, officers,
employees and agents of each Agent and each person, if any, who
controls each Agent within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act from and against any and all losses,
claims, damages, expenses and liabilities (including any and all
investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they, or any of
them, may become subject under the 1933 Act, the 1934 Act or other
federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages, expenses or
liabilities arise out of or are based on any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus supplement, the
Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus, or the omission or alleged omission to
state in such document a material fact required to be stated in it or
necessary to make the statements in it not misleading, provided that
the Company will not be liable to the extent that such loss, claim,
damage, expense or liability arises from the sale of the Notes to any
person by an Agent and is based on an untrue statement or omission or
alleged untrue statement or omission (1) made in reliance on and in
conformity with information
-26-
<PAGE> 27
furnished in writing to the Company by the Agents expressly for inclusion in
the Registration Statement, any preliminary prospectus supplement or the
Prospectus or (2) in a preliminary prospectus supplement if the Prospectus (or
the Prospectus as amended or supplemented) corrects the untrue statement or
omission or alleged untrue statement or omission that is the basis of the loss,
claim, damage, expense or liability for which indemnification is sought and the
person asserting any such loss, claim, damage, expense or liability purchased
Notes from such Agent but was not sent or given a copy of the Prospectus
(excluding any documents incorporated by reference) at or prior to the written
confirmation of the sale of such Notes to such person. This indemnity
agreement will be in addition to any liability that the Company might otherwise
have.
(b) Indemnification of the Company. Each Agent, severally and
not jointly, will indemnify and hold harmless the Company, each director of the
Company and each officer of the Company who signs the Registration Statement
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act, to the same extent as the
foregoing indemnity from the Company to each Agent, but only insofar as losses,
claims, damages, expenses or liabilities arise out of or are based on any
untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information furnished in writing to the
Company by the Agents expressly for use in the Registration Statement, any
preliminary prospectus or the Prospectus. This indemnity will be in addition
to any liability that each Agent might otherwise have.
(c) General. Any party that proposes to assert the right to be
indemnified under this Section 8 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 8, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying
party will not relieve it from any liability that it may have to any
indemnified party under this Section 8 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by
the indemnifying party. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement, the
indemnifying party will be entitled to participate in, and, to the extent that
it elects by delivering written notice to the indemnified party promptly after
receiving notice of the commencement of the action from the indemnified party,
jointly with any other indemnifying party similarly notified, to
-27-
<PAGE> 28
assume the defense of the action, with counsel satisfactory to the indemnified
party, and, after notice from the indemnifying party to the indemnified party
of its election to assume the defense, the indemnifying party will not be
liable to the indemnified party for any legal or other expenses except as
provided below and except for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the defense.
The indemnified party will have the right to employ its counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (2)
the indemnified party has reasonably concluded (based on advice of counsel)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (3) a conflict or potential conflict exists (based on advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel to assume the defense of
such action within a reasonable time after receiving notice of the commencement
of the action, in each of which cases the fees, disbursements, expenses and
other charges of counsel will be at the expense of the indemnifying party or
parties. It is understood that no indemnifying party shall, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm (in addition to any local counsel) at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. An
indemnifying party will not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be unreasonably
withheld).
(d) Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in the
foregoing paragraphs of this Section 8 is applicable in accordance with its
terms but for any reason is held to be unavailable from the Company or the
Agents, the Company and the Agents will contribute to the total loss, claim,
damage, expense and liability (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from persons other than the
Agents, such as persons who control the Company within the meaning of the 1933
Act, officers of the
-28-
<PAGE> 29
Company who signed the Registration Statement and directors of the Company, who
also may be liable for contribution) to which the Company and any one or more
of the Agents may be subject in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and any
particular Agent on the other. The relative benefits received by the Company
and such Agent shall be deemed to be in the same proportions as the net
proceeds from the sale of Notes (before deducting expenses) received by the
Company bear to the total discounts and commissions received by such Agent, to
the date of such liability, in each case. If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is appropriate
to reflect not only the relative benefits referred to in the foregoing
sentence, but also the relative fault of the Company or any particular Agent
with respect to the statements or omissions which resulted in such loss, claim,
damage, expense or liability, or any action in respect thereof, as well as any
other relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Agents, the intent of the parties, and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Agents agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Agents were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage, expense and
liability referred to in this Section 8(d) shall be deemed to include, for
purposes of this Section 8(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 8(d), no
Agent shall be required to contribute any amount in excess of the amount of the
discounts and commissions received by it, and no person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) will be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 8(d), any
person who controls a party to this Agreement within the meaning of the 1933
Act or 1934 Act will have the same rights to contribution as that party, and
each officer of the Company who signed the Registration Statement will have the
same rights to contribution as the Company,
-29-
<PAGE> 30
subject in each case to the provisions hereof. Any party
entitled to contribution, promptly after receipt of notice of
commencement of any action against such party in respect of which a
claim for contribution may be made under this Section 8(d), will
notify any such party or parties from whom contribution may be sought,
but the omission so to notify will not relieve the party or parties
from whom contribution may be sought from any other obligation it or
they may have under this Section 8 except to the extent such party or
parties are prejudiced by the failure to receive such notice. No
party will be liable for contribution with respect to any action or
claim settled without its written consent (which consent will not be
unreasonably withheld).
(e) Survival. The indemnity and contribution
agreements contained in this Section 8 and the representations and
warranties of the Company contained in this Agreement shall remain
operative and in full force and effect regardless of any investigation
made by or on behalf of the Agents, or any termination of this
Agreement.
SECTION 9. Payment of Expenses.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:
(a) The preparation and filing of the Registration
Statement and all amendments thereto and the Prospectus and any
amendments or supplements thereto;
(b) The preparation, filing and reproduction of this
Agreement;
(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 and of the Trustee and its counsel;
(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(h) hereof,
including filing fees and the reasonable 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;
-30-
<PAGE> 31
(g) The printing and delivery to the Agents in quantities
as hereinabove stated of copies of the Registration Statement and any
amendments thereto, and of the Prospectus and any amendments or
supplements thereto, and the delivery by the Agents of the Prospectus
and any amendments or supplements thereto in connection with
solicitations or confirmations of sales of the Notes;
(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 Agents incurred with the approval of the Company;
(l) The cost of preparing, and providing any CUSIP or
other identification numbers for, the Notes;
(m) The fees and expenses of any Depositary (as defined
in the Indenture) and any nominees thereof in connection with the
Notes; and
(n) The fees and expenses, if any, incurred in connection
with any filing with or approval by the State Authorities in
connection with the issuance of the Notes.
SECTION 10. 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 or thereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Agents or any
controlling person of any Agent, or by or on behalf of the Company, and shall
survive each delivery of and payment for any of the Notes.
SECTION 11. 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 an Agent upon the giving advance written notice of such termination
to the other party hereto.
-31-
<PAGE> 32
(b) Termination of a Terms Agreement. The applicable Agent 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 the Subsidiaries taken as a whole,
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 or escalation of hostilities or other national or
international calamity or crisis the effect of which is such as to make it, in
the judgment of such Agent, impracticable to market the Notes or enforce
contracts for the sale of the Notes, or (iii) if trading in any securities of
the Company has been suspended by the SEC or a national securities exchange, or
if trading generally on the New York Stock Exchange shall have been suspended
or limited, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by said exchange
or by order of the SEC or any other governmental authority, or if a banking
moratorium shall have been declared by either Federal or New York authorities,
or (iv) if the rating assigned by any nationally recognized securities rating
agency to any debt securities of the Company as of the date of any applicable
Terms Agreement shall have been lowered since that date or if any such rating
agency 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 applicable Agent's attention
any facts that would cause such Agent 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 the light of the
circumstances existing at the time of such delivery, not misleading.
(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) each
Agent shall own any Notes purchased pursuant to a Terms Agreement with the
intention of reselling them or (b) an offer to purchase any of the Notes has
been accepted by the Company but the time of delivery to the purchaser or his
agent of the Note or Notes relating thereto has not occurred, the 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(g) hereof, the provisions of Section 5 hereof, the indemnity and
contribution agreements set forth in Section 8 hereof, and the
-32-
<PAGE> 33
provisions of Sections 9, 10, 13 and 14 hereof shall remain in effect.
SECTION 12. 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:
United Cities Gas Company
5300 Maryland Way
Brentwood, Tennessee 37027
Attention: President
If to Smith Barney Inc.:
Smith Barney Inc.
390 Greenwich Street, 4th Floor
New York, New York 10013
Attention: MTN Product Management/Origination
If to PaineWebber Incorporated:
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Attention: Utility Finance Group
If to A.G. Edwards & Sons, Inc:
A.G. Edwards & Sons, Inc.
One North Jefferson
St. Louis, Missouri 63103
Attention: Corporate Finance Department
and Bond Department
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 12.
SECTION 13. 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 entirely in the State of
New York.
-33-
<PAGE> 34
SECTION 14. 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 Section 8 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
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.
-34-
<PAGE> 35
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,
UNITED CITIES GAS COMPANY
By: /s/ James B. Ford
----------------------------
Name: James B. Ford
Title: Senior Vice President
and Treasurer
Accepted:
SMITH BARNEY INC.
By: /s/ Frank W. Hamilton, III
--------------------------------
Name: Frank W. Hamilton, III
Title: Managing Director
PAINEWEBBER INCORPORATED
By: /s/ Walter S. Hulse, III
--------------------------------
Name: Walter S. Hulse, III
Title: Managing Director
A.G. EDWARDS & SONS, INC.
By: /s/ John E. Meiners
--------------------------------
Name: John E. Meiners
Title: Vice President
-35-
<PAGE> 36
EXHIBIT A
MEDIUM-TERM NOTES, SERIES A
ADMINISTRATIVE PROCEDURES
(DATED NOVEMBER 22, 1995)
Medium-Term Notes, Series A (the "Notes") to be offered from time to
time on a continuous basis by United Cities Gas Company (the "Company") through
Smith Barney Inc. ("Smith Barney"), PaineWebber Incorporated ("PaineWebber")
and A.G. Edwards & Sons, Inc. ("A.G. Edwards"), each of which, as agent
(individually, an "Agent" and collectively, the "Agents"), has agreed to use
its reasonable best efforts to solicit offers to purchase the Notes from the
Company. Each Agent 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 November 22, 1995 (the "Distribution Agreement").
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in the Distribution Agreement.
The Notes will be issued pursuant to the Indenture providing for the
issuance of the Notes. Bank of America Illinois (the "Bank"), the trustee
under the Indenture (the "Trustee"), will perform the duties specified herein
with respect to the Notes.
The Notes will either be issued (a) in book-entry form and represented
by one or more fully registered Notes (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 certificated form delivered
to the purchaser thereof or a person designated by such purchaser. Except in
the limited circumstances described in the Prospectus, owners of beneficial
interests in Notes issued in book-entry form will not be entitled to physical
delivery of Notes in certificated form equal in principal amount to their
respective beneficial interests.
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 certificated form will be issued in accordance with the procedures set forth
in Part III hereof.
<PAGE> 37
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 the date of
its original issue (the "Original Issue
Date").
Maturities: Each Note will mature on a date (the
"Stated Maturity") selected by the
purchaser and agreed to by the Company
which is not less than nine months nor
more than thirty years from its Original
Issue Date.
Registration: Notes will be issued only in fully
registered form.
Calculation of Interest: Interest on the Notes (including
payments for partial periods) will be
calculated and paid on the basis of a
360-day year of twelve 30-day months.
Acceptance and Rejection of Offers: The Company shall have the sole right
to accept offers to purchase Notes from
the Company and may reject any such
offer in whole or in part. Each Agent
shall communicate to the Company,
orally or in writing, each reasonable
offer to purchase Notes from the
Company received by it. Each Agent
shall have the right, in its discretion
reasonably exercised, without notice to
the Company, to reject any offer to
purchase Notes through it in whole or in
part.
Preparation of Pricing Supplement: If any offer to purchase a Note is
accepted by the Company, the Company,
with the approval of the Agent
presenting the offer (the "Presenting
Agent"), will prepare a Pricing
Supplement reflecting the terms of such
Note and file the Pricing Supplement
relating to the Notes and the plan of
distribution thereof with the Commission
in accordance with Rule 424 under the
Act and the provisions of Regulation
S-T under the Act. The Presenting Agent
will cause a Pricing Supplement and a
Prospectus to be delivered to the
purchaser of such Notes.
B-2
<PAGE> 38
The Company shall have delivered a completed Pricing
Supplement, via next day mail or telecopy to arrive
no later than 11 a.m. on the Business Day following
the trade date, to the Presenting Agent at the
following address:
If Smith Barney is the Presenting Agent, to it at:
Smith Barney Inc.
388 Greenwich Street - 4th floor
New York, New York 10013
Attention: MTN Product
Management/Origination - Mark R. Meyer
Telephone: (212) 723-5123
Telecopy: (212) 723-8854
With a copy to:
Smith Barney Inc.
388 Greenwich Street - 34th Floor
New York, New York 10013
Attention: Legal Compliance -
Adrienne Garofalo
Telephone: (212) 816-7594
Telecopy: (212) 816-7912
If PaineWebber Incorporated is the Presenting Agent,
to it at:
PaineWebber Incorporated
c/o ADP - Prospectus - PaineWebber Incorporated
536 Broadhollow Road
Melville,
New York 11747
Attention: Arnold Gibbs
Telephone: (514) 254-7110
If A.G. Edwards in the Presenting Agent, to it at:
A.G. Edwards & Sons, Inc.
One North Jefferson
St. Louis, Missouri 63183
Attention: Mr. John Meiners
Telephone: (314) 289-5800
Telecopy: (314) 289-5989
B-3
<PAGE> 39
In each instance that a Pricing Supplement is
prepared, the Presenting Agent will affix the Pricing
Supplement to Prospectuses prior to their use.
Outdated Pricing Supplements, and the Prospectuses to
which they are attached (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 Note, constitute "settlement." Offers
accepted by the Company will be settled from one to
three Business Days (hereinafter defined), or at a
time as the purchaser, the Trustee and the Company
shall agree, pursuant to the timetable for settlement
set forth in Parts II and III hereof under "Settlement
Procedures" with respect to Book-Entry Notes and
Certificated Notes, respectively. 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.
In the event of a purchase of Notes by an Agent
as principal, appropriate settlement details will be
as agreed between such Agent and the Company pursuant
to the applicable Terms Agreement.
B-4
<PAGE> 40
Procedure for Changing When a decision has been reached to change the
Rates or Other interest rate or any other variable term on any Notes
Variable Terms: being offered for sale, the Company will promptly
advise the Agents 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
advises the Agents 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 at a new interest rate or new variable term,
the Company, the Agents and the Trustee shall follow
the procedures set forth under the applicable
"Settlement Procedures."
Suspension of The Company may instruct the Agents to suspend
Solicitation; solicitation of purchases at any time. Upon receipt
Amendment or of such instructions the Agents will promptly suspend
Supplement: solicitation of offers to purchase Notes, which, in
any event, shall not be later than the close of
business on the day such instructions are received,
from the Company until such time as the Company has
advised it that solicitation of offers to purchase may
be resumed. If the Company decides to amend the
Registration Statement (including incorporating any
documents by reference therein) or supplement any of
such documents (other than to change rates or other
variable terms), it will promptly furnish the Agents
and their counsel with copies of the amendment
(including any document proposed to be incorporated by
reference therein) or supplement. One copy of such
filed document, along with a copy of the cover letter
sent to the Commission, will be delivered or mailed
to the Agents at the following addresses:
B-5
<PAGE> 41
If Smith Barney is the Presenting Agent, to it at:
Smith Barney Inc.
388 Greenwich Street - 4th Floor
New York, New York 10013
Attention: MTN Product
Management/Origination-Mark R. Meyer
Telephone: (212) 723-5123
Telecopy: (212) 723-8854
With a copy to:
Smith Barney Inc.
388 Greenwich Street - 34th Floor
New York, New York 10013
Attention: Legal Compliance -
Adrienne Garofalo
Telephone: (212) 816-7594
Telecopy: (212) 816-7912
If to PaineWebber, to it at:
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Attention: Utility Finance Group
If to A.G. Edwards, to it at:
A.G. Edwards & Sons, Inc.
One North Jefferson
St. Louis, Missouri 63103
Attention: Mr. John Meiners
B-6
<PAGE> 42
In the event that at the time the solicitation
of offers to purchase from the Company is suspended
(other than to change interest rates or other variable
terms) there shall be any orders outstanding which
have not been settled, the Company will promptly
advise the Agents and the Trustee whether such orders
may be settled and whether copies of the Prospectus as
in effect at the time of the suspension may be
delivered in connection with the settlement of such
orders. 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 orders may not be settled or that copies of such
Prospectus may not be so delivered.
Delivery of Prospectus: A copy of the most recent Prospectus and
Pricing Supplement must accompany or precede the
earlier of (a) the written confirmation of a sale sent
to a customer or the agent of such customer, and (b)
the delivery of Notes to a customer or the agent of
such customer.
Authenticity of The Agents will have no obligations or
Signatures: 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.
Documents Incorporated The Company shall supply each Agent with an
by Reference: adequate supply of all documents incorporated by
reference in the Registration Statement that are
reasonably requested by such Agent.
Business Day: "Business Day" means any day, other than a
Saturday or Sunday, which is not a day on which
banking institutions or trust companies in Chicago,
Illinois or the city in which is located any office or
agency maintained for the payment of principal of or
premium, if any, or interest on any Note are
authorized or required by law, regulation or
executive order to remain closed.
B-7
<PAGE> 43
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 November 17,
1995, and a Medium-Term Note Certificate Agreement, dated December 29, 1989,
between the Bank and DTC (the "Certificate Agreement"), and its obligations as
a participant in DTC, including DTC's Same-Day Funds Settlement System
("SDFS").
Issuance: All Notes issued in book-entry form having the
same Original Issue Date, redemption
provisions, interest payment dates, interest
rate, and Stated Maturity will be represented
initially by a single global security in fully
registered form without coupons (each a
"Book-Entry Note").
Each Book-Entry Note will be dated and
issued as of the date of its authentication by
the Trustee and shall also bear an Original
Issue Date. Unless otherwise set forth in the
Note, each Book-Entry Note will bear interest
from (a) with respect to an original Book-Entry
Note (or any portion thereof), its Original
Issue Date and (b) with respect to any
Book-Entry Note (or portion thereof) issued
subsequently upon exchange of a Book-Entry Note
or in lieu of a destroyed, lost or stolen
Book-Entry Note, the most recent Interest
Payment Date (defined therein) to which interest
has been paid or duly provided for on the
predecessor Book-Entry Note or Notes (or if no
such payment or provision has been made, the
Original Issue Date of the prdecessor
Book-Entry Note or Notes), regardless of the
date of authentication of such subsequently
issued Book-Entry Note. No Book-Entry Note
shall represent any Note issued in certificated
form.
B-8
<PAGE> 44
Identification: The Company has arranged with the CUSIP
Service Bureau of Standard & Poor's Corporation
(the "CUSIP Service Bureau") for the
reservation of approximately 900 CUSIP numbers
which have been reserved for and relating to
Book-Entry Notes and the Company has delivered
to the Trustee and DTC a written list of such
CUSIP numbers. The Trustee will assign CUSIP
numbers to Book-Entry 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
Book-Entry Notes. The Trustee will notify the
Company at any time when fewer than 50 of the
reserved CUSIP numbers remain unassigned to
Book-Entry Notes, and, if it deems necessry,
the Company will reserve additional CUSIP
numbers for assignment to Book-Entry Notes.
Upon obtaining such additional CUSIP numbers,
the Company will deliver a list of such
additional numbers to the Trustee and DTC.
Registration: Each Book-Entry 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 Book-Entry Note) (or
one or more indirect participants in DTC
designated by such owner) will 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 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 a Book-Entry 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
Book-Entry Note.
B-9
<PAGE> 45
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 Book-Entry Notes outstanding on such
date that represent Book-Entry Notes having the
same terms (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 Book-Entry Notes
shall be exchanged for a single replacement
Book-Entry Note; and (c) a new CUSIP number,
obtained from the Company, to be assigned to
such replacement Book-Entry 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 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
Book-Entry Notes to be exchanged will no longer
be valid. On the specified exchange date, the
Trustee will exchange such Book-Entry Notes for
a single Book-Entry Note bearing the new CUSIP
number and the CUSIP numbers of the exchanged
Book-Entry Notes will, in accord with CUSIP
Service Bureau procedures, be canceled and not
reassigned.
Denominations: Notes issued in book-entry form will be issued
in denominations of $1,000 and any
larger denomination which is an integral
multiple of $1,000.
Interest: General. Interest on each Note issued in
book-entry form will accrue from the
Original Issue Date of the Book-Entry Note
representing such Note. Each payment of
interest on a Note issued in book-entry form
will include interest accrued through the day
preceding, as the case may be, the Interest
Payment Date, or the earlier of the Stated
Maturity or the date of redemption, if any (the
"Maturity"). Interest payable at Maturity of a
Note issued in book-entry form will be payable
to the Person to whom the principal of such
Note is payable. DTC will arrange for each
pending deposit message described under
Settlement Procedure C below to be transmitted
to Standard & Poor's, which will use the
information in the message to include certain
terms of the related Book-Entry Note in the
appropriate daily bond report published by
Standard & Poor's.
B-10
<PAGE> 46
Regular Record Dates. The record date (the
"Regular Record Date") with respect to any
Interest Payment Date for a Note shall be the
fifteenth calendar day (whether or not a
business day) preceding such Interest Payment
Date.
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 to the holders on the
Regular Record Date preceding such Interest
Payment 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 second
Interest Payment Date following the Original
Issue Date.
Interest payments on Notes issued in book-entry
form will be made semiannually as specified in
each Note and the related Pricing Supplement and
at Maturity unless such day is not a Business
Day, in which case such payment will be made on
the next Business Day.
Payments of Principal Payments of Interest Only. Promptly after each
and Interest: 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 Book-Entry Note on the following
Interest Payment Date (other than an Interest
Payment Date coinciding with Maturity) and the
total of such amounts. DTC will confirm the
amount payable on each Book-Entry Note on such
Interest Payment Date by reference to the daily
bond reports published by Standard & Poor's. On
such Interest Payment Date, the Company will pay
to the Trustee, and the Trustee in turn will pay
to DTC, such total amount of interest due (other
than at Maturity), at the times and in the
manner set forth below under "Manner of Payment".
B-11
<PAGE> 47
Payments at Maturity. On or about the first
Business Day of each month in which principal
and/or interest is to be paid, the Trustee will
deliver to the Company and DTC a written list of
principal, interest and premium, if any, to be
paid on each Book-Entry Note maturing either at
Stated Maturity or, if applicable, on a
redemption date in the following month. The
Trustee, the Company and DTC will confirm the
amounts of such principal and interest payments
with respect to a Book-Entry Note on or about
the fifth Business Day preceding the Maturity of
such Book-Entry Note. At such Maturity, the
Company will pay to the Trustee, and the Trustee
in turn will pay to DTC, the principal amount of
such Note, together with interest and premium,
if any, due at such Maturity, at the times and
in the manner set forth below under "Manner of
Payment." If any Maturity of a Book-Entry Note
is not a Business Day, the payment due on such
day shall be made on the next succeeding
Business Day and no interest shall accrue on
such payment for the period from and after such
Maturity. 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 Book-Entry Notes as of the
immediately preceding Business Day.
B-12
<PAGE> 48
Manner of Payment. The total amount of
any principal, premium, if any, and interest
due on Book-Entry Notes on any Interest Payment
Date or at Maturity shall be transferred by the
Company to the Trustee to an account designated
by the Trustee in funds available for use by
the Trustee as of 9:30 a.m., New York City
time, on such date. The Company will confirm
such instructions in writing to the Trustee.
Prior to 10:00 a.m. New York City time, on such
date or as soon as possible thereafter, the
Trustee will pay (but only from funds withdrawn
from such account) 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 of
interest, principal and premium, if any, due on
a Book-Entry Note on such date. Thereafter on
such date, DTC will pay, in accordance with its
SDFD operating procedures then in effect, such
amounts in funds available for immediate use to
the respective Participants in whose names such
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 by DTC of the
principal of, or premium, if any, or interest
on, the Book-Entry Notes to such Participants.
Withholding Taxes. The amount of any taxes
required under applicable law to be withheld
from any interest payment on a 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 Note.
Settlement Procedures: Settlement procedures with regard to each Note
in book-entry form sold by an Agent as
agent of the Company or as principal, will be as
follows:
A. The Presenting Agent will advise the Company
by telephone (confirmed in writing) or
telecopy of the following Settlement
information:
B-13
<PAGE> 49
1. Taxpayer identification number of the
purchaser.
2. Principal amount of the Note.
3. Interest Rate.
4. Interest Payment Dates.
5. Price to public of the Note.
6. Trade date.
7. Settlement Date (Original Issue Date).
8. Stated Maturity.
9. Net proceeds to the Company.
10. Agent's commission.
11. Redemption provisions, if any.
B. The Company will advise the Trustee by telecopy
of the above settlement information received
from such Agent with respect to the Book-Entry
Note representing such Note.
C. The Company will assign a CUSIP number to such
Note and the Trustee will communicate to DTC
through DTC's Participant Terminal System, a
pending deposit message specifying the
following settlement information, which will
route such relevant information to such Agent,
Standard & Poor's Corporation and Interactive
Data Corporation:
1. The information set forth in Settlement
Procedure A.
2. Identification numbers of the participant
accounts maintained by DTC on behalf of the
Trustee and such Agent.
3. Initial Interest Payment Date for such
Note, number of days by which such date
succeeds the related record dated for DTC
purposes and, if then calculable, the
amount of interest payable on such Interest
Payment Date (which amount shall have been
confirmed by the Trustee).
B-14
<PAGE> 50
4. CUSIP number of the Book-Entry Note
representing such Note.
5. Whether such Book-Entry Note represents
any other Notes issued or to be issued
in book-entry form.
D. The Trustee will complete a Book-Entry Note
representing such Note in a form that has
been approved by the Company, such Agent
and the Trustee.
E. The Trustee will authenticate the
Book-Entry Note representing such Note.
F. DTC will credit such Note to the
participant account of the Trustee
maintained by DTC.
G. 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 such Agent maintained by DTC
and (ii) to debit the settlement account
of such Agent and credit the settlement
account of the Trustee maintained by DTC,
in an amount equal to the price of such
Note less such Agent's commission. Any
entry of such a deliver order shall be
deemed to constitute a representation and
warranty by the Trustee to DTC that (i) the
Book-Entry Note representing such Note has
been issued and authenticated and (ii) the
Trustee is holding such Book-Entry Note
pursuant to the Medium-Term Note
Certificate Agreement between the Trustee
and DTC.
H. The Agent will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC (i) to debit such Note to
such 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 such Agent maintained by DTC, in
an amount equal to the public offering
price of such Note.
I. Transfers of funds in accordance with SDFS
deliver orders described in Settlement
Procedures G and H will be settled in
accordance with SDFS operating procedures
in effect on the Settlement Date.
B-15
<PAGE> 51
J. Upon receipt of such funds, the Trustee
will credit to an account of the Company
identified to the Trustee funds available
for late use in the amount transferred to
the Trustee in accordance with Settlement
Procedure G.
K. Such Agent will confirm the purchase of
such Note to the 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 purchaser.
Settlement Procedures For orders of Notes accepted by the Company,
Timetable: Settlement Procedures "A" through "K" set forth
above shall be completed as soon as
possible but not later than the respective
times (New York City time) set forth below:
B-16
<PAGE> 52
SETTLEMENT TIME
PROCEDURE
A 11:00 a.m. on the trade date
B 12:00 noon on the trade date
C 2:00 p.m. on the trade date
D 3:00 p.m. on the Business Day
before Settlement Date
E 9:00 a.m. on Settlement Date
F 10:00 a.m. on Settlement Date
G-H 2:00 p.m. on the Settlement
Date
I 4:45 p.m. on Settlement Date
J-K 5:00 p.m. on Settlement Date
If a sale is to be settled more than
one Business Day after the trade date,
Settlement Procedures A, B, and C may,
if necessary, be completed at any time prior to
the specified times on the first Business Day
after such sale date. Settlement Procedure I
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 2:00
p.m., New York City time, on the Business Day
immediately preceding the scheduled Settlement
Date.
B-17
<PAGE> 53
Failure to Settle: If the Trustee fails to enter an SDFS
deliver order with respect to a
Book-Entry Note issued in book-entry form
pursuant to Settlement Procedure G, the Trustee
shall 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 Book-Entry 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 Book-Entry Note, the Trustee
will mark such Book-Entry Note "canceled," make
appropriate entries in its records and send
such canceled Book-Entry Note to the Company.
The CUSIP number assigned to such Book-Entry
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 Book-Entry Note, the
Trustee will exchange such Book-Entry
Note for two Book-Entry Notes, one of which
shall represent the Book-Entry 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
Book-Entry Note and shall bear the CUSIP number
of the surrendered Book-Entry Note.
If the purchase price for any Book-Entry Note
is not timely paid to the Participants with
respect to such Note by the beneficial
purchaser thereof (or a person, including an
indirect participant in DTC, acting on behalf
of such purchaser), such Participants and in
turn, the Presenting Agent may enter SDFS
deliver orders through DTC's Participant
Terminal System reversing the orders entered
pursuant to Settlement Procedures G and H,
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
Presenting Agent to perform its obligations
hereunder or under the Distribution
Agreement, the Company will reimburse such
Agent on an equitable basis for its loss of the
use of funds during the period when the funds
were credited to the account of the Company.
B-18
<PAGE> 54
Notwithstanding the foregoing, upon any
failure to settle with respect to a Book-Entry
Note, DTC may take any 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 Book-Entry Security also
representing other Notes, the Trustee will
provide, in accordance with Settlement
Procedures D and E, for the authentication and
issuance of a Book-Entry Note representing such
remaining Notes and will make appropriate
entries in its records.
Nothing herein should be deemed to
require the Trustee to risk or expend its own
funds in connection with any payment to the
Company, or the Agents, or DTC, or any
beneficial holder of Notes, it being understood
by all parties that payments made by the
Trustee shall be made solely to the extent that
funds are provided to the Trustee for such
purpose.
B-19
<PAGE> 55
PART III: PROCEDURES FOR NOTES ISSUED
IN CERTIFICATED FORM
Denominations: The Notes will be issued in denominations of
$1,000 and integral multiples of $1,000 in
excess thereof.
Interest: Each Note will bear interest in accordance
with its terms. Interest will begin to accrue
on the Original Issue Date of a Note for the
first interest period and on the most recent
Interest Payment Date to which interest
has been paid for all subsequent interest
periods. Each payment of interest shall include
interest accrued to, but excluding, the date of
such payment. Interest payments in respect of
Notes will be made semiannually as specified in
each Note and the related Pricing Supplement
and at Maturity. However, the first payment of
interest on any Note issued between a Regular
Record Date and an Interest Payment Date will
be made on the Interest Payment Date following
the next succeeding Regular Record Date. The
Regular Record Date for any payment of interest
shall be the fifteenth calendar day (whether or
not a Business Day), prior to the applicable
Interest Payment Date. Interest at Maturity
will be payable to the person to whom the
principal is payable.
Nothing herein should be deemed to require
the Trustee to risk or expend its own
funds in connection with any payment to the
Company, or the Agents, or DTC, or any holder
of Notes, it being understood by all parties
that payments made by the Trustee shall be made
solely to the extent that funds are provided to
the Trustee for such purpose.
B-20
<PAGE> 56
Payments of Principal and
Interest: Upon presentment and delivery of the Note, the
Trustee will pay the principal amount of each
Note at Maturity and the final installment of
interest in immediately available funds. All
interest payments on a Note, other than
interest due at Maturity, will be made by check
drawn on the Trustee and mailed by the Trustee
to the person entitled thereto as provided in
the Note. Any payment of principal or interest
required to be made of principal or interest
required to be made on an Interest Payment Date
or at Maturity of a Note which is not a
Business 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
the Interest Payment Date or at Maturity, as
the case may be, and no interest shall accrue
for the period from and after such Interest
Payment Date or Maturity.
The Trustee will provide to the Company
in each month prior to a month in which any
Note or Notes mature, a list of the principal
and interest to be paid on Notes maturing in
the next succeeding month. The Trustee will be
responsible for withholding taxes on interest
paid as required by applicable law, but shall
be relieved from any such responsibility if it
acts in good faith and in reliance upon an
opinion of counsel.
Notes presented to the Trustee at maturity for
payment will be canceled and held by the
Trustee.
Settlement Procedures: Settlement Procedures with regard to each Note
purchased though an Agent, as agent, shall be
as follows:
A. The Presenting Agent will advise the
Company by telephone (confirmed in writing)
or telecopy of the following Settlement
information with regard to each Note:
1. Exact name in which the Note is to be
registered (the "Registered Owner").
B-21
<PAGE> 57
2. Exact address or addresses
of the Registered Owner for delivery,
notices and payments of principal and
interest.
3. Taxpayer identification number of
the Registered Owner.
4. Principal amount of the Note.
5. Denomination of the Note.
6. Interest Rate.
7. Interest Payment Dates.
8. Price to public of the Note.
9. Trade date.
10. Settlement date (Original Issue
Date).
11. Stated Maturity.
12. Net proceeds to the Company.
13. Agent's commission.
14. Redemption provisions, if any.
B. The Company shall provide to the Trustee
the above Settlement information
received from such Agent and shall cause
the Trustee to issue, authenticate and
deliver Notes. The Company also shall
provide to the Trustee and/or such Agent a
copy of the applicable Price Supplement.
C. With respect to each trade, the Trustee
will deliver the Notes to such Agent at
the following address:
B-22
<PAGE> 58
If Smith Barney, to it at:
Smith Barney Inc.
388 Greenwich Street - 4th Floor
New York, New York 10013
Attention: MTN Product
Management/Origination-Mark R. Meyer
Telephone: (212) 723-5123
Telecopy: (212) 723-8854
If to PaineWebber, to it at:
PaineWebber Incorporated
55 Water Street - 3rd Floor
New York, New York 10041
Telephone: (212) 558-2403
If to A.G. Edwards, to it at:
A.G. Edwards & Sons, Inc.
One North Jefferson
St. Louis, Missouri 63103
Attention: Mr. John Meiners
Telephone: (314) 289-5800
Telecopy: (314) 289-5989
The Trustee will keep a copy of such
Note. Such Agent will acknowledge receipt of
the Note through a broker's receipt and will
keep a copy of such Note. Delivery of the Note
will be made only against such acknowledgment
of receipt. Upon determination that the Note
has been authorized, delivered and completed as
aforementioned, such Agent will wire the net
proceeds of the Note after deduction of its
applicable commission to the Company pursuant
to standard wire instructions given by the
Company.
B-23
<PAGE> 59
D. Such Agent will deliver the Note (with
confirmations), as well as a copy of
the Prospectus and the Pricing Supplement
received from the Trustee to the purchaser
against payment in immediately available
funds.
E. The Trustee will send a copy of such Note
to the Company.
Settlement Procedures For offers accepted by the Company, Settlement
Timetable: Procedures "A" through "E" set forth above
shall be completed on or before the
respective times set forth below:
SETTLEMENT TIME
PROCEDURE
A 5:00 p.m. on the trade date
B 3:00 p.m. on the second Business
Day prior to settlement
C 2:15 p.m. on day of settlement
D 3:00 p.m. on day of settlement
E 5:00 p.m. on day of settlement
B-24
<PAGE> 60
Failure to Settle: In the event that a purchaser of a Note from
the Company shall either fail to accept
delivery of or make payment for a Note
on the date fixed for settlement, such
Agent will forthwith notify the Trustee and the
Company by telephone, confirmed in writing, and
return the Note to the Trustee. The Trustee,
upon receipt of the Note from such Agent, will
immediately advise the Company and the Company
will prompty arrange to credit the account of
such Agent in an amount of immediately
available funds equal to the amount previously
paid by such Agent in settlement for the 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 Agent to perform its obligations
hereunder or under the Distribution Agreement,
the Company will reimburse such Agent on an
equitable basis for its 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 Note in respect
of which the failure occurred, the Trustee will
cancel the Note, make appropriate entries in
its records to reflect the fact that the Note
was never issued, and accordingly notify in
writing the Company.
B-25
<PAGE> 61
EXHIBIT B
UNITED CITIES GAS COMPANY
("COMPANY")
MEDIUM-TERM NOTES, SERIES A
TERMS AGREEMENT
__________________, 19__
To: The Agent(s) identified herein
Dear Sirs/Madams:
The undersigned agrees to sell to the Agent(s) named below for its
account, on and subject to the terms and conditions of the Distribution
Agreement, dated November 22, 1995, between the Company, Smith Barney Inc.,
PaineWebber Incorporated and A.G. Edwards & Sons, Inc. ("Distribution
Agreement"), the following notes ("Offered Notes"), which are a tranche of the
Company's Medium-Term Notes, Series A, on the following terms:
ADDITIONAL DESIGNATION: _________________.
PRINCIPAL AMOUNT: $___________.
INTEREST: __________% per annum, from _______________, 19__, payable
semiannually on ___________ and ______________, commencing
________________, 19__, to holders of record on the preceding Regular Record
Date.
MATURITY: ______________, ____.
REDEMPTION: [None/Describe redemption terms, including Initial
Redemption Date, Initial Redemption Percentage and Annual Redemption Percentage
Reduction].
SINKING FUND: [None/Describe sinking fund provisions].
LISTING: [None/Designate exchange].
STANDOFF PERIOD: [None/Describe period].
<PAGE> 62
ADDITIONAL TERMS:
[Describe additional terms, including any conversion rights.]
PROCEEDS TO COMPANY: _________% of principal amount, plus accrued
interest, if any, from ________________, 19__.
Price to Public: _____% of principal amount, subject to change by the
Underwriter.
SETTLEMENT DATE: ______ [A.M./P.M.] on _________________, 19__, at
the offices of [Chapman and Cutler], in immediately available (same day) funds.
SETTLEMENT AND TRADING: [Book-Entry Only via DTC. The Offered
Securities will trade in DTC's Same Day Funds Settlement System./Certificated
securities.]
NAME AND ADDRESS OF AGENT(S):
_______________________________
_______________________________
_______________________________
ADDITIONAL DOCUMENTS TO BE DELIVERED AT THE CLOSING:
[Describe certificates, opinions, comfort letters and other documents
to be delivered at the closing].
The provisions of the Distribution Agreement are incorporated herein
by reference.
For purposes of Section 8 of the Distribution Agreement, the only
information furnished to the Company by the Agent(s) for use in the Prospectus
consists of the following information in the pricing supplement related to the
Offered Securities dated _______________, 19__: [(i) the last paragraph at the
bottom of the pricing supplement cover page concerning the terms of the
offering by the Underwriter, (ii) the legend concerning stabilizing on the
front cover page of the pricing supplement, and (iii) the concession and
reallowance figures appearing in the ____________ paragraph under the caption
"Plan of Distribution" in the pricing supplement.]
-37-
<PAGE> 63
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement between the Company and
the Agent(s) in accordance with its terms.
Very truly yours,
UNITED CITIES GAS COMPANY
By:
----------------------
[Name]
Its: [Title]
The foregoing Terms Agreement is hereby confirmed
and accepted as of the date first above written.
- -------------------------
By:
----------------------
[Name]
Its: [Title]
-38-
<PAGE> 64
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company
shall pay the applicable Agent, on a discount basis, a commission for the sale
of each Note equal to the principal amount of such Note multiplied by the
appropriate percentage set forth below:
<TABLE>
<CAPTION>
PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
- --------------- ----------------
<S> <C>
From 9 months but less than 1 year............. .125
From 1 year but less than 18 months............ .150
From 18 months but less than 2 years........... .200
From 2 years but less than 3 years............. .250
From 3 years but less than 4 years............. .350
From 4 years but less than 5 years............. .450
From 5 years but less than 6 years............. .500
From 6 years but less than 7 years............. .550
From 7 years but less than 10 years............ .600
From 10 years but less than 15 years........... .625
From 15 years but less than 20 years........... .700
From 20 years to less than 30 years............ .750
</TABLE>
