UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ]Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1996
or
[ ]Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 1-7296
NORTHERN ILLINOIS GAS COMPANY
(Exact name of registrant as specified in its charter)
Illinois 36-2863847
(State of incorporation) (I.R.S. Employer
Identification No.)
1844 Ferry Road
Naperville, Illinois 60563-9600
(Address of principal (Zip Code)
executive offices)
(630)983-8888
(Registrant's telephone number)
Registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this Form with a reduced disclosure
format.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Shares of common stock, par value $5, outstanding at July 31, 1996, were
15,232,414, all of which are owned by NICOR Inc.
Northern Illinois Gas Page i
Table of Contents
Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited) 1
Consolidated Statement of Income -
Three, Six and Twelve Months Ended
June 30, 1996 and 1995 2
Consolidated Statement of Cash Flows -
Six and Twelve Months Ended
June 30, 1996 and 1995 3
Consolidated Balance Sheet -
June 30, 1996 and 1995, and
December 31, 1995 4
Notes to the Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Part II. Other Information
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8-K 10
Signature 11
Exhibit Index 12
Selected terms:
Ill.C.C. - Illinois Commerce Commission.
Mcf, Bcf - Thousand cubic feet, billion cubic feet.
Degree days - Number of degrees by which the daily
mean temperature falls below 65 degrees
Fahrenheit.
Northern Illinois Gas Page 1
PART I - Financial Information
Item 1. Financial Statements
The following condensed unaudited financial statements of Northern
Illinois Gas have been prepared by the company pursuant to the
rules and regulations of the Securities and Exchange Commission
(SEC). Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to SEC rules and regulations. The condensed
financial statements should be read in conjunction with the
financial statements and the notes thereto included in the
company's latest Annual Report on Form 10-K.
The information furnished reflects, in the opinion of the company,
all adjustments (consisting only of normal recurring adjustments)
necessary for a fair statement of the results for the interim
periods presented. Because of seasonal and other factors, the
results for the interim periods presented are not necessarily
indicative of the results to be expected for the full fiscal year.
<TABLE>
Northern Illinois Gas Page 2
Consolidated Statement of Income (Unaudited)
(Millions)
<CAPTION>
Three months ended Six months ended Twelve months ended
June 30 June 30 June 30
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $ 284.7 $ 208.9 $ 937.2 $ 778.3 $1,471.6 $1,258.8
Operating expenses
Cost of gas 157.0 106.0 596.4 481.1 902.5 748.6
Operating and maintenance 37.8 37.3 77.1 75.0 157.2 148.1
Depreciation 18.1 16.0 64.4 57.5 105.7 95.5
Taxes, other than income taxes 24.3 19.0 75.8 65.5 111.2 98.6
Income taxes 13.6 7.9 37.9 29.4 57.2 45.7
250.8 186.2 851.6 708.5 1,333.8 1,136.5
Operating income 33.9 22.7 85.6 69.8 137.8 122.3
Other income (expense)
Interest income .1 2.0 .1 2.1 .4 2.6
Other, net .3 .3 .6 .6 1.1 2.2
Income taxes on other income (.1) (.9) (.2) (1.1) (.4) (1.8)
.3 1.4 .5 1.6 1.1 3.0
Interest expense
Interest on debt, net of amounts
capitalized 9.6 8.9 20.1 19.4 38.7 39.1
Other 2.0 .1 2.4 .3 2.9 .1
11.6 9.0 22.5 19.7 41.6 39.2
Net income 22.6 15.1 63.6 51.7 97.3 86.1
Dividends on preferred stock .1 .2 .3 .2 .5 .5
Earnings applicable to common stock $ 22.5 $ 14.9 $ 63.3 $ 51.5 $ 96.8 $ 85.6
<F1>
Northern Illinois Gas is a wholly owned subsidiary of NICOR Inc. Earnings and dividends per share
information is therefore omitted.
<F2>
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
Northern Illinois Gas Page 3
Consolidated Statement of Cash Flows (Unaudited)
(Millions)
<CAPTION>
Six months ended Twelve months ended
June 30 June 30
1996 1995 1996 1995
Operating activities
<S> <C> <C> <C> <C>
Net income $ 63.6 $ 51.7 $ 97.3 $ 86.1
Adjustments to reconcile net income to net
cash flow provided from operating activities:
Depreciation 64.4 57.5 105.7 95.5
Deferred income tax expense (benefit) (1.5) 2.6 .9 1.0
Change in working capital items and other:
Accounts receivable, less allowances 95.2 115.8 (61.2) 20.7
Gas in storage 42.8 58.3 (8.5) (10.3)
Deferred/accrued gas costs (24.5) 54.9 (53.5) 27.4
Accounts payable (64.6) (26.0) 11.7 26.2
Temporary LIFO liquidation 12.0 30.7 (18.7) (19.4)
Gas refunds due customers (20.1) 43.3 (41.5) 42.4
Other 10.8 2.8 8.4 (12.9)
Net cash flow provided from operating activities 178.1 391.6 40.6 256.7
Investing activities
Capital expenditures (42.5) (60.2) (134.5) (165.6)
Other - .2 .1 .8
Net cash flow used for investing activities (42.5) (60.0) (134.4) (164.8)
Financing activities
Net proceeds from issuing long-term debt - - 49.5 99.1
Disbursements to retire long-term debt (50.0) - (100.0) (50.0)
Short-term borrowings (repayments), net (42.3) (188.2) 109.3 -
Dividends paid (42.7) (37.0) (77.1) (76.6)
Other (.6) (.5) (.6) (.2)
Net cash flow used for financing activities (135.6) (225.7) (18.9) (27.7)
Net increase (decrease) in cash and cash equivalents - 105.9 (112.7) 64.2
Cash and cash equivalents, beginning of period - 6.8 112.7 48.5
Cash and cash equivalents, end of period $ - $ 112.7 $ - $ 112.7
<F1>
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
Northern Illinois Gas Page 4
Consolidated Balance Sheet (Unaudited)
(Millions)
<CAPTION>
June 30 December 31 June 30
Assets 1996 1995 1995
<S> <C> <C> <C>
Gas distribution plant, at cost $ 2,889.0 $ 2,851.8 $ 2,766.5
Less accumulated depreciation 1,243.1 1,182.2 1,143.1
1,645.9 1,669.6 1,623.4
Other property and investments, net of accumulated
depletion of $34.4 8.5 8.4 8.1
Current assets
Cash and cash equivalents - Affiliates - - 64.6
- Other - - 48.1
Accounts receivable, less allowances of $7.4,
$4.7 and $6.1, respectively 147.6 242.8 86.4
Deferred gas costs 33.2 8.7 -
Gas in storage, at last-in, first-out (LIFO) cost 20.2 63.0 11.7
Other 23.9 25.1 23.9
224.9 339.6 234.7
Other assets 66.7 69.1 54.5
$ 1,946.0 $ 2,086.7 $ 1,920.7
Capitalization and Liabilities
Capitalization
Long-term debt $ 421.4 $ 446.2 $ 446.6
Preferred stock
Redeemable 8.6 9.1 9.1
Nonredeemable 1.4 1.4 1.4
Common equity
Common stock 76.2 76.2 76.2
Paid-in capital 107.9 107.9 107.9
Retained earnings 512.3 516.0 499.5
1,127.8 1,156.8 1,140.7
Current liabilities
Long-term obligations due within one year 25.5 50.5 50.5
Short-term borrowings 109.3 151.6 -
Accounts payable 216.4 281.0 204.7
Accrued interest 38.9 37.4 37.7
Temporary LIFO liquidation 12.0 - 30.7
Gas refunds due customers 4.1 24.2 45.6
Accrued gas costs - - 20.3
Other 43.5 14.2 33.4
449.7 558.9 422.9
Deferred credits and other liabilities
Deferred income taxes 173.1 172.8 166.6
Regulatory income tax liability 85.1 86.5 88.6
Unamortized investment tax credits 49.8 50.8 51.7
Other 60.5 60.9 50.2
368.5 371.0 357.1
$ 1,946.0 $ 2,086.7 $ 1,920.7
<F1>
The accompanying notes are an integral part of this statement.
</TABLE>
Northern Illinois Gas Page 5
Notes To The Consolidated Financial Statements (Unaudited)
ACCOUNTING POLICIES
Depreciation. Depreciation is calculated using a straight-line method for
the calendar year. For interim periods, depreciation is allocated based on
gas deliveries. In April 1996, the composite depreciation rate increased to
4.1 percent from 3.7 percent.
Gas in Storage. Gas in storage injections and withdrawals are valued using
the last-in, first-out (LIFO) method on a calendar-year basis. For interim
periods, the difference between current replacement cost and the LIFO cost
for quantities of gas temporarily withdrawn from storage is recorded in cost
of gas as a temporary LIFO liquidation.
CASH FLOW INFORMATION
Income taxes paid, net of refunds, and interest paid, net of amounts
capitalized, for the periods ended June 30 were (millions):
Six months Twelve months
1996 1995 1996 1995
Income taxes paid $32.9 $20.9 $57.0 $57.0
Interest paid 20.7 19.2 39.7 38.1
REGULATORY MATTERS
Rate Proceeding. On April 3, 1996, the Ill.C.C. granted Northern Illinois
Gas a $33.7 million general rate increase, of which $12 million relates to
the change in the company's composite depreciation rate noted above. The
order, effective April 11, 1996, allows the company a rate of return on
original-cost rate base of 9.67 percent, which reflects an 11.13 percent
cost of common equity. The new rate structure will allow Northern Illinois
Gas to recover a larger proportion of its fixed costs during warmer months.
The overall result is that the company's earnings will be less sensitive to
the effects of weather and the seasonal variations in quarterly earnings
will be reduced.
In May 1996, the Ill.C.C. denied requests for rehearing filed by several
parties including Northern Illinois Gas. The company and other parties have
subsequently appealed the Ill.C.C.'s order to the Third District Appellate
Court of Illinois.
LONG-TERM DEBT
On August 13, 1996, the company issued $75 million of 6.45% First Mortgage
Bonds due in 2001. The net proceeds of the sale replenished general
corporate funds which were used for the March 1996 maturity of $50 million
of 4-1/2% First Mortgage Bonds and the completion of the Elgin-Volo pipeline
project.
Northern Illinois Gas Page 6
Notes To The Consolidated Financial Statements (Unaudited)
(Concluded)
CONTINGENCIES
The company is involved in legal or administrative proceedings before
various courts and agencies with respect to rates, taxes and other matters.
Until the early 1950s, manufactured gas facilities were operated in the
Northern Illinois Gas service territory. Manufactured gas is now known to
have created various by-products that may still be present at these sites.
Current environmental laws may require cleanup of these former manufactured
gas plant sites. The company has identified up to 40 properties in its
service territory believed to be the location of such sites. Of these 40
properties, Northern Illinois Gas currently owns 15 and formerly owned or
leased 13. The remaining properties were never owned or leased by the
company. Information has been presented to the Illinois Environmental
Protection Agency regarding preliminary reviews of the company's currently
owned and formerly owned or leased properties. More detailed investigations
are either currently in progress or planned at many of these sites. At
certain sites, the current owners are seeking to allocate cleanup costs to
former owners or lessees, including Northern Illinois Gas.
The results of continued testing and analysis should determine to what
extent remediation is necessary and may provide a basis for estimating any
additional future costs which, based on industry experience, could be
significant. Costs are currently being recovered pursuant to Ill.C.C.
authorization.
On December 20, 1995, Northern Illinois Gas filed suit against certain
insurance carriers in the Circuit Court of Cook County. This suit seeks to
declare the insurance carriers liable under policies in effect primarily
between the years 1954 and 1985 for costs incurred or to be incurred for
environmental cleanup of former manufactured gas plant sites. Presently,
management cannot predict the timing or outcome of this lawsuit. Any
recoveries from such litigation or other sources will be flowed back to the
company's customers.
Although unable to determine the outcome of these contingencies, management
believes that appropriate accruals have been recorded. Final disposition of
these matters is not expected to have a material impact on the company's
financial condition or results of operations.
Northern Illinois Gas Page 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion should be read in conjunction with the Management's
Discussion and Analysis section of the Northern Illinois Gas 1995 Annual
Report on Form 10-K.
RESULTS OF OPERATIONS
Net income for the three-, six- and twelve-month periods ended June 30,
1996, rose $7.5 million to $22.6 million, $11.9 million to $63.6 million and
$11.2 million to $97.3 million, respectively, from the corresponding 1995
periods. For the three-month period, the increase was due primarily to the
impact of a 2.8 percent general rate increase along with rate design changes
which shift some revenues from cold-weather months to warm-weather months.
For the six- and twelve-month periods, the increase was due primarily to the
positive impact of higher deliveries. The April 1996 rate case result also
contributed to the improvements.
Operating revenues increased $75.8 million, $158.9 million and $212.8
million for the three-, six- and twelve-month periods, respectively, due
primarily to increased deliveries and higher natural gas costs which are
passed through to sales customers. Increased deliveries were attributable
to the positive impact of colder weather and demand growth.
Margin, defined as operating revenues less cost of gas and revenue taxes, is
shown in the following table for the periods ended June 30. Margin
increased in each period due primarily to higher deliveries and the impact
of the general rate increase. Margin per Mcf delivered for the three-month
period rose sharply as a result of the general rate increase along with rate
design changes which shift some revenues from cold-weather months to warm-
weather months.
Three months Six months Twelve months
1996 1995 1996 1995 1996 1995
Margin (Millions) $106.8 $ 87.2 $275.7 $241.9 $476.1 $429.8
Margin per Mcf
delivered 1.13 1.00 .85 .83 .85 .87
Operating and maintenance expense increased $9.1 million for the twelve-
month period due primarily to higher administrative and general costs.
Depreciation expense increased in each period due primarily to the change in
the plant composite depreciation rate and plant additions. For further
information on the change in the plant composite depreciation rate, see
Accounting Policies on page 5.
Interest income decreased in each period due to lower investment levels.
Interest expense increased in each period due primarily to higher interest
on income tax adjustments.
The effective income tax rate rose to 37.2 percent from 35.5 percent for the
twelve-month period due primarily to less excess deferred taxes turning
around.
Northern Illinois Gas Page 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
FINANCIAL CONDITION
Net cash flow from operating activities decreased $213.5 million and $216.1
million for the six- and twelve-month periods, respectively, due to the
timing of gas cost recoveries, the impact of a 1995 gas pipeline refund and
a return to normal levels of customer advance payments. Net cash flow from
operations may fluctuate widely from one interim period to another due to
the seasonal nature of Northern Illinois Gas' business. The company
generally relies on short-term financing to meet temporary working capital
needs.
The company maintains short-term credit agreements with major domestic and
foreign banks. At June 30, 1996, these agreements, which serve as backup
for the issuance of commercial paper, totaled $250 million, and the company
had $109.3 million of commercial paper outstanding. At June 30, 1996, the
unused lines of credit under these credit agreements were $140.7 million.
On August 13, 1996, the company issued $75 million of 6.45% First Mortgage
Bonds due in 2001. The net proceeds of the sale replenished general
corporate funds which were used for the March 1996 maturity of $50 million
of 4-1/2% First Mortgage Bonds and the completion of the Elgin-Volo pipeline
project.
RATE PROCEEDING
On April 3, 1996, the Ill.C.C. granted Northern Illinois Gas a $33.7
million, 2.8 percent general rate increase effective April 11, 1996. For
further information, see Regulatory Matters on page 5.
<TABLE>
Northern Illinois Gas Page 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Concluded)
OPERATING STATISTICS
Changes in weather can materially affect operating results. Operating revenues, deliveries, weather statistics
and other data are presented below.
<CAPTION>
Three months ended Six months ended Twelve months ended
June 30 June 30 June 30
1996 1995 1996 1995 1996 1995
Operating revenues (Millions):
Sales
<S> <C> <C> <C> <C> <C> <C>
Residential $ 181.7 $ 131.7 $ 599.2 $ 499.5 $ 949.5 $ 812.2
Commercial 45.9 31.9 163.3 132.6 248.6 213.7
Industrial 7.4 4.7 30.5 23.0 43.3 35.7
235.0 168.3 793.0 655.1 1,241.4 1,061.6
Transportation
Commercial 10.6 8.6 31.0 27.8 53.4 45.5
Industrial 11.7 13.5 29.6 32.5 59.7 56.5
22.3 22.1 60.6 60.3 113.1 102.0
Revenue taxes and other 27.4 18.5 83.6 62.9 117.1 95.2
$ 284.7 $ 208.9 $ 937.2 $ 778.3 $1,471.6 $1,258.8
Deliveries (Bcf):
Sales
Residential 35.8 33.1 150.8 133.1 249.2 210.1
Commercial 9.2 8.3 41.1 35.3 65.1 55.9
Industrial 1.6 1.4 8.3 6.6 12.2 10.1
46.6 42.8 200.2 175.0 326.5 276.1
Transportation
Commercial 11.3 9.2 45.2 34.4 74.8 56.5
Industrial 36.7 35.3 78.8 83.2 161.2 159.3
48.0 44.5 124.0 117.6 236.0 215.8
94.6 87.3 324.2 292.6 562.5 491.9
Gas cost per Mcf sold $ 3.29 $ 2.35 $ 2.91 $ 2.66 $ 2.68 $ 2.63
Weather statistics:
Degree days 801 726 4,004 3,692 6,423 5,535
Percent colder (warmer) than normal 16.4 5.8 4.1 (4.3) 5.2 (9.8)
Customers at end of period (Thousands):
Sales
Residential 1,668.3 1,638.7
Commercial 140.5 140.6
Industrial 11.5 11.5
1,820.3 1,790.8
Transportation
Commercial 17.8 16.1
Industrial 2.6 2.4
20.4 18.5
1,840.7 1,809.3
</TABLE>
Northern Illinois Gas Page 10
PART II - Other Information
Item 1. Legal Proceedings
For information concerning legal proceedings, see Regulatory
Matters and Contingencies in Notes to the Consolidated Financial
Statements beginning on page 5, which are incorporated herein by
reference.
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index on page 12 filed herewith.
(b) The company did not file a report on Form 8-K during the second
quarter of 1996.
Northern Illinois Gas Page 11
Signature
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 thereunto duly authorized.
Northern Illinois Gas Company
Date August 14, 1996 By DAVID L. CYRANOSKI
David L. Cyranoski
Senior Vice President,
Secretary and Controller
Northern Illinois Gas Page 12
Exhibit Index
Exhibit
Number Description of Document
1.01 Underwriting Agreement, dated August 6, 1996, between the company
and PaineWebber Incorporated.
4.01 Supplemental Indenture, dated May 10, 1996, of the company to
Harris Trust and Savings Bank, Trustee, under Indenture dated as of
January 1, 1954.
4.02 Supplemental Indenture, dated August 1, 1996, of the company to
Harris Trust and Savings Bank, Trustee, under Indenture dated as of
January 1, 1954.
12.01 Computation of Consolidated Ratio of Earnings to Fixed Charges.
27.01 Financial Data Schedule.
NORTHERN ILLINOIS GAS COMPANY
FORM 10-Q
EXHIBIT 1.01
NORTHERN ILLINOIS GAS COMPANY
$75,000,000
FIRST MORTGAGE BONDS
6.45% SERIES DUE AUGUST 1, 2001
UNDERWRITING AGREEMENT
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019 August 6, 1996
Dear Sirs:
Northern Illinois Gas Company (the ''Company'') proposes, subject to the
terms and conditions stated herein and in the General Terms and Conditions of
Underwriting Agreement in the form of Annex A hereto, a copy of which you have
previously received, to issue and sell to the Underwriter named in Schedule I
hereto (the ''Underwriter''), $75,000,000 aggregate principal amount of the
Company's First Mortgage Bonds (the ''Bonds''). All of the provisions of such
General Terms and Conditions of Underwriting Agreement are incorporated herein
by reference in their entirety, and shall be deemed to be a part of this
Underwriting Agreement to the same extent as if such provisions had been set
forth in full herein. Unless otherwise defined herein, terms defined in the
General Terms and Conditions of Underwriting Agreement are used herein as
therein defined.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Bonds in the form heretofore
delivered to you is now proposed to be filed or mailed for filing with the
Commission. Such amendment or supplement sets forth the terms of the Bonds.
Subject to the terms and conditions set forth herein, the Company agrees
to issue and sell to the Underwriter, and the Underwriter agrees to purchase
from the Company, the principal amount of Bonds set forth opposite the name of
such Underwriter in Schedule I hereto on the following terms and conditions:
Aggregate principal amount of Bonds to be
purchased:
$75,000,000
Rate of interest per annum to be borne by the
Bonds (payable semiannually):
6.45% (such rate to be a multiple of .001%)
Maturity date of the Bonds:
August 1, 2001
Price to be paid to the Company for the Bonds:
99.224% of the principal amount of the Bonds (not less than 99%) plus
accrued interest from date of Supplemental Indenture to the date of
delivery of the Bonds.
Initial public offering price of the Bonds:
The Underwriter proposes to offer the Bonds from time to time for sale
in one or more negotiated transactions, or otherwise, at market prices
prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
1
Place for delivery of Bonds:
The Depository Trust Company
55 Water Street
New York, NY 10004
Date and time of Time of Delivery:
August 13, 1996 at 9:00 a.m. Chicago time
Place for checking Bonds on the business day
prior to Time of Delivery:
The Depository Trust Company, 55 Water Street,
New York, New York 10004
Redemption and Sinking Fund:
Any redemption provisions will be as set forth on Schedule II
hereto. No sinking fund will be provided.
Address for notices per Section 12 of the General Terms and Conditions
of Underwriting Agreement:
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
If the foregoing is in accordance with your understanding, please sign
and return to us the enclosed counterparts hereof, whereupon it will become a
binding agreement between the Underwriter and the Company in accordance with
its terms.
Very truly yours,
Northern Illinois Gas Company
By
Vice President
The foregoing Underwriting Agreement is hereby confirmed and accepted as of
the date first above written.
PaineWebber Incorporated
By
Title
2
SCHEDULE I
Name of Underwriter Principal Amount of Bonds
PaineWebber Incorporated $75,000,000
SCHEDULE II
Redemption. The Bonds may not be called for redemption by the Company
prior to August 1, 2000. On August 1, 2000 and thereafter until maturity on
August 1, 2001, the Bonds may be redeemed at the Company's option, on not less
than 30 nor more than 45 days notice, as a whole at any time, or in part from
time to time, at 100% of the principal amount thereof plus accrued and unpaid
interest to the date fixed for redemption.
ANNEX A
NORTHERN ILLINOIS GAS COMPANY
$75,000,000
FIRST MORTGAGE BONDS
GENERAL TERMS AND CONDITIONS OF UNDERWRITING AGREEMENT
Northern Illinois Gas Company, an Illinois corporation (the''Company''),
proposes to enter into an Underwriting Agreement into which these General
Terms and Conditions are incorporated by reference (the ''Underwriting
Agreement'') and, subject to the terms and conditions stated therein, to issue
and sell to the underwriter or underwriters named in Schedule I to the
Underwriting Agreement $75,000,000 aggregate principal amount of its First
Mortgage Bonds (hereinafter called the ''Bonds'') under the registration
statement referred to in Section 2(a) hereof. Such Bonds will be issued under
the Company's Indenture dated as of January 1, 1954, to Harris Trust and
Savings Bank, Trustee (the ''Trustee''), as supplemented by supplemental
indentures dated February 9, 1954, April 1, 1956, June 1, 1959, July 1, 1960,
June 1, 1963, July 1, 1963, August 1, 1964, August 1, 1965, May 1, 1966,
August 1, 1966, July 1, 1967, June 1, 1968, December 1, 1969, August 1, 1970,
June 1, 1971, July 1, 1972, July 1, 1973, April 1, 1975, April 30, 1976, April
30, 1976, July 1, 1976, August 1, 1976, December 1, 1977, January 15, 1979,
December 1, 1981, March 1, 1983, October 1, 1984, December 1, 1986, March 15,
1988, July 1, 1988, July 1, 1989, July 15, 1990, August 15, 1991, July 15,
1992, February 1, 1993, March 15, 1993, May 1, 1993, July 1, 1993, August 15,
1994, October 15, 1995 and May 10, 1996 respectively, and as to be further
supplemented by a Supplemental Indenture (the ''Supplemental Indenture'')
which will be dated the first or fifteenth day of the calendar month in which
the ''Time of Delivery'' (as hereinafter defined) falls, creating the series
in which the Bonds are to be issued. Said Indenture as so supplemented is
hereinafter called the ''Indenture.'' The term ''Underwriters'' herein shall
refer to the several persons, firms and corporations named in Schedule I to
the Underwriting Agreement and the term ''Representatives'' herein shall refer
to the Underwriters identified as the Representatives who are acting on behalf
of the Underwriters (including themselves) in the Underwriting Agreement. All
obligations of the Underwriters under the Underwriting Agreement are several
and not joint. The terms ''Underwriters'', ''Representatives'', ''persons'',
''firms'' and ''corporations'' shall include the singular as well as the
plural.
The terms of the issuance of the Bonds shall be as specified in the
Underwriting Agreement. The Underwriting Agreement shall constitute an
agreement by the Company and the Underwriters to be bound by all of the
provisions of these General Terms and Conditions of Underwriting Agreement, as
follows:
Section 1. Sale of Bonds. Sales of the Bonds will be made to the
Underwriters, for whom the Representatives will act as such. The obligation of
the Company to issue and sell any of the Bonds and the obligation of any of
the Underwriters to purchase any of the Bonds shall be evidenced by the
Underwriting Agreement. The Underwriting Agreement shall specify the aggregate
principal amount of Bonds to be purchased, the rate and time of payment of
interest to be borne by the Bonds, the maturity date of the Bonds, the price
to be paid to the Company for the Bonds, the initial public offering price or
other offering terms of such Bonds and the redemption prices and other special
terms, if any, relating to the Bonds, the names of the Underwriters of such
Bonds, the names of the Representatives of such Underwriters and the amount of
Bonds to be purchased by each Underwriter, and, subject to the provisions of
Section 3 hereof, shall set forth the date, time and manner of the delivery of
such Bonds. The terms of the Bonds will be set forth in the Prospectus
Supplement (as hereinafter defined). The Underwriting Agreement shall be in
the form of an executed writing (which may be in counterparts) and may be
evidenced by an exchange of telecopied communications or any other rapid
transmission device to produce a written record of communications transmitted.
Section 2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement on Form S-3 with respect to the Bonds,
including a related preliminary prospectus, has been prepared by the
Company in conformity with the requirements of the Securities Act of 1933,
as amended (the ''Act''), and the rules and regulations of the Securities
and Exchange Commission (the ''Commission'') under the Act (the
''Regulations''), and has been filed with the Commission on April 18, 1994
and, if one or more amendments to such registration statement, which may
include an amended preliminary prospectus, have been filed with the
Commission, such amendments have been similarly prepared; and such
registration statement has become effective. Such registration statement,
as amended to the date of the Underwriting Agreement, together with the
prospectus supplement referred to below is hereinafter referred to as the
''Registration Statement''. Such prospectus as supplemented specifically
relating to the Bonds and filed with the Commission under Rule 424(b) of
the Act is hereinafter referred to as the ''Prospectus''. The Prospectus
has been prepared by the Company in conformity with the requirements of the
Act and the Regulations. Copies of the Registration Statement and any
related prospectus have been delivered to the Representatives. As used
herein, Registration Statement, Prospectus and preliminary prospectus shall
include, in each case, the material incorporated therein pursuant to Item
12 of Form S-3 filed under the Securities Exchange Act of 1934 (the ''1934
Act'') on or prior to the date of the Underwriting Agreement, and
''amended'', ''amendment'' or ''supplement'' with respect to the
Registration Statement or the Prospectus shall be deemed to include the
filing by the Company of any document pursuant to Sections 13(a), 13(c), 14
or 15(d) of the 1934 Act after the date of the Underwriting Agreement.
(b) The registration statement at the time it became effective, and the
related prospectus and any amendments and supplements thereto filed prior
to the date of the Underwriting Agreement, conformed in all material
respects to the provisions of the Act and the Trust Indenture Act of 1939,
as amended (the ''Trust Indenture Act'') and the rules and regulations of
the Commission thereunder, on the date of the Underwriting Agreement and at
the Time of Delivery (referred to in Section 3) the Registration Statement,
the Prospectus, and any amendments and supplements thereto, and the
Indenture, will conform in all material respects to the Act, the Trust
Indenture Act and the respective rules and regulations of the Commission
thereunder, and at the time the registration statement became effective,
the registration statement and related prospectus did not contain any
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; and at the date of this Underwriting Agreement and at the
Time of Delivery, the Registration Statement and the Prospectus and any
amendments and supplements thereto do not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading; provided, however,
that none of the representations and warranties in this subsection shall
apply to statements in or omissions from the Registration Statement or
Prospectus or any amendment or supplement thereto made in reliance upon and
in conformity with information respecting the Underwriters furnished to the
Company in writing by or on behalf of any Underwriter through the
Representatives expressly for use in the Registration Statement or
Prospectus.
(c) The documents incorporated by reference into the Prospectus, at the
time they were filed with the Commission, complied in all material respects
with the requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the ''1934 Regulations''), and, at the date of this
Underwriting Agreement and at the Time of Delivery, when read together with
the Prospectus and any supplement thereto 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, and any documents filed after the date of the Underwriting
Agreement and so incorporated by reference in the Prospectus will, when
they are filed with the Commission, comply in all material respects with
the requirements of the 1934 Act and the 1934 Regulations, and when read
together with the Prospectus and any supplement thereto will not contain an
untrue statement of material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
2
(d) Arthur Andersen LLP are independent public accountants with respect
to the Company and its subsidiaries as required by the Act and the
Regulations.
(e) The financial statements included in the Registration Statement
present fairly the financial position of the Company and its consolidated
subsidiaries as of the dates indicated and the results of their operations
for the periods specified, and said financial statements have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis during the periods involved.
(f) The Company is a corporation in good standing, duly organized and
validly existing under the laws of Illinois, and has due corporate
authority to carry on the business in which it is engaged and to own and
operate the properties used by it in such business as described in the
Prospectus. The Company's subsidiary constitutes less than 5% of its
consolidated assets and during the year ended December 31, 1995 contributed
less than 5% of its consolidated annual operating revenues and net income,
and the Company does not consider its subsidiary to be material.
(g) The execution and delivery of the Underwriting Agreement have been
duly authorized by the Company and the Underwriting Agreement constitutes a
valid and legally binding obligation of the Company; the Bonds have been
duly authorized, and when issued and delivered pursuant to the Underwriting
Agreement and the Indenture, will have been duly executed, authenticated,
issued and delivered and will constitute valid and legally binding
obligations of the Company in accordance with their respective terms,
entitled to the benefits provided by the Indenture; the Supplemental
Indenture has been duly authorized in substantially the form filed as an
exhibit to the Registration Statement and, when executed and delivered by
the Company and the Trustee, will constitute a valid and legally binding
instrument enforceable in accordance with its terms, except to the extent
the enforceability of the Bonds and the Indenture may be limited by
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors' rights or general
equity principles; and the Indenture and the Bonds as executed and
delivered will conform in all material respects to the descriptions thereof
in the Prospectus.
(h) The issue and sale of the Bonds and the compliance by the Company
with all of the provisions of the Bonds, the Indenture, and the
Underwriting Agreement and the transactions contemplated thereby will not
conflict with or result in any breach or violation of any of the provisions
of, or constitute (disregarding any grace or notice period) a default
under, or result in the imposition of any lien, charge or encumbrance upon
any property or assets of the Company pursuant to the terms of, any other
indenture, or any mortgage, loan agreement, contract, note, lease or other
agreement or instrument to which the Company is a party or by which the
Company may be bound or to which any of the property or assets of the
Company is subject, nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any statute or any
order, rule or regulation applicable to the Company of any court or any
federal, state or other regulatory authority or other governmental body
having jurisdiction over the Company or any of its properties.
(i) Since the respective dates as of which information is given in the
Registration Statement and Prospectus and except as may otherwise be stated
or contemplated therein; (i) there has not been any material adverse change
in the condition, financial or otherwise, of the Company and its
subsidiaries considered as one enterprise, or in the earnings, affairs,
business prospects or properties of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course
of business or arising from any court or governmental action, order or
decree, and (ii) there has been no transaction entered into by the Company
or any subsidiary which is material to the Company and its subsidiaries
considered as one enterprise, other than transactions in the ordinary
course of business.
(j) Except as set forth in the Prospectus, the Company, with minor
exceptions, and subject to noncompliance with certain procedural and other
requirements in the procurement and granting of gas franchises in a number
of smaller municipalities formerly served by Mid-Illinois Gas Company, has
statutory authority, franchises, licenses, rights-of-way, easements and
consents, free from unduly burdensome restrictions and adequate for the
conduct of the business in which it is engaged.
3
(k) The Illinois Commerce Commission has entered an order authorizing
the issue and sale of the Bonds by the Company upon terms consistent with
the Underwriting Agreement, and no other consent, approval, authorization
or other order or filing with any regulatory or governmental body is
required for the issuance and sale of the Bonds and consummation of the
transactions contemplated hereby, except such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Bonds by the Underwriters.
(l) The Company is not in violation of its charter or, except as
disclosed in the Prospectus, in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which it is a party or by which it or its property is bound or affected
which is material to the Company and its subsidiary considered as one
enterprise.
(m) Except as set forth in the Registration Statement and Prospectus,
there are no legal or governmental proceedings pending to which the Company
or its subsidiary is a party or of which any property of the Company or its
subsidiary is the subject, and, to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities
or threatened by others, other than proceedings which, if determined
adversely to the Company and its subsidiary, would not individually or in
the aggregate have a material adverse effect on the business, properties,
financial position, net worth or results of operations of the Company and
its subsidiary considered as a whole.
Any certificate signed by any officer of the Company and delivered to
you or to Underwriters' counsel shall be deemed a representation and warranty
by the Company to each Underwriter as to the statements made therein.
Section 3. Purchase, Sale and Delivery of Bonds. Following the execution
of the Underwriting Agreement, the several Underwriters propose to make a
public offering of their respective portions of the Bonds as soon as in the
Representatives' judgment it is advisable upon the terms and conditions set
forth in the Prospectus Supplement.
The Bonds to be purchased by each Underwriter pursuant to the
Underwriting Agreement, in definitive form and registered in such names as the
Representatives may request upon at least forty-eight hours' prior notice to
the Company, shall be delivered by or on behalf of the Company to the
Representatives for the respective accounts of the several Underwriters,
against payment therefor as specified in the Underwriting Agreement in
immediately available funds, at the office of Mayer, Brown & Platt, 190 South
LaSalle Street, Chicago, Illinois 60603 (except as hereinafter provided with
respect to delivery of such Bonds), at the time and date specified in the
Underwriting Agreement or at such other place and time and date as the
Representatives and the Company may agree upon in writing, such time and date
being herein called the ''Time of Delivery''. If specified by the
Representatives in the Underwriting Agreement, delivery of the Bonds will be
made at the Time of Delivery at such place in New York, New York as shall have
been so specified against payment therefor in Chicago as aforesaid.
Section 4. Covenants of the Company. The Company covenants with each
Underwriter that:
(a) The Company will notify the Representatives immediately and confirm
the notice in writing (i) of the receipt of any request by the Commission
for any amendment or supplement to the Registration Statement or the
Prospectus or any amendment or supplement thereto or for additional
information, and (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the
initiation or threatened initiation of any proceedings for that purpose or
of the suspension or threatened suspension of the qualification of the
Bonds for offering or sale in any jurisdiction. The Company will make every
reasonable effort to prevent the issuance by the Commission of any stop
order and, if any such stop order shall at any time be issued, to obtain
the lifting thereof at the earliest moment.
4
(b) The Company will not file any amendment to the Registration
Statement or any amendment or supplement to the Prospectus (including a
prospectus filed pursuant to Rule 424 and including documents deemed to be
incorporated by reference into the Prospectus) without first having
furnished the Representatives with a copy of the proposed form thereof and
given the Representatives a reasonable opportunity to review and comment
respecting the same and having given reasonable consideration to any
comments or objections made by the Representatives.
(c) The Company will deliver to each of the Representatives, as soon as
available, one signed copy of the Registration Statement as originally
filed and of each amendment thereto, including, in each case, documents
incorporated by reference into the Registration Statement and one set of
exhibits thereto (other than exhibits incorporated by reference which will
be furnished upon specific request), and will also deliver to the
Representatives a reasonable number of conformed copies of the Registration
Statement as originally filed and of each amendment and post-effective
amendment thereto including such incorporated documents (without exhibits)
for each of the Underwriters.
(d) The Company will deliver to each Underwriter from time to time
during the period when a prospectus is required to be delivered under the
Act such number of copies of the Prospectus (as amended or supplemented and
including incorporated documents) as the Representatives may reasonably
request for the purposes contemplated by the Act or the Regulations;
provided, however, that the delivery of copies of the Prospectus (as
amended or supplemented and including incorporated documents) more than
nine months after the date of the Underwriting Agreement shall be at the
expense of the Underwriter requesting such delivery.
(e) During the period when a prospectus is required to be delivered
under the Act, the Company will comply so far as it is able, and at its own
expense (for a period not to exceed nine months), with all requirements
imposed upon it by the Act, and by Sections 13 and 14 of the 1934 Act, as
now or hereafter amended, and by the Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealing
in the Bonds during such period in accordance with the provisions hereof
and of the Prospectus.
(f) If any event shall occur as a result of which it is necessary, in
the opinion of counsel for the Company and of Underwriters' counsel, to
amend or supplement the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it is necessary to amend or supplement the
Prospectus to comply with law, the Company will forthwith prepare and
furnish to the Underwriters, without expense to them except as otherwise
provided in subsection (d) of this Section 4, a reasonable number of copies
of an amendment or amendments or a supplement or supplements to the
Prospectus (in the form referred to in subsection (b) of this Section 4)
which will amend or supplement the Prospectus so that as amended or
supplemented it will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein not misleading, or so that the Prospectus will comply with law. For
the purposes of this subsection, the Company will furnish such information
as the Representatives may from time to time reasonably request.
(g) The Company will endeavor in good faith, in cooperation with the
Underwriters, to qualify the Bonds for offering and sale under the
applicable securities laws of such jurisdictions as the Representatives may
designate and to arrange for the determination of the legality of the Bonds
for purchase by institutional investors; provided, however, that the
Company shall not be obligated to file any general consent to service or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified. In each jurisdiction where
any of the Bonds shall be qualified as above provided, the Company will
make and file such statements and reports in each year as are or may be
reasonably required by the laws thereof.
(h) The Company will make generally available to its security holders as
soon as practicable, but not later than 75 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Section 11(a) of the Act and the Regulations thereunder
(including, at the option of the Company, Rule 158), which need not be
certified by independent public accountants
5
unless required by the Act or the Regulations), covering a twelve-month period
beginning on the first day of the calendar quarter following the Time of
Delivery.
(i) The Company agrees that it will not publicly offer or sell any
intermediate or long-term debt between the date of the Underwriting
Agreement and Time of Delivery without the prior written consent of the
Representatives.
Section 5. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under the Underwriting Agree-
ment, including (i) the printing and filing by the Company of the registration
statement and the printing of the Underwriting Agreement, any Agreement Among
Underwriters, any Selling Agreement, the Supplemental Indenture and the
Underwriters' Questionnaire, (ii) the authorization, issuance and delivery of
the Bonds to the Underwriters, including the printing and engraving of the
Bonds, and all taxes, if any, upon the issuance and sale of the Bonds to the
Underwriters, (iii) the qualification of the Bonds under the securities laws
of the various jurisdictions in accordance with the provisions of subsection
(g) of Section 4, including filing fees and fees and disbursements of
Underwriters' counsel in connection with such qualification and in connection
with the preparation of the Blue Sky Survey and any Legal Investment
Memorandum (such fees of Underwriters' counsel not to exceed $6,500 in the
aggregate), (iv) any fees charges by securities rating services for rating the
Bonds, (v) the fees and expenses of the Trustee and its counsel in connection
with the Bonds and the Supplemental Indenture, (vi) the printing and delivery
to the Underwriters and dealers in quantities as hereinbefore stated of copies
of the registration statement and all amendments thereto, of any preliminary
prospectuses and amended preliminary prospectuses, of the Registration
Statement and any amendments thereto, and of the Prospectus and any amendments
or supplements thereto, and (vii) the cost of printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any Legal Investment
Memorandum.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 6 or Section 10(b), or is prevented by the
Company from becoming effective in accordance with the provisions of
Section 10(a), the Company shall reimburse the Underwriters severally for their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters incurred in connection with the offering.
Section 6. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters hereunder are subject to the accuracy of and
compliance with the representations and warranties of the Company herein
contained, to the performance by the Company of its obligations hereunder and
to the following further conditions:
(a) At the Time of Delivery no stop order suspending the effectiveness
of the Registration Statement shall have been issued under the Act or
proceedings therefor initiated or threatened by the Commission.
(b) At the Time of Delivery the Representatives shall have received:
(1) The favorable opinion, dated as of the Time of Delivery, of
Mayer, Brown & Platt, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) the Company is a corporation in good standing, duly
organized and validly existing under the laws of the State of
Illinois and has due corporate authority to carry on the business in
which it is engaged and to own and operate the properties used by it
in such business;
(ii) the Indenture is in due and proper form, has been
duly and validly authorized by the necessary corporate action and by
orders duly entered by the Illinois Commerce Commission; no
authorization, approval, consent, certificate or order of any other
state commission or regulatory authority or of any federal
commission or regulatory authority not already obtained is required
in respect of the execution and delivery of the Indenture; and the
Indenture has been duly and validly executed and delivered and is a
valid and enforceable instrument in accordance with its terms,
except as enforcement of provisions of the Indenture may be limited
6
by bankruptcy or other laws of general application affecting the
enforcement of creditors' rights and by general equity principles;
(iii) the Bonds are in due and proper form; the issue and
sale of the Bonds by the Company in accordance with the terms of the
Underwriting Agreement have been duly and validly authorized by the
necessary corporate action and by order duly entered by the Illinois
Commerce Commission; no authorization, approval, consent,
certificate or order of any other state commission or regulatory
authority or of any federal commission or regulatory authority not
already obtained is required in respect of such issue and sale
(except such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Bonds
by the Underwriters); the Bonds have been duly executed and
delivered to the Underwriters against payment of the agreed
consideration therefor and, assuming due authentication thereof by
the Trustee, constitute valid and enforceable obligations of the
Company in accordance with their terms, secured by the lien of and,
with like exception as noted in the foregoing subdivision (ii),
entitled to the benefits provided by the Indenture, and the
registered owners of the Bonds will be entitled to the payment of
principal and interest, and premium in case of redemption, as
therein provided; the Bonds and the Indenture conform as to legal
matters in all material respects with the statements concerning them
made in the Prospectus, and such statements accurately set forth the
matters respecting the Bonds and the Indenture required to be set
forth in the Prospectus;
(iv) The Registration Statement is effective under the Act
and the Indenture has been duly qualified under the Trust Indenture
Act, and to the best of the knowledge of said counsel no proceedings
for a stop order are pending or threatened under Section 8(d) of the
Act;
(v) the execution and delivery of the Underwriting
Agreement by the Company has been duly authorized by the necessary
corporate action, and the Underwriting Agreement has been duly
executed and delivered by the Company;
(vi) the Company has good and sufficient title to all
property described or referred to in the Indenture and purported to
be conveyed thereby (except property released from the lien of the
Indenture in connection with the sale or other disposition thereof),
subject only to the lien of the Indenture and to permitted liens as
defined therein; the Indenture has been duly filed for recordation
in such manner and in such places as is required by law in order to
give constructive notice of, establish, preserve and protect the
lien of the Indenture; the Indenture constitutes a valid, direct
first mortgage lien, subject only to permitted liens, on
substantially all property of the Company, except property expressly
excepted by the terms of the Indenture; the Indenture will, when
recorded or registered by the Company in accordance with its
covenants under the Indenture, constitute a valid, direct first
mortgage lien on all property of the character of that now subject
to the lien of the Indenture hereafter acquired by the Company,
subject only to permitted liens and to liens, if any, existing or
placed on such after-acquired property at the time of the
acquisition thereof;
(vii) the issue and sale of the Bonds and the compliance
by the Company with all of the provisions of the Bonds, the
Indenture and the Underwriting Agreement will not conflict with or
result in a breach or violation of any of the provisions of, or
constitute (disregarding any grace or notice period) a default
under, any indenture, mortgage, loan agreement, contract, note,
lease or other agreement or instrument, known to such counsel, to
which the Company is a party or by which the Company is bound or to
which any of the property or assets of the Company is subject (with
such exceptions as are in the aggregate not material to the business
or financial condition of the Company or the validity of the Bonds),
nor will such action result in any violation of the provisions of
the Charter or By-Laws of the Company, or, to the best of their
knowledge, any statute or any order, rule or regulation applicable
to the Company of any court or governmental agency or body having
jurisdiction over the Company or any of its
7
properties (except such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Bonds by the
Underwriters);
(viii) at the time the registration statement became
effective, the registration statement and the related prospectus
(other than the financial statements and notes thereto and
supporting schedules and other financial information included
therein, as to which no opinion need be rendered) complied as to
form in all material respects with the requirements of the Act and
the Trust Indenture Act and the Regulations;
(ix) with minor exceptions, and subject to noncompliance
with certain procedural and other requirements in the procurement
and granting of gas franchises in a number of smaller municipalities
formerly served by Mid-Illinois Gas Company, the Company holds
franchises from all of the incorporated cities and villages included
in the communities in which the Company renders gas service; all of
the franchises so held by the Company are valid and subsisting and
authorize it to engage in the business conducted by it in the
respective municipalities granting such franchises; the Company also
holds certificates of public convenience and necessity issued by the
Illinois Commerce Commission, which are valid and subsisting and
constitute due authorization by such commission for the conduct by
the Company of its operations in all areas served;
(x) to the best of their knowledge and information, there
are no contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments of a character required to be described
in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement other than those described
therein or filed or incorporated by reference as exhibits thereto
and the descriptions thereof or reference thereto are correct; and
(xi) except as disclosed in the Prospectus, there are no
material pending or threatened legal proceedings, considering the
Company and the subsidiaries as a single enterprise, known to said
counsel, to which the Company or any subsidiary is a party or of
which property of the Company or any subsidiary is the subject, and
to the best of the knowledge of said counsel there are no such
proceedings contemplated by governmental authorities.
Such counsel shall further state that, based upon their participation in
the preparation of the Registration Statement and the Prospectus, and
any amendment or supplement thereto, and upon their review and
discussions of the contents thereof, but without independent check or
verification except as specified, nothing has come to their attention
that has caused them to believe that the Registration Statement, at the
time it became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus, and any amendment or supplement thereto, at the date the
Registration Statement became effective, the date of this Agreement or
at the Time of Delivery, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(2) The favorable opinion of Wildman, Harrold, Allen & Dixon,
counsel for the Underwriters, with respect to the incorporation of the
Company, the validity of the Bonds and the Indenture, the Registration
Statement, the Prospectus and other related matters as the
Representatives may reasonably request; provided that any opinion
requested with respect to the jurisdiction of regulatory authorities
(other than the Illinois Commerce Commission, the Securities and
Exchange Commission and state securities or Blue Sky authorities) and
the matters in subdivisions (vi) and (ix) above will rely upon the
opinion of Mayer, Brown & Platt.
(c) At the effective date of the Registration Statement and at the Time
of Delivery the Representatives shall have received a letter from Arthur
Andersen LLP, dated the effective date or Time of Delivery, respectively,
in form and substance satisfactory to the Representatives, advising that
8
(i) they are independent public accountants with respect to the Company and
its subsidiaries as required by the Act and the 1934 Act and the applicable
Regulations, (ii) in their opinion, the audited consolidated financial
statements and any supplemental financial information and schedules of the
Company examined by them and incorporated by reference in the Registration
Statement and Prospectus comply as to form in all material respects with
the applicable accounting requirements of the Act, the 1934 Act and the
applicable Regulations, (iii) on the basis of a reading of the latest
available unaudited interim consolidated financial statements prepared by
the Company, a reading of the minutes of meetings of the shareholder and
the board of directors and executive committee of the Company and its
subsidiaries, consultation with officers of the Company responsible for
financial and accounting matters and other specified procedures, nothing
has come to their attention which caused them to believe that (A) the
unaudited interim condensed consolidated financial statements included or
incorporated by reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act,
the 1934 Act and the applicable Regulations or are not in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements incorporated as
aforesaid, (B) the unaudited amounts set forth in ''Summary
Information-Consolidated Financial Information'' and any other unaudited
income statement data and balance sheet data (other than such data for the
periods referred to in (A) above) included or incorporated by reference in
the Prospectus do not agree with the corresponding items in the audited or
unaudited, as the case may be, financial statements from which such data
were derived or were not determined on a basis substantially consistent
with that of the corresponding amounts included in the audited consolidated
financial statements of the Company incorporated in the Registration
Statement and Prospectus, or (C) at a specified date within five business
days of the date of such letter with respect to (1) below, and during the
period from the date of the latest audited consolidated financial
statements or unaudited interim condensed consolidated financial
statements, as the case may be, incorporated in the Prospectus to the date
of the latest available unaudited interim consolidated financial statements
(if any) prepared by the Company with respect to (2) below, except in all
instances as set forth in or contemplated by the Prospectus or as set forth
in such letter: (1) there was any increase in the consolidated long-term
debt of the Company and its subsidiaries, as compared with the amounts set
forth in the latest balance sheet included or incorporated by reference in
the Prospectus, or (2) there were any decreases in consolidated operating
income or net income as compared with the corresponding period in the
preceding year; and (iv) they have carried out specified procedures
performed for the purpose of comparing certain financial information and
percentages (which is limited to financial information derived from general
accounting records of the Company) specified by the Representatives and
appearing in the Registration Statement or in schedules or exhibits to the
Registration Statement or in the Prospectus or in documents incorporated by
reference in the Prospectus with indicated amounts in the financial
statements or accounting records of the Company and (excluding any
questions of legal interpretation and, in the case of the letter delivered
at the Time of Delivery, any exceptions disclosed in the letter delivered
at the Effective Date) have found such information and percentages to be in
agreement with the relevant accounting and financial information of the
Company referred to in such letter in the description of the procedures
performed by them. If such letter discloses any material adverse decreases
or increases, as the case may be, in the items specified in item (iii) (C)
above which are not set forth in or contemplated by the Prospectus which,
in the judgment of the Representatives, makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Bonds on the terms and in the manner contemplated by the Prospectus, this
Agreement and all obligations of the Underwriters hereunder may be
cancelled by the Representatives by notifying the Company in the manner and
with the effect provided below in the last sentence of this Section 6.
(d) At the Time of Delivery the Representatives shall have received a
certificate of the Chairman and President, Vice President and principal
financial officer, Vice President and principal accounting officer or
Treasurer of the Company, dated as of the Time of Delivery, to the effect
that the signer of such certificate has carefully examined the Registration
Statement, the Prospectus and any amendment or supplement thereto and the
Underwriting Agreement and that, in his opinion, at the time the
Registration Statement became effective, the Registration Statement did not
contain an untrue statement
9
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 not misleading,
and at the date of the Underwriting Agreement the Prospectus did not contain
an untrue statement of a material fact or omit to state a material fact requir-
ed to be stated therein or necessary in order to make the statements therein not
misleading, and since the date of the Underwriting Agreement, no event has
occurred which should have been set forth in an amendment of or supplement to
the Prospectus which has not been so set forth; and no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings therefor have been instituted or threatened by the Commission;
and to the further effect that all the representations and warranties
contained in Section 2 hereof are true and correct, with the same force and
effect as though expressly made at the Time of Delivery.
(e) At the Time of Delivery counsel for the Underwriters shall have been
furnished with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the sale of the Bonds as
herein contemplated and related proceedings, or in order to evidence the
accuracy or completeness of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the sale of the Bonds
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
If any of the conditions specified in this Section shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this
Agreement and all obligations of the Underwriters hereunder may be cancelled
by the Representatives by notifying the Company of such cancellation in
writing or by telecopy at any time at or prior to the Time of Delivery and any
such cancellation shall be without liability of any party to any other party
except as otherwise provided in this Agreement.
Section 7. Condition of Company's Obligations. The obligations of the
Company to sell and deliver the Bonds are subject to the following conditions:
that at the Time of Delivery no stop order suspending the effectiveness of the
Registration Statement shall have been issued or proceedings therefor
initiated or threatened; that the order of the Illinois Commerce Commission,
referred to in Section 2(k), shall be in full force and effect substantially
in the form in which such order shall originally have been entered; and that
the Indenture shall be qualified under the Trust Indenture Act.
Section 8. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Act or the 1934 Act, as follows:
(i) against any and all loss, liability, claim, damage and expense,
whatsoever, arising out of any untrue statement or alleged untrue statement
of a material fact contained in the registration statement as it became
effective, or in any amendment thereto, or in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, or arising out of any untrue statement
or alleged untrue statement of a material fact contained in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading, unless such untrue statement or
omission or such alleged untrue statement or omission was made in reliance
upon and in conformity with written information respecting the Underwriters
furnished to the Company by or on behalf of any Underwriter through the
Representatives expressly for use in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement
thereto);
(ii) against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, commenced or threatened, or of any claim
10
whatsoever based upon any such untrue statement or omission or any such alleged
untrue statement or omission, if such settlement is effected with the written
consent of the Company; and
(iii) against any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent
that any such expense is not paid under (i) or (ii) above, and, in the case
of (i) above, unless such untrue statement or omission or such alleged
untrue statement or omission was made in reliance upon and in conformity
with written information respecting the Underwriters furnished to the
Company by or on behalf of any Underwriter through the Representatives
expressly for use in the Registration Statement (or any amendment thereto)
or the Prospectus (or any amendment or supplement thereto), or, in the case
of (ii) above, provided such settlement is effected with the written
consent of the Company.
This indemnity agreement is subject to the condition that, insofar as it
relates to any untrue statement, alleged untrue statement, omission or alleged
omission made in a preliminary prospectus or preliminary prospectus
supplement, but eliminated or remedied in the Prospectus, such indemnity
agreement shall not inure to the benefit of any Underwriter from whom the
person asserting any loss, liability, claim or damage purchases the Bonds
which are the subject thereof (or to the benefit of any person who controls
such Underwriter) if such Underwriter fails to send or give a copy of the
Prospectus (excluding documents incorporated by reference) to such person
prior to or together with written confirmation of the sale of such Bonds to
such person and the delivery thereof would have constituted a defense to the
claim by such person.
In no case shall the Company be liable under this indemnity agreement
with respect to any claim made against any Underwriter or any such controlling
person unless the Company shall be notified in writing of the nature of the
claim within a reasonable time after the assertion thereof, but failure to so
notify the Company shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. The Company shall be
entitled to participate at its own expense in the defense, or, if it so
elects, within a reasonable time after receipt of such notice, to assume the
defense of any suit brought to enforce any such claim, but if it so elects to
assume the defense, such defense shall be conducted by counsel chosen by it
and approved by the Underwriter or Underwriters or controlling person or
persons, defendant or defendants in any suit so brought, which approval shall
not be unreasonably withheld. In the event that the Company elects to assume
the defense of any such suit and retains such counsel, the Underwriter or
Underwriters or controlling person or persons, defendant or defendants in the
suit shall thereafter bear the fees and expense of any additional counsel
retained by them. In the event that the parties to any such action (including
impleaded parties) include both the Company and one or more Underwriters and
any such Underwriter shall have been advised by counsel chosen by it and
satisfactory to the Company that there may be one or more legal defenses
available to it which are different from or additional to those available to
the Company, the Company shall not have the right to assume the defense of
such action on behalf of such Underwriter and will reimburse such Underwriter
and any person controlling such Underwriter as aforesaid for the reasonable
fees and expenses of any counsel retained by them, it being understood that
the Company shall not, in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expense of more than one separate firm of attorneys for all such Underwriters
and controlling persons, which firm shall be designated in writing by the
Representatives. The Company agrees to notify the Representatives within a
reasonable time of the assertion of any claim against it, any of its officers
or directors or any person who controls the Company within the meaning of the
Act or the 1934 Act, in connection with the sale of the Bonds.
(b) Each Underwriter severally agrees that it will indemnify and hold
harmless the Company, its directors, and each of its officers who signed the
Registration Statement and each person, if any, who controls the Company
within the meaning of the Act or the 1934 Act, to the same extent as the
indemnity contained in subsection (a) of this Section, but only with respect
to statements or omissions made in the registration statement as it became
effective, or in any amendment thereto, or in the Registration Statement (or
any amendment thereto) or the Prospectus (or any
11
amendment or supplement thereto) in reliance upon and in conformity with written
information respecting the Underwriters furnished to the Company by or on behalf
of such Underwriter through the Representatives expressly for use in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto). In case any action shall be brought against
the Company or any person so indemnified based on the Registration Statement
(or any amendment thereto) or the Prospectus (or any amendment or supplement
thereto) and in respect of which indemnity may be sought against any
Underwriter, such Underwriter shall have the rights and duties given to the
Company, and the Company and each person so indemnified shall have the rights
and duties given to the Underwriters, by the provisions of subsection (a) of
this Section.
(c) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act or the 1934 Act; and
the obligations of the Underwriters under this Section 8 shall be in addition
to any liability which the respective Underwriters may otherwise have and
shall extend, upon the same terms and conditions, to each officer and director
of the Company and to each person, if any, who controls the Company within the
meaning of the Act or the 1934 Act.
Section 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in the
Underwriting Agreement and/or contained in certificates of officers of the
Company submitted pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any
Underwriter or any controlling person of any Underwriter, or by or on behalf
of the Company, and shall survive payment for and delivery of the Bonds.
Section 10. Effective Date of the Underwriting Agreement and Termination
Thereof. (a) The Underwriting Agreement shall become effective at the time of
the initial public offering by the Underwriters of any of the Bonds. The time
of the initial public offering shall mean 12:00 noon, New York City time, on
the first full business day after the Underwriting Agreement is executed or at
such time as the Representatives may authorize the sale of the Bonds to the
public by the Underwriters or other securities dealers, whichever shall first
occur. The Representatives or the Company may prevent the Underwriting
Agreement from becoming effective without liability of any party to any other
party, except as otherwise provided in the Underwriting Agreement, by giving
the notice indicated below in this Section prior to the time the Underwriting
Agreement would otherwise become effective as herein provided.
(b) The Representatives shall have the right to terminate the Underwriting
Agreement by giving the notice indicated below in this Section at any time at
or prior to the Time of Delivery if (i) the Company shall have sustained since
the respective dates as of which information is given in the Prospectus any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree; or (ii) since the respective
dates as of which information is given in the Prospectus there shall have been
any material increase in the long-term debt, or any material adverse change,
or any development involving a prospective material adverse change, in or
affecting the general business affairs, management, financial position,
results of operations, or business prospects of the Company and its
subsidiaries considered as one enterprise, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), in the judgment of the Representatives makes
it impracticable or inadvisable to proceed with the public offering or the
delivery of the Bonds on the terms and in the manner contemplated in the
Prospectus; or (iii) there shall have occurred the outbreak or escalation of
hostilities involving in a significant way the armed forces of the United
States, or the declaration by the United States, on or after the date of the
Underwriting Agreement, of a national emergency or war, or there shall have
occurred a general suspension or limitation of trading in securities on the
New York or American Stock Exchanges, or the establishment of minimum prices
on either such Exchange, or a general moratorium on commercial banking
activities in New York is declared by either federal or New York state
authorities, the effect of which in the judgment of the Representatives makes
it impracticable or inadvisable to proceed with the public offering or the
delivery of
12
the Bonds on the terms and in the manner contemplated in the
Prospectus. If the Representatives shall so terminate the Underwriting
Agreement, such termination shall be without liability of any party to any
other party except as otherwise provided in the Underwriting Agreement.
(c) If the Representatives elect to prevent the Underwriting Agreement
from becoming effective or to terminate the Underwriting Agreement as provided
in this Section, the Company and each other Underwriter shall be notified
promptly by the Representatives, by telephone or telegram, confirmed by
letter. If the Company elects to prevent the Underwriting Agreement from
becoming effective as provided in this Section, the Representatives shall be
notified promptly by the Company by telephone or telegram, confirmed by
letter.
Section 11. Default of Underwriters. If any one or more of the
Underwriters shall fail at the Time of Delivery to purchase the amount of Bonds
which it or they are obligated to purchase hereunder (the ''Defaulted Bonds''),
then the Representatives shall have the right, within 24 hours thereafter, to
make arrangements for one or more of the non-defaulting Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Bonds in such amounts as may be agreed upon and upon the terms herein set forth.
If, however, during such 24 hours the Representatives shall not have completed
such arrangements for the purchase of all of the Defaulted Bonds, then the
Company shall be entitled to a further period of 24 hours within which to
procure another party or parties satisfactory to the Representatives to
purchase all of such Defaulted Bonds on such terms. If, after giving effect to
any arrangements for the purchase of Defaulted Bonds by the Representatives
and the Company as provided above, then:
(a) if the amount of Defaulted Bonds does not exceed 10% of the
aggregate principal amount of the Bonds being sold hereunder, the
non-defaulting Underwriters shall be obligated to purchase severally the
full amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the amount of Defaulted Bonds exceeds 10% of the aggregate
principal amount of the Bonds being sold hereunder, the Underwriting
Agreement shall terminate without any liability on the part of the Company
or any non-defaulting Underwriter.
The termination of the Underwriting Agreement pursuant to this Section
shall be without liability on the part of the Company or any of said
non-defaulting Underwriters, except for the respective obligations of the
Company and the Underwriters pursuant to Section 8 and except that the Company
shall be obligated to reimburse the Underwriters for their out-of-pocket
expenses (including reasonable fees and disbursements of counsel for the
Underwriters) incurred in connection with the offering if the Underwriting
Agreement could have been terminated by the Representatives pursuant to
Section 6 or 10(b).
Nothing herein shall relieve any Underwriter so defaulting from
liability, if any, for such default.
In the event of a default by any one or more Underwriters as set forth
in this Section, either the Representatives or the Company shall have the right
to postpone the Time of Delivery for an additional period not exceeding 7 days
in order that any required changes in the Registration Statement and
Prospectus or in any other documents or arrangements may be effected.
Section 12. Notices. Except as otherwise provided in the Underwriting
Agreement, all communications under the Underwriting Agreement shall be in
writing, and, if sent to the Underwriters, shall be mailed, delivered or
telecopied and confirmed to the address of the Representatives, as set forth
in the Underwriting Agreement (except that any notice to an Underwriter
pursuant to Section 8 hereof shall be sent to it at its address set forth in
the copies of the Underwriters' Questionnaires furnished to the Company), or,
if sent to the Company shall be mailed or telecopied and confirmed to it at
P.O. Box 190, Aurora, Illinois 60507-0190, or delivered to it at 1844 Ferry
Road, Naperville, Illinois, for the attention of Donald W. Lohrentz, Vice
President and Treasurer.
Section 13. Parties. The Underwriting Agreement shall insure to the
benefit of and be binding upon the Underwriters and the Company and their
respective successors. Nothing expressed or mentioned in the
13
Underwriting 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 the directors and officers referred
to in Section 8, any legal or equitable right, remedy or claim under or in
respect of the Underwriting Agreement or any provision herein contained; the
Underwriting Agreement and all conditions and provisions hereof being intended
to be and being for the sole and exclusive benefit of the parties hereto and
their respective successors and said controlling persons, directors and officers
and for the benefit of no other person, firm or corporation. No purchaser of any
Bonds from any Underwriter shall be deemed to be a successor by reason merely of
such purchase.
Section 14. Choice of Law. The Underwriting Agreement shall be construed
in accordance with, and governed by, the laws of the State of Illinois.
14
NORTHERN ILLINOIS GAS COMPANY
FORM 10-Q
EXHIBIT 4.01
Supplemental Indenture
DATED MAY 10, 1996
NORTHERN ILLINOIS GAS COMPANY
TO
HARRIS TRUST AND SAVINGS BANK
(successor to BANK OF AMERICA ILLINOIS)
TRUSTEE UNDER INDENTURE DATED AS OF
JANUARY 1, 1954 AND SUPPLEMENTAL
INDENTURES THERETO
AMENDMENTS TO ARTICLES I, IV, VI, X, XVII and XIX
This instrument was prepared by Richard J. Lannon, 1844 Ferry Road,
Naperville, Illinois 60563-9600.
This Supplemental Indenture, dated the tenth day of May, 1996, between
Northern Illinois Gas Company, a corporation organized and existing
under the laws of the State of Illinois (hereinafter called the
''Company''), and Harris Trust and Savings Bank, an Illinois banking
corporation (hereinafter called the ''Trustee''), as Trustee under an
Indenture dated as of January 1, 1954, as supplemented by Supplemental
Indentures dated, respectively, February 9, 1954, April 1, 1956, June
1, 1959, July 1, 1960, June 1, 1963, July 1, 1963, August 1, 1964,
August 1, 1965, May 1, 1966, August 1, 1966, July 1, 1967, June 1,
1968, December 1, 1969, August 1, 1970, June 1, 1971, July 1, 1972,
July 1, 1973, April 1, 1975, April 30, 1976, April 30, 1976, July 1,
1976, August 1, 1976, December 1, 1977, January 15, 1979, December 1,
1981, March 1, 1983, October 1, 1984, December 1, 1986, March 15, 1988,
July 1, 1988, July 1, 1989, July 15, 1990, August 15, 1991, July 15,
1992, February 1, 1993, March 15, 1993, May 1, 1993, July 1, 1993,
August 15, 1994 and October 15, 1995, such Indenture dated as of
January 1, 1954, as so supplemented, being hereinafter called the
''Indenture.''
Witnesseth:
Whereas, the Trustee has become fully vested with all estates,
authority, rights, trusts, powers, duties and obligations of Bank of
America Illinois under the Indenture pursuant to that certain
Instrument of Resignation, Appointment and Acceptance dated as of
January 26, 1996, attached hereto as Exhibit A, and Section 17.07 of
the Indenture; and
Whereas, the Company desires to amend the Indenture and has requested
that the Trustee join it in the execution and delivery of this
Supplemental Indenture in order to amend the Indenture as set forth
herein; and
Whereas, this Supplemental Indenture is being entered into pursuant to
Section 20.01(d) of the Indenture which provides that supplemental
indentures may be entered into by the Company and the Trustee to modify
any of the provisions of the Indenture for the purpose of relieving the
Company from any of the obligations, conditions or restrictions
contained therein, subject to the provisions of Section 19.07 of the
Indenture relating to approval of such modification by a vote of
bondholders; and
Whereas, all acts and things necessary to make this Supplemental
Indenture, when duly executed and delivered, a valid, binding and legal
instrument in accordance with its terms and for the purposes herein
expressed, have been done
2
and performed, and the execution and delivery of this Supplemental Indenture
have in all respects been duly authorized;
Now, Therefore, in consideration of the premises and of the sum of one
dollar paid by the Trustee to the Company, and for other good and
valuable considerations, the receipt of which is hereby acknowledged,
it is agreed by and between the Company and the Trustee as follows:
ARTICLE ONE
Modifications of Indenture
Section 1. The definition of ''Board of Directors'' in Section 1.09 of
the Indenture is hereby deleted in its entirety and replaced by the
following:
The term ''Board of Directors'' shall mean either the Board of
Directors of the Company or any duly authorized committee of the
Board of Directors.
Section 2. The definition of ''authorized newspaper'' in Section 1.31
of the Indenture is hereby deleted in its entirety and replaced by the
following:
The term ''authorized newspaper'', when used in connection with
the name of a particular city, shall mean a newspaper printed in the
English language, of general circulation in such city and
customarily published at least once in each of five days (except in
case of legal holidays) in each calendar week.
Section 3. The definition of ''office of the Trustee'' in Section 1.32
of the Indenture is hereby deleted in its entirety and replaced by the
following:
The term ''office of the Trustee'' shall mean the principal
office of the Trustee at which at any particular time its corporate
trust business shall be administered.
Section 4. Article IV of the Indenture is hereby amended by adding a
new Section 4.17 to read as follows:
Section 4.17. All determinations and authorizations required or
permitted by this Article IV to be made by the Board of Directors
may be made by any duly authorized officer or officers of the
Company if a resolution permitting such officer or officers to make
such determinations or authorizations in lieu of the Board of
Directors is delivered to the Trustee. Any determination or
authorization made by such officer or officers pursuant to
3
such resolution shall be evidenced by a written instrument signed by such
officer or officers and delivered to the Trustee.
Section 5. Section 6.04 of the Indenture is hereby deleted in its
entirety and replaced by the following:
Upon application by the Company to the Trustee for the
authentication and delivery of bonds under the provisions of Section
6.05, 6.06 or 6.07, the Company shall deliver to the Trustee the
following:
(a) a resolution authorizing the execution and issuance of
and requesting the Trustee to authenticate and deliver bonds,
specifying the principal amount and series thereof, and any other
matters with respect thereto required or permitted by this
Indenture or a resolution permitting one or more officers of the
Company to authorize the execution and issuance of bonds together
with a written instrument signed by such officer or officers
requesting the Trustee to authenticate and deliver bonds;
(b) if an interim certificate is not filed in connection
with the particular application for the authentication and
delivery of bonds, an officers' certificate stating that to the
knowledge of the signers the Company is not in default under any
of the provisions of this Indenture, and that all conditions
precedent provided for in this Indenture relating to the
authentication and delivery of the bonds applied for have been
complied with;
(c) an opinion of counsel stating, in the signer's
opinion, (1) that the issuance of such bonds has been duly
authorized by the necessary corporate action and by any and all
governmental authorities the consent of which is required for the
legal issuance of such bonds, and specifying any officially
authenticated orders or other documents by which such consent is
or may be evidenced, or that no such consent is required; (2)
that, since the date of the last previous opinion of counsel
filed with the Trustee pursuant to the provisions of this Article
VI, or since the actual date of execution and delivery of this
Indenture in the case of the first such opinion filed under this
Article VI, none of the mortgaged property has become subject to
any lien or encumbrance prior to the lien of this Indenture as
security for the additional bonds then applied for, except (i)
permitted liens and (ii) prior liens on property, including
additions thereto, acquired by the Company after January 31,
1954; and (3) if an interim certificate is not filed in
connection with the particular application for the authentication
and delivery of bonds, that all conditions precedent provided for
in this Indenture relating to the authentication and delivery of
the bonds applied for have been complied with;
4
(d) the officially authenticated orders or other
documents, if any, specified in such opinion of counsel; and
(e) in case such bonds constitute the initial issue of
bonds of a particular series, a supplemental indenture of the
character referred to in Section 4.02.
Section 6. Section 10.03 of the Indenture is hereby deleted in its
entirety and replaced by the following:
Unless the Company is in default under any of the provisions of
this Indenture, the Company may, if deemed desirable in the conduct
of its gas utility business, sell or otherwise dispose of at any
time, under and subject to the provisions of this Section 10.03, any
part of the mortgaged property, and the Trustee shall from time to
time release from the lien hereof any part of the mortgaged property
so sold or otherwise disposed of, or contracted to be so sold or
otherwise disposed of, upon receipt by the Trustee of the following:
(a) a resolution requesting such release and stating that
such release is, in the opinion of the Board of Directors,
desirable in the conduct of the gas utility business of the
Company (provided that no such resolution need be furnished if
the fair value of the property to be released, as stated in the
engineer's certificate specified under (f) of this Section 10.03,
is not more than $300,000);
(b) an officers' certificate stating:
(1) that the property to be released has been sold
or otherwise disposed of or contracted to be sold or
otherwise disposed of, such property to be described in
reasonable detail;
(2) the amount of the consideration received or to
be received for the property to be released which shall be
the sum of (i) the amount of any cash received or to be
received, (ii) the principal amount of any purchase money
obligations received or to be received, (iii) the principal
amount of any obligations assumed or to be assumed by the
purchaser, (iv) the fair value, as stated in an independent
appraiser's certificate, of any securities, other than
purchase money obligations, received or to be received, and
(v) the fair value, as stated in an independent engineer's
certificate, of any property, other than securities, received
or to be received, after deducting from such sum, at the
election of the Company, the fair value, as stated in an
independent engineer's certificate, of any property excepted
from the lien of this Indenture and sold or otherwise
disposed of or contracted to be sold or otherwise disposed of
in the same transaction but not for a separate consideration;
and
5
(3) that to the knowledge of the signers the
Company is not in default under any of the provisions of this
Indenture, and that all conditions precedent provided for in
this Indenture relating to such release have been complied
with;
(c) in case the determination of the amount of the
consideration received or to be received for the property to be
released shall require the stating of the fair value of
securities received or to be received, an independent appraiser's
certificate stating, in the signer's opinion, the fair value, as
of a date within sixty days of the date of such application, of
such securities;
(d) in case the determination of the amount of the
consideration received or to be received for the property to be
released shall require the stating of the fair value of property,
other than securities, received or to be received, an independent
engineer's certificate stating, in the signer's opinion, the fair
value, as of a date within sixty days of the date of such
application, of such property;
(e) in case the determination of the amount of the
consideration received or to be received for the property to be
released shall require the stating of the fair value of property
excepted from the lien of this Indenture and sold or otherwise
disposed of or contracted to be sold or otherwise disposed of in
the same transaction but not for a separate consideration, an
independent engineer's certificate stating, in the signer's
opinion, the fair value, as of a date within sixty days of the
date of such application, of such excepted property;
(f) an engineer's certificate stating, in the signer's
opinion, the fair value, as of a date within sixty days of the
date of such application, of the property to be released, which
fair value, as stated in such certificate, shall not be less than
the amount of the consideration received or to be received for
the property to be released, and that such release will not
impair the security under this Indenture in contravention of the
provisions hereof;
(g) in case the fair value of the property to be released,
as shown by the engineer's certificate specified under (f) of
this Section 10.03, is 1% or more of the aggregate principal
amount of the bonds outstanding at the time of such application,
an independent engineer's certificate stating, in the signer's
opinion, the fair value, as of a date within sixty days of the
date of such application, of the property to be released, which
fair value, as stated in such certificate, shall not be less than
the amount of the consideration received or to be received for
the property to be released, and that such release will not
impair the security under this Indenture in contravention of the
provisions hereof;
6
(h) cash in an amount, subject to reduction as permitted
under Section 10.04, equal to the fair value of the property to
be released as stated in the engineer's certificate specified
under (f) of this Section 10.03, or as stated in the independent
engineer's certificate, if any, filed pursuant to (g) of this
Section 10.03 if such fair value as stated in such independent
engineer's certificate shall be greater than such fair value as
stated in such engineer's certificate; and
(i) an opinion of counsel stating, in the signer's
opinion, that all conditions precedent provided for in this
Indenture relating to such release have been complied with.
All cash deposited with the Trustee pursuant to the provisions of
this Section 10.03 shall be held by the Trustee as a part of the
mortgaged property, and shall be paid over, withdrawn, used or
applied in the manner, to the extent, for the purposes and subject
to the conditions set forth in Section 11.03.
Section 7. Section 17.05 of the Indenture is hereby deleted in its
entirety and replaced by the following:
If the Trustee shall at any time cease to be a bank or trust
company in good standing organized and doing business under the laws
of the United States or of any State, and having a combined capital
and surplus of not less than $5,000,000, which is authorized under
the laws of the jurisdiction of incorporation to exercise corporate
trust powers and is subject to supervision or examination by Federal
or State authority, then the Trustee shall resign within thirty days
thereafter, such resignation to become effective upon the
appointment of a successor Trustee and such successor's acceptance
of such appointment. If the Trustee publishes reports of condition
at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, the combined capital
and surplus of the Trustee shall be deemed to be its combined
capital and surplus as set forth in its most recent report of
condition so published. If the Trustee shall fail or refuse to
resign within such period, or if the Trustee has or shall acquire
any conflicting interest of the character specified in Section 17.04
and shall fail or refuse either to eliminate such conflicting
interest or to resign within the period in Section 17.04 provided in
respect of such resignation, then (a) the Trustee shall, within ten
days after the expiration of such period, transmit notice of such
failure or refusal to the bondholders in the manner and to the
extent provided under Section 17.10(c); and (b) any bondholder who
has been the bona fide holder of a bond for at least six months may,
subject to the provisions of Section 13.20, on behalf of himself and
all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor, if the Trustee fails, after written
7
request therefor by such bondholder, to comply with the provisions of
Section 17.04.
Section 8. Section 17.06 of the Indenture is hereby deleted in its
entirety and replaced by the following:
The Trustee and any successor to the Trustee may resign and be
discharged from the trust created by this Indenture by giving notice
thereof in writing to the Company, specifying the date when such
resignation shall take effect, and by giving notice thereof to the
bondholders, in the manner and to the extent provided under Section
17.10(c), and, unless all bonds then outstanding are registered
bonds without coupons, by publishing such notice at least once a
week for three successive calendar weeks (the first such publication
to be not less than thirty days nor more than sixty days prior to
the effective date of such resignation) in one authorized newspaper
in the City of Chicago, State of Illinois, and in one authorized
newspaper in the Borough of Manhattan, The City of New York, State
of New York. Subject to the provisions of Sections 17.04 and 17.05,
such resignation shall take effect on the date specified in such
notice unless previously a successor Trustee shall have been
appointed as hereinafter provided, in which event such resignation
shall take effect upon the appointment of such successor Trustee.
The Trustee or any successor Trustee may be removed at any time
by the holders of a majority in principal amount of the bonds at the
time outstanding, upon payment to the Trustee so removed of all
moneys then due to it hereunder, by an instrument or concurrent
instruments in writing, signed in duplicate by such holders. One
copy shall be filed with the Company and the other with the Trustee
so removed.
In case at any time the Trustee or any successor Trustee shall
resign, be dissolved or be removed or otherwise shall become
disqualified to act or incapable of acting, or in case control of
the Trustee or of any successor Trustee, or of its officers shall be
taken over by any public officer or officers, the Company, by an
instrument in writing, executed by order of the Board of Directors,
shall appoint a successor Trustee. Every successor Trustee shall be
a bank or trust company in good standing organized and doing
business under the laws of the United States or of any State, and
(a) which shall be a corporation having a combined capital and
surplus of not less than $5,000,000, (b) which shall be authorized
under the laws of the jurisdiction of incorporation to exercise
corporate trust powers, and (c) which shall be subject to
supervision or examination by a Federal or State authority. If such
successor Trustee publishes reports of condition at least annually,
pursuant to law or to the requirements of such supervising or
examining authority, the combined capital and surplus of such
successor
8
Trustee shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
If in a proper case no appointment of a successor Trustee shall
be made pursuant to the foregoing provisions of this Article XVII
within six months after a vacancy shall have occurred in the office
of Trustee, the holder of any bond or the retiring Trustee may apply
to any court, State or Federal, having jurisdiction to appoint a
successor Trustee, and such court may thereupon, after such notice,
if any, as such court may deem proper and prescribe, appoint a
successor Trustee.
Section 9. Section 17.07 of the Indenture is hereby deleted in its
entirety and replaced by the following:
Any successor Trustee appointed hereunder shall execute,
acknowledge and deliver to its predecessor Trustee and also to the
Company, an instrument in writing accepting such appointment
hereunder, and thereupon such successor Trustee, without any further
act, deed or conveyance, shall become fully vested with all the
estates, authority, rights, trusts, powers, duties and obligations
of its predecessor Trustee and be entitled to the immediate delivery
by such predecessor Trustee of any part of the mortgaged property in
the hands or under the control of such predecessor Trustee and all
the estate, right, title and interest of such predecessor Trustee in
the mortgaged property shall wholly cease and determine; but the
Trustee ceasing to act shall nevertheless, on the written request of
the Company or of the successor Trustee, execute, acknowledge and
deliver an appropriate instrument in writing transferring to such
successor Trustee upon the trusts herein expressed, all the estates,
properties, rights, powers and trusts of the predecessor Trustee so
ceasing to act (but may retain and reserve its lien upon the
mortgaged property for its reasonable compensation and expenses, if
any thereof remain unpaid), and shall duly assign, transfer and
deliver all property and cash held by such Trustee to the successor
Trustee, it being understood that all securities, cash and other
pledged property the custody of which is given to the Trustee shall
always be in its custody or in that of its proper successor in
trust. Should any deed, conveyance or instrument in writing from the
Company be required by the successor Trustee for more fully and
certainly vesting in, and confirming to, such successor Trustee such
estates, rights, powers and duties, any and all such deeds,
conveyances and instruments in writing shall be executed,
acknowledged and delivered by the Company to the successor Trustee
upon the latter's request. The Company shall promptly give notice of
the appointment of any successor Trustee to the bondholders in the
manner and to the extent provided under Section 17.10(c) and, unless
all bonds then outstanding are registered bonds without coupons, by
publishing such notice at least once in each week for two successive
calendar weeks in one authorized newspaper in the City of
9
Chicago, State of Illinois, and in one authorized newspaper in the Borough of
Manhattan, The City of New York, State of New York.
Section 10. Section 19.08 of the Indenture is hereby deleted in its
entirety and replaced by the following:
A record in duplicate of the proceedings of each meeting of
bondholders shall be prepared by the permanent Secretary of the
meeting and shall have attached thereto the original reports of the
inspectors of votes, and an affidavit by a person having knowledge
of the facts setting forth a copy of the notice or waiver of notice
of the meeting and, in the case of any adjournment for more than
fourteen days, a copy of the notice or waiver of notice of
adjournment thereof, and showing that such notice or notices, unless
waived, were given as hereinabove provided. Such record shall be
signed and verified by the affidavits of the permanent Chairman and
the permanent Secretary of the meeting, and by a duly authorized
representative of the Trustee if such a representative shall have
been present at the meeting, and one copy thereof shall be delivered
to the Company and the other to the Trustee for preservation by the
Trustee. Any record so signed and verified shall be proof of the
matters therein stated until the contrary is proved, and the meeting
to which such record relates shall be deemed conclusively to have
been duly convened and held, and any resolution or proceeding stated
in such record to have been adopted or taken shall be deemed
conclusively to have been duly adopted or taken at such meeting. No
resolution adopted at such meeting shall be binding unless the
subject matter of such resolution is within the scope of the
business stated in the notice, if any, of such meeting given
pursuant to the provisions of Section 19.02, and unless and until
such resolution shall have been approved by resolution of the Board
of Directors. Such resolution, if adopted by the Board of Directors,
shall be filed by the Company with the Trustee and from and after
the date of such filing such resolution shall be deemed conclusively
to be binding upon the Company, the Trustee and the bondholders;
provided, however, that no such resolution adopted at a meeting of
the bondholders and no such resolution of approval adopted by the
Board of Directors shall in any manner be construed so as to change
or modify any of the rights, immunities or obligations of the
Trustee without its written assent thereto. Copies of any
resolution, or of a summary thereof, adopted at such meeting of
bondholders, if approved by resolution of the Board of Directors as
above provided, shall be mailed by the Trustee to bondholders in the
manner and to the extent provided under Section 17.10(c), and proof
of such mailing by the affidavit of a person having knowledge of the
facts shall be filed with the Trustee, and, unless all of the bonds
then outstanding are registered bonds without coupons, a copy or
summary of such resolution shall be published by the Company in one
authorized newspaper in the City of Chicago, State of Illinois, and
in one authorized newspaper in the Borough of Manhattan, The
10
City of New York, State of New York, at least once in each of two successive
calendar weeks, the first publication to be not more than fifteen
days after the approval of such resolution by the Board of
Directors; provided, however, that the mailing of copies of such
resolution or of such summary shall in no case be a condition
precedent to the validity or effectiveness of such resolution, and
neither failure to mail such copies nor any imperfection or defect
therein shall affect the validity or effectiveness of such
resolution.
Section 11. Article XIX of the Indenture is hereby amended by adding a
new Section 19.11 to read as follows:
Section 19.11. Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture
to be given or taken by bondholders (including any action required
or permitted by the provisions of this Article XIX to be taken at a
meeting of bondholders) may be given or taken without a meeting of
bondholders if embodied in and evidenced by one or more written
instruments of substantially similar tenor signed by such
bondholders in person or by agent or proxy duly appointed in
writing; and except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments
are delivered to the Trustee. Subject to the provisions of Section
17.02, proof of the execution of any instrument by a bondholder or
the agent or proxy for such bondholder shall be sufficient if made
in accordance with such reasonable rules and regulations as may be
prescribed by the Trustee or in such manner as shall be satisfactory
to the Trustee.
ARTICLE TWO
Miscellaneous Provisions
Section 1. This Supplemental Indenture is executed by the Company and
the Trustee pursuant to provisions of Section 20.01 of the Indenture
and the terms and conditions hereof shall be deemed to be a part of the
terms and conditions of the Indenture for any and all purposes. The
Indenture, as heretofore supplemented and as supplemented by this
Supplemental Indenture, is in all respects ratified and confirmed.
Section 2. This Supplemental Indenture shall bind and, subject to the
provisions of Article XVI of the Indenture, inure to the benefit of the
respective successors and assigns of the parties hereto.
Section 3. This Supplemental Indenture may be simultaneously executed
in any number of counterparts, and all such counterparts executed and
delivered, each as an original, shall constitute but one and the same
instrument.
11
In Witness Whereof, Northern Illinois Gas Company has caused this
Supplemental Indenture to be executed in its name by its President or a
Vice President, and its corporate seal to be hereunto affixed and
attested by its Secretary or its Assistant Secretary, and Harris Trust
and Savings Bank, as Trustee under the Indenture, has caused this
Supplemental Indenture to be executed in its name by a Vice President,
and its seal to be hereunto affixed and attested by its Assistant
Secretary, all as of the day and year first above written.
Northern Illinois Gas Company
By
Vice President
Attest:
Assistant Secretary
Harris Trust and Savings Bank,
as Trustee
By
Vice President
Attest:
Assistant Secretary
12
State of Illinois} ss:
County of DuPage}
I, Beth A. Aussem, Notary Public in the State aforesaid, Do Hereby
Certify that Richard J. Lannon, Vice President and Treasurer of
Northern Illinois Gas Company, an Illinois corporation, one of the
parties described in and which executed the foregoing instrument, and
Alexander C. Allison, Assistant Secretary of said corporation, who are
both personally known to me to be the same persons whose names are
subscribed to the foregoing instrument as such Vice President and
Assistant Secretary, respectively, and who are both personally known to
me to be the Vice President and the Assistant Secretary, respectively,
of said corporation, appeared before me this day in person and
severally acknowledged that they signed, sealed, executed and delivered
said instrument as their free and voluntary act as such Vice President
and Assistant Secretary, respectively, of said corporation, and as the
free and voluntary act of said corporation, for the uses and purposes
therein set forth.
Given under my hand and notarial seal this th day of June A.D.
1996.
Notary Public
My Commission expires March 23, 1999.
13
State of Illinois} ss:
County of Cook}
I, Kimberley Lange, a Notary Public in and for said County, in the
State aforesaid, Do Hereby Certify that J. Bartolini, Vice President of
Harris Trust & Savings, an Illinois banking corporation, one of the
parties described in and which executed the foregoing instrument, and
D. G. Donovan, Assistant Secretary of said banking corporation, who are
both personally known to me to be the same persons whose names are
subscribed to the foregoing instrument as such Vice President and
Assistant Secretary, respectively, and who are both personally known to
me to be a Vice President and an Assistant Secretary, respectively, of
said banking corporation, appeared before me this day in person and
severally acknowledged that they signed, sealed, executed and delivered
said instrument as their free and voluntary act as such Vice President
and Assistant Vice President, respectively, of said banking
corporation, and as the free and voluntary act of said banking
corporation, for the uses and purposes therein set forth.
Given under my hand and notarial seal this th day of June A.D. 1996.
Notary Public
My Commission expires December 14, 1997.
14
RECORDING DATA
This Supplemental Indenture was recorded , in the
office of the Recorder of Deeds in certain counties in the State of
Illinois, as follows:
County Book Page Document No.
Adams
Boone
Bureau
Carroll
Champaign
Cook
DeKalb
DeWitt Microfilm
DuPage
Ford
Grundy
Hancock
Henderson
Henry
Iroquois
Jo Daviess
Kane
Kankakee
Kendall
Lake
La Salle
Lee
Livingston
McHenry
McLean Microfilm
Mercer
Ogle
Piatt
Pike
Rock Island
Stephenson
Tazewell
Vermilion
Whiteside
Will
Winnebago
Woodford
Exhibit A
INSTRUMENT OF RESIGNATION, APPOINTMENT AND ACCEPTANCE
This INSTRUMENT OF RESIGNATION, APPOINTMENT AND ACCEPTANCE (this
"Instrument"), dated as of January 26, 1996 (the "Execution Date"), by and
among Northern Illinois Gas Company, a corporation duly organized and
existing under the laws of the State of Illinois (the "Company"), Bank of
America Illinois, an Illinois state banking corporation (the "Resigning
Trustee") and Harris Trust and Savings Bank, an Illinois state banking
corporation (the "Successor Trustee").
WHEREAS, Commonwealth Edison Company and the Resigning Trustee
(formerly known as Continental Illinois National Bank and Trust Company of
Chicago) entered into an indenture, dated as of January 1, 1954, as amended
and supplemented (the "Indenture") which Indenture was adopted by a
predecessor of the Company pursuant to an Indenture of Adoption dated
February 9, 1954;
WHEREAS, the Indenture provides for the issuance from time to time
thereunder, in series, of bonds of the Company for its lawful corporate
purposes (the "Bonds"); and
WHEREAS, the Resigning Trustee has been acting as Trustee, paying
agent, registrar and transfer agent under the Indenture; and
WHEREAS, Section 17.06 of the Indenture provides that the Trustee may
resign and be discharged of the trust created by the Indenture by giving notice
thereof in writing to the Company specifying the date when such resignation
shall take effect, and by giving notice thereof to the bondholders, in
accordance with Section 17.10(c) of the Indenture; and
WHEREAS, the Resigning Trustee hereby notifies the Company in writing of
its resignation to become effective as of February 26, 1996; and
WHEREAS, Section 17.06 of the Indenture provides that in case the
Trustee shall resign, the Company by an instrument in writing executed by order
of the Board of Directors shall appoint a successor Trustee; and
WHEREAS, Section 17.06 of the Indenture provides every successor Trustee
shall be qualified under the provision of such Section; and
WHEREAS, Section 17.07 of the Indenture provides that any successor
Trustee appointed under the Indenture shall execute, acknowledge and deliver to
its predecessor Trustee and also to the Company an instrument in writing
accepting such appointment and thereupon such successor Trustee, without any
further act, deed or conveyance, shall become fully vested with all the estates,
1
authority, rights, trusts, powers, duties and obligations of the Resigning
Trustee; and
NOW, THEREFORE, pursuant to the Indenture and in consideration of the
covenants herein contained, it is agreed as follows (words and phrases not
otherwise defined in this Instrument shall have the meaning given thereto in the
Indenture):
THE RESIGNING TRUSTEE
1. Pursuant to the terms of the Indenture, the Resigning Trustee here-
by notifies the Company that the Resigning Trustee is resigning as Trustee under
the Indenture effective as of February 26, 1996 (the "Effective Date").
2. Effective as of the Effective Date, the Resigning Trustee hereby
assigns, transfers, delivers and confirms to the Successor Trustee all of its
estates, authority, rights, trusts, powers, duties and obligations of the
Resigning Trustee under the Indenture.
3. The Resigning Trustee agrees to execute and deliver such further
instruments and shall take such further actions as the Successor Trustee or the
Company may reasonably request so as to more fully and certainly vest and
confirm in the Successor Trustee all the estates, authority, rights, trusts,
powers, duties and obligations hereby assigned, transferred, delivered and
confirmed to the Successor Trustee, including without limitation, the execution
and delivery of any instruments required to re-perfect all liens that it may
have on the trust in the name of the Successory Trustee.
4. Promptly after the execution and delivery of this Instrument, the
Resigning Trustee shall cause notice of its resignation, effected hereby to be
given as is required purusant to Section 17.06 of the Indenture.
5. Promptly after the Effective Date, the Resigning Trustee shall
provide the governing documents to the Successor Trustee.
THE COMPANY
1. Effective as of the Effective Date, the Company hereby accepts the
resignation of the Resigning Trustee and appoints the Successor Trustee as
successor in trust under the Indenture and confirms to the Successor Trustee all
of the estates, authority, rights, trusts, powers, duties and obligations of the
Trustee under the Indenture.
2
2. The Company agrees to execute and deliver such further instruments
and to take such further action as the Successor Trustee may reasonably request
so as to more fully and certainly vest and confirm in the Successor Trustee all
the estates, authority, rights, trusts, powers, duties and obligations hereby
assigned, transferred, delivered and confirmed to the Successor Trustee.
3. The Company hereby represents and warrants that to the best
knowledge of the Company there has been no notice of a completed default and
no event which, after notice or lapse of time or both, would become a completed
default under the terms of the Indenture, as of the Effective Date.
4. The Company agrees to give, or cause to be given, prompt notice of
the appointment of the Successor Trustee to the bondholders in accordance with
Section 17.07 of the Indenture.
THE SUCCESSOR TRUSTEE
1. Effective as of the Effective Date, the Successor Trustee hereby
accepts its appointment as successor Trustee under the Indenture and shall be
vested with all the estates, authority, rights, trusts, powers, duties and
obligations of the Trustee under the Indenture.
2. The Successor Trustee hereby represents that it is qualified and
eligible under the provisions of Section 17.06 of the Indenture to be appoited
successor Trustee and hereby accepts the appointment as Successor Trustee and
agrees that upon the signing of this Instrument it shall become vested with all
of the estates, authority, rights, trusts, powers, duties and obligations of the
Resigning Trustee as Trustee with respect to all series of Bonds with like
effect as if originally named as Trustee under the Indenture.
3. The Successor Trustee shall perform such functions as paying agent,
registrar and transfer agent pursuant to the terms of the Indenture at its
Corporate Trust Office in Chicago, Illinois, where notices and demands to or
upon the Company in respect of the Bonds or the Indenture may be served, or the
Bonds may be presented or surrendered for payment and where the Bonds may be
surrendered for exchange or registration of transfer.
3
MISCELLANEOUS
1. (a) Notwithstanding the resignation of the Resigning Trustee as
trustee under the Indenture, the Company shall remain obligated under the
Indenture to compensate, reimburse and indemnify the Resigning Trustee in
connection with its trusteeship under the Indenture prior to the date hereof
pursuant to the terms of the Indenture.
(b) The Resigning Trustee agrees to indemnify and save the
Successor Trustee harmless against any and all costs, claims, liabilities,
expenses, losses or damages whatsoever (including all reasonable fees, expenses
and disbursements of counsel, auditors or other agents or expert(s), which the
Successor Trustee may suffer or incur at any time or times as a result of the
Successor Trustee's accepting the appointment and acting as successor trustee
under the Indenture which may arise out of the Resigning Trustee's willful
misconduct, bad faith or negligence during the term of its trusteeship, as
determined on the basis of the provisions contained in the Indenture.
(c) The Successor Trustee agrees to indemnify and save the
Resigning Trustee harmless from and against any and all costs, claims,
liabilities, expenses, losses or damages whatsoever (including all reasonable
fees, expenses and disbursements and the reasonable fees, expenses and disburse-
ments of counsel and agents), incurred by the Resigning Trustee which may arise
out of the Successor Trustee's willful misconduct, bad faith or negligence
during the term of its trusteeship as determined on the basis of the provisions
contained in the Indenture.
2. The parties hereto agree that as of the Effective Date, all
references to the Resigning Trustee as Trustee in the Indenture shall be deemed
to refer to the Successor Trustee. After the Effective Date, all notices or
payments which were required by the terms of the Indenture to be given or paid
to the Resigning Trustee, as Trustee, shall be given or paid to:
HARRIS TRUST AND SAVINGS BANK
311 West Monroe Street
Attention: Indenture Trust Division
Chicago, Illinois 60606
3. The resignation, appointment and acceptance effected hereby shall
become effective as of the opening of business on the Effective Date.
4. This Instrument shall be governed by and construed in accordance
with the laws governing the Indenture.
4
5. This Instrument may be executed in any number of counterparts, each
of which shall be an original, but which counterparts shall together constitute
but one and the same instrument.
6. Nothing contained in this Instrument shall in any way affect the
obligations or rights of the Company, the Resigning Trustee or any holder of the
Bonds under the Indenture. This Instrument shall be binding upon and inure to
the benefit of the Company, the Resigning Trustee, the Successor Trustee and
their respective successors and assigns.
7. The parties hereby agree that from and after the Effective Date,
all fees payable by the Company to the Trustee under the Indenture shall hence-
forth be invoiced by and paid to the Successor Trustee at such address and
account as shall hereafter be provided by the Successor Trustee to the Company.
8. Each of the parties hereto hereby represents and warrants for
itself that as of the date hereof and as of the Effective Date:
a) it has the power and authority to execute and deliver this
Instrument and to perform its obligations hereunder, and all
such action has been duly and validly authorized by all
necessary proceedings on its part; and
b) this Instrument has been duly authorized, executed and
delivered by it, and constitutes a legal, valid and binding
agreement enforceable against it in accordance with its terms,
except as the enforceability of this Instrument may be limited
by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditor's rights or
by general principles of equity limiting the availability of
equitable remedies.
IN WITNESS WHEREOF, the parties hereto have caused this Instrument to be
duly executed and attested by their duly authorized officers, all as of the date
and year first above written.
NORTHERN ILLINOIS GAS COMPANY,
as Company
By: ________________________
Title: _____________________
Attest:
_______________________
5
BANK OF AMERICA ILLINOIS, as
Resigning Trustee
By: _______________________
Title: ____________________
Attest:
_______________________
HARRIS TRUST AND SAVINGS BANK,
as Successor Trustee
By: _________________________
Title: ______________________
Attest:
_______________________
NORTHERN.CAP
6
NORTHERN ILLINOIS GAS COMPANY
FORM 10-Q
EXHIBIT 4.02
Supplemental Indenture
DATED AUGUST 1, 1996
NORTHERN ILLINOIS GAS COMPANY
TO
HARRIS TRUST AND SAVINGS BANK
TRUSTEE UNDER INDENTURE DATED AS OF
JANUARY 1, 1954 AND SUPPLEMENTAL
INDENTURES THERETO
FIRST MORTGAGE BONDS
6.45% SERIES DUE AUGUST 1, 2001
This instrument was prepared by Donald W. Lohrentz, 1844 Ferry Road,
Naperville, Illinois 60563-9600.
Return to: Northern Illinois Gas Company
Attn: Joe R. Johnson
P.O. Box 190, Aurora, IL 60507-0190
This Supplemental Indenture, dated the first day of August, 1996,
between Northern Illinois Gas Company, a corporation organized and
existing under the laws of the State of Illinois (hereinafter called
the ''Company''), and Harris Trust and Savings Bank, an Illinois
banking corporation (hereinafter called the ''Trustee''), as Trustee
under an Indenture dated as of January 1, 1954, as supplemented by
Supplemental Indentures dated, respectively, February 9, 1954, April
1, 1956, June 1, 1959, July 1, 1960, June 1, 1963, July 1, 1963,
August 1, 1964, August 1, 1965, May 1, 1966, August 1, 1966, July 1,
1967, June 1, 1968, December 1, 1969, August 1, 1970, June 1, 1971,
July 1, 1972, July 1, 1973, April 1, 1975, April 30, 1976, April 30,
1976, July 1, 1976, August 1, 1976, December 1, 1977, January 15,
1979, December 1, 1981, March 1, 1983, October 1, 1984, December 1,
1986, March 15, 1988, July 1, 1988, July 1, 1989, July 15, 1990,
August 15, 1991, July 15, 1992, February 1, 1993, March 15, 1993, May
1, 1993, July 1, 1993, August 15, 1994, October 15, 1995 and May 10,
1996, such Indenture dated as of January 1, 1954, as so supplemented,
being hereinafter called the ''Indenture.''
Witnesseth:
Whereas, the Indenture provides for the issuance from time to time
thereunder, in series, of bonds of the Company for the purposes and
subject to the limitations therein specified; and
Whereas, the Company desires, by this Supplemental Indenture, to
create an additional series of bonds to be issuable under the
Indenture, such bonds to be designated ''First Mortgage Bonds, 6.45%
Series due August 1, 2001'' (hereinafter called the ''bonds of this
Series''), and the terms and provisions to be contained in the bonds of
this Series or to be otherwise applicable thereto to be as set forth in
this Supplemental Indenture; and
Whereas, the forms, respectively, of the bonds of this Series, and
Trustee's certificate to be endorsed on all bonds of this Series, are
to be substantially as follows:
(form of face of bond)
No. RU $
NORTHERN ILLINOIS GAS COMPANY
First Mortgage Bond, 6.45% Series due August 1, 2001
2
Northern Illinois Gas Company, an Illinois corporation (hereinafter
called the ''Company''), for value received, hereby promises to pay to
or registered assigns, the sum of Dollars, on the first day
of August, 2001, and to pay to the registered owner hereof interest on
said sum from the date hereof until said sum shall be paid, at the rate
of six and forty-five hundredths per centum (6.45%) per annum, payable
semiannually on the first day of February and the first day of August
in each year. Both the principal of and the interest on this bond shall
be payable at the office or agency of the Company in the City of
Chicago, State of Illinois, or, at the option of the registered owner,
at the office or agency of the Company in the Borough of Manhattan, The
City and State of New York, in any coin or currency of the United
States of America which at the time of payment is legal tender for the
payment of public and private debts. Any installment of interest on the
bonds may, at the Company's option, be paid by mailing checks for such
interest payable to or upon the written order of the person entitled
thereto to the address of such person as it appears on the registration
books.
So long as there is no existing default in the payment of interest on
this bond, the interest so payable on any interest payment date will be
paid to the person in whose name this bond is registered on the January
<PAGE>
15 or the July 15 (whether or not a business day), as the case may be,
next preceding such interest payment date. If and to the extent that
the Company shall default in the payment of interest due on such
interest payment date, such defaulted interest shall be paid to the
person in whose name this bond is registered on the record date fixed,
in advance, by the Company for the payment of such defaulted interest.
Additional provisions of this bond are set forth on the reverse
hereof.
This bond shall not be entitled to any security or benefit under the
Indenture or be valid or become obligatory for any purpose unless and
until it shall have been authenticated by the execution by the Trustee,
or its successor in trust under the Indenture, of the certificate
endorsed hereon.
In witness whereof, Northern Illinois Gas Company has caused this bond
to be executed in its name by its Chairman, President, or a Vice
President, manually or by facsimile signature, and has caused its
corporate seal to be impressed hereon or a facsimile thereof to be
imprinted hereon and to be
3
attested by its Secretary or its Assistant Secretary, manually or by facsimile
signature.
Dated
Northern Illinois Gas Company
By
President
Attest:
Secretary
(form of trustee's certificate of authentication)
This bond is one of the bonds of the series designated therein,
referred to and described in the within-mentioned Supplemental
Indenture dated August 1, 1996.
Harris Trust and Savings Bank,
Trustee
By
Authorized Officer
(form of reverse side of bond)
This bond is one, of the series hereinafter specified, of the bonds
issued and to be issued in series from time to time under and in
accordance with and secured by an Indenture dated as of January 1,
1954, to Harris Trust and Savings Bank, as Trustee, as supplemented by
certain indentures supplemental thereto, executed and delivered to the
Trustee; and this bond is one of a series of such bonds, designated
''Northern Illinois Gas Company First Mortgage Bonds, 6.45% Series due
August 1, 2001'' (herein called ''bonds of this Series''), the issuance
of which is provided for by a Supplemental Indenture dated August 1,
1996 (hereinafter called the ''Supplemental Indenture''), executed and
delivered by the Company to the Trustee. The term ''Indenture'', as
hereinafter used, means said Indenture dated as of January 1, 1954, and
all indentures supplemental thereto from time to time in effect.
Reference is made to the Indenture for a description of the property
mortgaged and pledged, the nature and extent of the security, the
rights of the holders and registered
4
owners of said bonds, of the Company and of the Trustee in respect of the
security, and the terms and conditions governing the issuance and security of
said bonds.
With the consent of the Company and to the extent permitted by and
as provided in the Indenture, modifications or alterations of the
Indenture or of any supplemental indenture and of the rights and
obligations of the Company and of the holders and registered owners of
the bonds may be made, and compliance with any provision of the
Indenture or of any supplemental indenture may be waived, by the
affirmative vote of the holders and registered owners of not less than
sixty-six and two-thirds per centum (662/3%) in principal amount of the
bonds then outstanding under the Indenture, and by the affirmative vote
of the holders and registered owners of not less than sixty-six and
two-thirds per centum (662/3%) in principal amount of the bonds of any
series then outstanding under the Indenture and affected by such
modification or alteration, in case one or more but less than all of
the series of bonds then outstanding under the Indenture are so
affected, but in any case excluding bonds disqualified from voting by
reason of the Company's interest therein as provided in the Indenture;
subject, however, to the condition, among other conditions stated in
the Indenture, that no such modification or alteration shall be made
which, among other things, will permit the extension of the time or
times of payment of the principal of or the interest on this bond, or
the reduction in the principal amount hereof or in the rate of interest
or any other modification in the terms of payment of such principal or
interest, which terms of payment are unconditional, or, otherwise than
as permitted by the Indenture, the creation of any lien ranking prior
to or on a parity with the lien of the Indenture with respect to any of
the mortgaged property, all as more fully provided in the Indenture.
The bonds of this Series may not be called for redemption by the
Company prior to August 1, 2000. On August 1, 2000 and thereafter until
maturity on August 1, 2001, upon the notice hereinafter stated and in
the manner and with the effect provided in the Indenture, the bonds of
this Series are redeemable at the option of the Company, as a whole at
any time or in part from time to time, at 100% of the principal amount
thereof, plus accrued and unpaid interest to the redemption date.
Notice of each redemption shall be mailed to all registered owners not
less than thirty nor more than forty-five days before the redemption date.
5
In case of certain completed defaults specified in the Indenture, the
principal of this bond may be declared or may become due and payable in
the manner and with the effect provided in the Indenture.
No recourse shall be had for the payment of the principal of or the
interest on this bond, or for any claim based hereon, or otherwise in
respect hereof or of the Indenture, to or against any incorporator,
stockholder, officer or director, past, present or future, of the
Company or of any predecessor or successor corporation, either directly
or through the Company or such predecessor or successor corporation,
under any constitution or statute or rule of law, or by the enforcement
of any assessment or penalty, or otherwise, all such liability of
incorporators, stockholders, directors and officers being waived and
released by the registered owner hereof by the acceptance of this bond
and being likewise waived and released by the terms of the Indenture,
all as more fully provided therein.
This bond is transferable by the registered owner hereof, in person
or by duly authorized attorney, at the office or agency of the Company
in the City of Chicago, State of Illinois, or, at the option of the
registered owner, at the office or agency of the Company in the Borough
of Manhattan, The City and State of New York, upon surrender and
cancellation of this bond; and thereupon a new registered bond or bonds
without coupons of the same aggregate principal amount and series will,
upon the payment of any transfer tax or taxes payable, be issued to the
transferee in exchange herefor. The Company shall not be required to
exchange or transfer this bond if this bond or a portion hereof has
been selected for redemption.
(end of bond form)
and
Whereas, all acts and things necessary to make this Supplemental
Indenture, when duly executed and delivered, a valid, binding and legal
instrument in accordance with its terms and for the purposes herein
expressed, have been done and performed, and the execution and delivery
of this Supplemental Indenture have in all respects been duly
authorized;
6
Now, Therefore, in consideration of the premises and of the sum of one
dollar paid by the Trustee to the Company, and for other good and
valuable considerations, the receipt of which is hereby acknowledged,
for the purpose of securing the due and punctual payment of the
principal of and the interest and premium, if any, on all bonds which
shall be issued under the Indenture, and for the purpose of securing
the faithful performance and observance of all the covenants and
conditions set forth in the Indenture and in all indentures
supplemental thereto, the Company by these presents does grant,
bargain, sell, transfer, assign, pledge, mortgage, warrant and convey
unto Harris Trust and Savings Bank, as Trustee, and its successor or
successors in the trust hereby created, all property, real and personal
(other than property expressly excepted from the lien and operation of
the Indenture), which, at the actual date of execution and delivery of
this Supplemental Indenture, is solely used or held for use in the
operation by the Company of its gas utility system and in the conduct
of its gas utility business and all property, real and personal, used
or useful in the gas utility business (other than property expressly
excepted from the lien and operation of the Indenture) acquired by the
Company after the actual date of execution and delivery of this
Supplemental Indenture or (subject to the provisions of Section 16.03
of the Indenture) by any successor corporation after such execution and
delivery, and it is further agreed by and between the Company and the
Trustee as follows:
ARTICLE I
Bonds of this Series
Section 1. The bonds of this Series shall, as hereinbefore recited, be
designated as the Company's ''First Mortgage Bonds, 6.45% Series due
August 1, 2001.'' The bonds of this Series which may be issued and
outstanding shall not exceed $75,000,000 in aggregate principal amount,
exclusive of bonds of such series authenticated and delivered pursuant
to the provisions of Section 4.12 of the Indenture.
Section 2. The bonds of this Series shall be registered bonds without
coupons, and the form of such bonds, and of the Trustee's certificate
of authentication to be endorsed on all bonds of this Series, shall be
substantially as hereinbefore recited, respectively.
Section 3. The bonds of this Series shall be issued in the
denomination of $1,000 each and in such multiple or multiples thereof
as shall be determined
7
and authorized by the Board of Directors of the Company or by any officer or
officers of the Company authorized by the Board of Directors to make such
determination, the authorization of the denomination of any bond to be
conclusively evidenced by the execution thereof on behalf of the Company. The
bonds of this Series shall be numbered, RU-1 and consecutively upwards, or in
such other appropriate manner as shall be determined and authorized by the Board
of Directors of the Company.
All bonds of this Series shall be dated August 1, 1996, except that
each bond issued on or after the first payment of interest thereon
shall be dated as of the date of the interest payment date thereof to
which interest shall have been paid on the bonds of such series next
preceding the date of issue, unless issued on an interest payment date
to which interest shall have been so paid, in which event such bonds
shall be dated as of the date of issue; provided, however, that bonds
issued on or after January 15 and before the next succeeding February 1
or on or after July 15 and before the next succeeding August 1 shall be
dated the next succeeding interest payment date if interest shall have
been paid to such date. All bonds of this Series shall mature August 1,
2001, and shall bear interest at the rate of 6.45% per annum until the
principal thereof shall be paid. Such interest shall be calculated on
the basis of a 360-day year consisting of twelve 30-day months and
shall be payable semiannually on the first day of February and the
first day of August in each year. So long as there is no existing
default in the payment of interest on the bonds of this Series, such
interest shall be payable to the person in whose name each such bond is
registered on the January 15 and July 15 (whether or not a business
day), as the case may be, next preceding the respective interest
payment dates; provided, however, if and to the extent that the Company
shall default in the payment of interest due on such interest payment
date, such defaulted interest shall be paid to the person in whose name
each such bond is registered on the record date fixed, in advance, by
the Company for the payment of such defaulted interest.
The principal of and interest on the bonds of this Series shall be
payable in any coin or currency of the United States of America which
at the time of payment is legal tender for the payment of public and
private debts, and shall be payable at the office or agency of the
Company in the City of Chicago, State of Illinois, or, at the option of
the registered owner, at the office or agency of the Company in the
Borough of Manhattan, The City and State of New York. Any installment
of interest on the bonds may, at the Company's option, be
8
paid by mailing checks for such interest payable to or upon the written order
of the person entitled thereto to the address of such person as it
appears on the registration books. The bonds of this Series shall be
registrable, transferable and exchangeable in the manner provided in
Sections 4.08 and 4.09 of the Indenture, at either of such offices or
agencies.
Section 4. The bonds of this Series may not be called for redemption
by the Company prior to August 1, 2000. On August 1, 2000 and
thereafter until maturity on August 1, 2001, the bonds of this Series,
upon the mailing of notice and in the manner provided in Section 7.01
of the Indenture (except that no published notice shall be required for
the bonds of this Series), and with the effect provided in Section 7.02
thereof, shall be redeemable at the option of the Company, as a whole
at any time or in part from time to time, at 100% of the principal
amount thereof, plus accrued and unpaid interest to redemption date.
Section 5. No sinking fund is to be provided for the bonds of this
Series.
ARTICLE II
Miscellaneous Provisions
Section 1. This Supplemental Indenture is executed by the Company and
the Trustee pursuant to provisions of Section 4.02 of the Indenture and
the terms and conditions hereof shall be deemed to be a part of the
terms and conditions of the Indenture for any and all purposes. The
Indenture, as heretofore supplemented and as supplemented by this
Supplemental Indenture, is in all respects ratified and confirmed.
Section 2. This Supplemental Indenture shall bind and, subject to the
provisions of Article XVI of the Indenture, inure to the benefit of the
respective successors and assigns of the parties hereto.
Section 3. Although this Supplemental Indenture is dated August 1,
1996, it shall be effective only from and after the actual time of its
execution and delivery by the Company and the Trustee on the date
indicated by their respective acknowledgments hereto annexed.
Section 4. This Supplemental Indenture may be simultaneously executed
in any number of counterparts, and all such counterparts executed and
delivered, each as an original, shall constitute but one and the same
instrument.
9
In Witness Whereof, Northern Illinois Gas Company has caused this
Supplemental Indenture to be executed in its name by its President, a
Vice President, or Treasurer, and its corporate seal to be hereunto
affixed and attested by its Secretary or its Assistant Secretary, and
Harris Trust and Savings Bank, as Trustee under the Indenture, has
caused this Supplemental Indenture to be executed in its name by one of
its Vice Presidents, and its seal to be hereunto affixed and attested
by its Assistant Secretary, all as of the day and year first above
written.
Northern Illinois Gas Company
By
Vice President and Treasurer
Attest:
Assistant Secretary
Harris Trust and Savings Bank,
as Trustee
By
Vice President
Attest:
Assistant Secretary
10
State of Illinois }
} ss:
County of DuPage }
I, Beth A. Aussem, Notary Public in the State aforesaid, Do Hereby
Certify that Donald W. Lohrentz, Vice President and Treasurer of
Northern Illinois Gas Company, an Illinois corporation, one of the
parties described in and which executed the foregoing instrument, and
Alexander C. Allison, Assistant Secretary of said corporation, who are
both personally known to me to be the same persons whose names are
subscribed to the foregoing instrument as such Vice President and
Assistant Secretary, respectively, and who are both personally known to
me to be the Vice President and the Assistant Secretary, respectively,
of said corporation, appeared before me this day in person and
severally acknowledged that they signed, sealed, executed and delivered
said instrument as their free and voluntary act as such Vice President
and Assistant Secretary, respectively, of said corporation, and as the
free and voluntary act of said corporation, for the uses and purposes
therein set forth.
Given under my hand and notarial seal this day of August A.D.
1996.
Notary Public
My Commission expires March 23, 1999.
11
State of Illinois }
} ss:
County of Cook }
I, Kimberley Lange, a Notary Public in and for said County, in the
State aforesaid, Do Hereby Certify that J. Bartolini, Vice President of
Harris Trust and Savings Bank, an Illinois banking corporation, one of
the parties described in and which executed the foregoing instrument,
and D. G. Donovan, Assistant Secretary of said banking corporation, who
are both personally known to me to be the same persons whose names are
subscribed to the foregoing instrument as such Vice President and
Assistant Secretary, respectively, and who are both personally known to
me to be a Vice President and an Assistant Secretary, respectively, of
said banking corporation, appeared before me this day in person and
severally acknowledged that they signed, sealed, executed and delivered
said instrument as their free and voluntary act as such Vice President
and Assistant Secretary, respectively, of said banking corporation, and
as the free and voluntary act of said banking corporation, for the uses
and purposes therein set forth.
Given under my hand and notarial seal this day of August A.D. 1996.
Notary Public
My Commission expires December 14, 1997.
12
RECORDING DATA
This Supplemental Indenture was recorded on August 8 or 9, 1996, in
the office of the Recorder of Deeds in certain counties in the State of
Illinois, as follows:
County Book Page Document No.
Adams
Boone
Bureau
Carroll
Champaign
Cook
DeKalb
DeWitt
DuPage
Ford
Grundy
Hancock
Henderson
Henry
Iroquois
Jo Daviess
Kane
Kankakee
Kendall
Lake
La Salle
Lee
Livingston
McHenry
McLean
Mercer
Ogle
Piatt
Pike
Rock Island
Stephenson
Tazewell
Vermilion
Whiteside
Will
Winnebago
Woodford
Northern Illinois Gas Company
Form 10-Q
Exhibit 12.01
<TABLE>
NORTHERN ILLINOIS GAS COMPANY
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
(Thousands)
<CAPTION>
Twelve
Months Ended
June 30 Year Ended December 31
1996 1995 1994 1993 1992 1991
Earnings available to cover fixed charges:
<S> <C> <C> <C> <C> <C> <C>
Net income $ 97,314 $ 85,448 $ 93,078 $ 94,935 $ 91,239 $ 91,368
Add: Income taxes 57,619 49,881 50,958 52,890 49,578 47,664
Fixed charges 42,040 39,400 37,729 40,960 41,648 40,969
Allowance for funds used
during construction (719) (911) (151) (64) (915) (700)
Total $ 196,254 $ 173,818 $ 181,614 $ 188,721 $ 181,550 $ 179,301
Fixed charges:
Interest on debt $ 38,743 $ 38,129 $ 36,726 $ 38,949 $ 39,773 $ 36,270
Other interest charges and
amortization of debt discount,
premium and expense, net 3,297 1,271 1,003 2,011 1,875 4,699
Total $ 42,040 $ 39,400 $ 37,729 $ 40,960 $ 41,648 $ 40,969
Ratio of earnings to fixed charges 4.67 4.41 4.81 4.61 4.36 4.38
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME, THE CONSOLIDATED BALANCE SHEET AND THE
CONSOLIDATED STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1646
<OTHER-PROPERTY-AND-INVEST> 8
<TOTAL-CURRENT-ASSETS> 225
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 67
<TOTAL-ASSETS> 1946
<COMMON> 76
<CAPITAL-SURPLUS-PAID-IN> 108
<RETAINED-EARNINGS> 512
<TOTAL-COMMON-STOCKHOLDERS-EQ> 696
9
1
<LONG-TERM-DEBT-NET> 421
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 109
<LONG-TERM-DEBT-CURRENT-PORT> 25
1
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 684
<TOT-CAPITALIZATION-AND-LIAB> 1946
<GROSS-OPERATING-REVENUE> 937
<INCOME-TAX-EXPENSE> 38
<OTHER-OPERATING-EXPENSES> 814
<TOTAL-OPERATING-EXPENSES> 852
<OPERATING-INCOME-LOSS> 85
<OTHER-INCOME-NET> 1
<INCOME-BEFORE-INTEREST-EXPEN> 86
<TOTAL-INTEREST-EXPENSE> 22
<NET-INCOME> 64
1
<EARNINGS-AVAILABLE-FOR-COMM> 63
<COMMON-STOCK-DIVIDENDS> 67
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 178
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0
<FN>
<F1>NORTHERN ILLINOIS GAS IS A WHOLLY OWNED SUBSIDIARY OF NICOR INC.
EARNINGS PER SHARE INFORMATION IS THEREFORE OMITTED.
</FN>
</TABLE>
