<PAGE> 1
File Number 70-8107
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 3
to
FORM U-1
DECLARATION UNDER THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935
By
CONSOLIDATED NATURAL GAS COMPANY
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
Names and addresses of agents for service:
S. E. Williams, Senior Vice President L. D. JOHNSON, Vice Chairman
and General Counsel of the Board and Chief Financial
Consolidated Natural Gas Company Officer
CNG Tower Consolidated Natural Gas Company
625 Liberty Avenue CNG Tower
Pittsburgh, Pennsylvania 15222-3199 625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
N. F. CHANDLER, General Attorney
Consolidated Natural Gas Service Company, Inc.
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
<PAGE> 2
File Number 70-8107
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 3
to
FORM U-1
DECLARATION UNDER THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935
Consolidated Natural Gas Company restates its
application-declaration (except financial statements) under the above file
number in the entirety as follows:
Item 1. Description of Proposed Transaction
___________________________________
(a) Furnish a reasonably detailed and precise description of the
proposed transaction, including a statement of the reasons why it is desired
to consummate the transaction and the anticipated effect thereof. If the
transaction is part of a general program, describe the program and its
relation to the proposed transaction.
I. REQUEST FOR AUTHORIZATION TO USE NEW INDENTURE
Consolidated Natural Gas Company ("Consolidated" or the
"Company"), a registered public utility holding company, desires
to be able to issue and sell debt securities ("Debt Securities")
under a new indenture ("New Indenture"), which would be between
Consolidated and a major bank yet to be designated.
By order dated April 21, 1993 ("First Order"), Release No.
35-25800, File No. 70-8167, the Securities and Exchange
Commission ("Commission") authorized Consolidated to issue and
<PAGE> 3
sell on or before June 30, 1995 up to $400,000,000 principal
amount of debentures maturing in not more than thirty years. On
August 24, 1993, Consolidated issued and sold $150,000,000
principal amount of 5-3/4% Debentures Due August 1, 2003
pursuant to the First Order. On December 8, 1993, Consolidated
issued and sold $150,000,000 principal amount of 6-5/8%
Debentures Due December 1, 2013 under the First Order. Both
series of these debenture were issued pursuant to an indenture
dated as of May 1, 1971 ("1971 Indenture") between Consolidated
and Chemical Bank. The expiration date of the First Order was
extended from June 30, 1995 to June 30, 1996 by Commission
supplemental order dated November 21, 1994 ("First Supplemental
Order"), Release No. 35-26165.
By order dated April 14, 1994 (Second Order"), Release No
35-26026, File No. 70-8365, the Commission authorized
Consolidated to issue and sell on or before June 30, 1996 up to
an additional $400,000,000 principal amount of debentures
maturing in not more than thirty years. No debentures have been
issued under the Second Order. The $100,000,000 principal
amount of securities remaining available for issue under the
First Order and the $400,000,000 principal amount of securities
available for issue under the Second Order are hereinafter
referred to as the "Debt Securities."
By the First Supplemental Order in File No. 70-8167 and by
Commission supplemental order dated November 21, 1994 ("Second
Supplemental Order"), Release No. 35-26166, in File No. 70-8365,
Consolidated was authorized to amend the 1971 Indenture
<PAGE> 4
to reserve the right, without consent of the holders of future
debentures, to change covenants requiring certain income
coverage and debt to equity ratio tests before additional funded
debt (as defined in the 1971 Indenture) could be incurred. Any
need to use such covenant changing authorizations would be
obviated if Consolidated were authorized to use the New
Indenture. The First Order, First Supplemental Order, Second
Order, and Second Supplemental Order are collectively referred
to herein as the "Orders."
In this proceeding, Consolidated is seeking authorization to
use the New Indenture in lieu of the 1971 Indenture with respect
to the remaining unissued aggregate balance of the $500,000,000
debt security authorization granted under the Orders.
Consolidated desires to be able to select whether to use the
1971 Indenture or the New Indenture for an interim period of
time. It would, therefore, retain the right to issue debentures
under the Orders or issue Debt Securities under the New
Indenture until June 30, 1996, provided that the aggregate so
issued would not exceed $500,000,000 in principal amount.
The price, negotiated sales and use of proceeds provisions
in the Orders as applicable to the offer and sale of Debentures
under the 1971 Indenture would also apply to the offer and sale
of Debt Securities under the New Indenture. Accordingly, the
Debt Securities would be sold on or before June 30, 1996, and
would mature in not more than thirty years from date of issue.
The Debt Securities will be sold in one more series at a price,
exclusive of accrued interest, which will be not less than 98%
<PAGE> 5
nor more than 101% of the principal amount and at an interest
rate which will be a multiple of 1/8, 1/10, or 1/20 of 1%.
Consolidated proposes to issue and sell the Debt Securities
either by competitive bidding or through negotiated public or
private offerings without any additional prior Commission
approval.
The proceeds from the sale of the Debt Securities will be
added to Consolidated's treasury fund and subsequently used to
(i) finance, in part, capital expenditures of Consolidated and
its subsidiaries, (ii) finance the purchase of Consolidated's
common stock in the open market, and/or (iii) acquire, retire,
or redeem securities of which Consolidated is an issuer without
the need for prior Commission approval pursuant to Rule 42 under
the Act. The proceeds from the sale of the Debt Securities will
not be used to acquire any interest in an exempt wholesale
generator as defined in Section 32(a)(1) of the Act or any
interest in a foreign utility company as defined in Section
33(a)(3) of the Act.
Consolidated provides funds to its subsidiaries through (i)
open account advances for general corporate purposes, including
gas storage inventories, other working capital requirements and
temporarily for construction until long-term financing is
obtained and/or cash is generated internally, and (ii) long-term
loans and the purchase of subsidiary capital stock to finance
capital expenditures. Consolidated presently applies for
Commission approval of the financing of the Consolidated
<PAGE> 6
subsidiaries' capital needs on an annual basis, the most recent
authorization being by Commission order dated June 27, 1994,
HCAR No. 26072, File No. 70-8415, which expires on June 30,
1995. It is expected by Consolidated that the order authorizing
such system financing for 1994-1995 would itself be succeeded by
subsequent orders authorizing, on an annual or multi-annual
basis, future Consolidated intra-system financing programs. No
Debt Securities will be issued or sold for the purpose of
financing subsidiary capital needs except as permitted by the
Act or authorized by Commission order under the Act.
Consolidated's purchase of up to 4 million shares of its
common stock through December 31, 1995, is authorized in the
Commission's order dated May 18, 1992, HCAR No. 35-25538, File
No. 70-7948.
II. NEW INDENTURE
A. General Description
The Debt Securities will be issued in one or more series,
under the New Indenture. A draft of the Indenture is filed as
Exhibit A.
Many provisions of the New Indenture, such as redemption
procedures, defaults and remedies, and rights and duties of the
trustee, do not materially vary from similar provisions in the
1971 Indenture. However, the New Indenture
<PAGE> 7
is more flexible and adaptable to market conditions than the
1971 Indenture.
Even if the Company adopts the New Indenture at this time,
the following restrictive covenants in the 1971 Indenture would
still apply to the Company, unless modified with the approval of
debenture holders, until it retires the last issue outstanding
under the 1971 Indenture.(1) The longest maturity outstanding
under the 1971 Indenture is that of the 8-3/4% Debentures due
October 1, 2019.
Subject Provision
_______ _________
Liens Generally no liens allowed on assets of the
Company unless Debentures equally and
ratably secured; does not apply to purchase
and acquisition liens, assessment and tax
pledges and pledges to stay legal
proceedings (Section 6.04)
Limitation on Debt- The Company and its subsidiaries ("Subs")
CNG and Subsidiaries cannot incur Funded Debt(2) unless during 12
consecutive months out of the last 15 months
consolidated income is equal to 2.5 times
annual interest charges plus Sub preferred
stock dividend requirements, and
consolidated debt and preferred stock will
not exceed 60% of consolidated net tangible
assets ("CNTA"). (Section 6.06)
_______________
(1) Modification of the covenants contained in the 1971 Indenture would
require approval of 66 2/3% in aggregate principal amount of the
outstanding debentures and 66 2/3% in aggregate principal amount of
the debentures of each affected series. Such modification would also
require the approval of the Commission under the Act. The Company
believes that obtaining such consents from debenture holders would be
difficult and expensive, and might prove to be impossible.
(2) Funded Debt is defined in the 1971 Indenture as any indebtedness
maturing by its terms more than one year from the date of its
creation, including indebtedness renewable or extendible at the
Company's option to a date later than one year after its creation.
<PAGE> 8
Subject Provision
_______ _________
Limitation on Debt- Sub cannot incur Funded Debt to third
Subsidiaries party unless funded debt and preferred stock
of Sub will not exceed 60% of capitalization
of the Sub and funded debt and preferred
stock of all Subs will not exceed 15% of
CNTA. (Section 6.07)
Issue and Sale of Cannot issue or sell voting stock of a
Stock of Subsidiaries restricted Sub(3) unless all such shares
sold, or all of common and 75% of other
voting shares of Sub retained by the Company
and other restricted Subs, or total amount
of securities (other than of restricted
Subs) does not exceed 25% of CNTA. (Section
6.05)
Limitations on The Company cannot pay dividends on capital
Dividends stock if amount paid together with
cumulative past payments from a prior date
(usually around issue date) as to each
series of debentures would exceed amount of
cumulative net income available for
dividends from such date plus an amount
calculated to be free for dividends as of
such date. (Section 6.08)
B. Comparative Analysis of New Indenture with 1971 Indenture
The New Indenture's provisions reflect the modernization of
indenture provisions generally over the past twenty years and
will simplify the Company's corporate housekeeping. For
example, the New Indenture incorporates by reference provisions
of the Trust Indenture Act of 1939, as amended, is expected to
result in substantial savings in printing and trustee
administration costs, simplifies the procedure for
_______________
(3) "Restricted Subsidiary" under the 1971 Indenture means any
corporation all of the common share of which and at least 75% of the
voting shares of which are at the time owned by the Company and/or
another restricted subsidiary.
<PAGE> 9
authorization and issuance of Debt Securities and provides for
covenant defeasance of Debt Securities.
Setting of Terms
________________
The terms of a specific issue of Debt Securities can be set
under the New Indenture through either a resolution of the Board
of Directors of the Company ("Securities Resolution"), or by a
supplemental indenture. The New Indenture enumerates 25
variable terms, such as the principal amount, interest rate,
redemption terms, denominations, events of default and the like,
which may be included as part of the terms of a new issue, and
permits other terms to be included or excluded in the
resolutions or supplemental indenture authorizing a particular
series of securities.
The 1971 indenture allows only a limited number of terms to
vary by series, including the interest rate, principal amount,
maturity and interest dates, and redemption and sinking fund
provisions.
Types of Securities
___________________
The New Indenture permits the Company to issue a wide
variety of unsecured debt securities. Securities issuable can
include, in addition to notes and debentures with terms similar
to those the Company has issued in the past, medium-term notes,
securities having a low or zero coupon (which may be
<PAGE> 10
issued with original issue discount), securities as to which
payments of interest or principal are based on a formula or
index, and securities on which payment of interest or principal
are denominated in a foreign currency or currencies. In theory,
any combination of the above provisions could be included in a
single series of securities which, under current practice, would
be called various names such as "notes", "debentures" or
"medium-term notes". The New Indenture also permits any series
of securities to be issued in certificated form, in "global"
form (i.e., transferable only by book-entry on the records of a
securities depository such as The Depository Trust Company),
uncertificated securities, and bearer securities (if such
securities are sold outside the United States).
The 1971 Indenture permits the issuance of only traditional
type registered debentures.
Lien Restrictions
_________________
The New Indenture, unless the Securities Resolution provides
otherwise, generally prohibits liens on property of the Company,
and of any of its wholly-owned subsidiaries having substantially
all of its assets in the United States ("Restricted
Subsidiary"), which property ("Principal Property") is used in
the transmission, distribution,
<PAGE> 11
exploration or production of natural gas in the United States,
the net depreciated book value of which exceeds 3% of the
Company's consolidated net tangible assets ("CNTA"). However,
property certified by the Company as not of material importance
to the total business of the Company will not be Principal
Property. The New Indenture enumerates 15 categories of
permissible liens ("Permitted Liens") generally of a type
normally arising in the ordinary course of business. Liens in
addition to Permitted Liens are allowed under the New Indenture
if the lien equally and ratably secures the Debt Securities
issued under the New Indenture and all debt for borrowed money
not subordinated to the Debt Securities, or if the lien arises
in connection with acquisition or improvement of property, a
merger or consolidation, pre-existing or substituted liens,
intra-affiliate transactions, production payments and other
transactions typically exempt from an indenture no-pledge
clause. Additionally, aggregate liens are allowed on Principal
Property to the extent debt secured does not exceed 10% of CNTA.
The New Indenture contains restrictions on liens because the
Company has been advised, and has learned from its survey of
debt instruments of issuers who compete for the same investors
as the Company, that such investors require a lien restriction
covenant of this sort in the debt instruments in which they
invest. The lien restriction covenant is drafted
<PAGE> 12
with a view to striking a balance between investors' desire to
have some covenant of this type in an investment grade debt
indenture and the Company's need for flexibility to impose liens
on its property if doing so is reasonable from a business point
of view, or if liens arise by operation of law in circumstances
over which the Company has no control.
The 1971 Indenture has a somewhat similar lien provision,
namely Section 6.04, although as such Section is drafted it
reflects a less sophisticated understanding of the business
operations issues created by liens than investors now have.
Like Section 4.04 in the New Indenture, Section 6.04 prohibits
the Company from imposing liens on its property without equally
or ratably securing Debentures issued under the 1971 Indenture.
A list of exceptions from this requirement is set forth in
Section 6.04 which generally includes purchase money mortgages,
liens on property acquired and certain other liens which arise
in the course of the Company's business. The New Indenture
similarly contains a list of exceptions from the general
restriction it imposes. The length of the list in the New
Indenture reflects an attempt to clarify ambiguities and
interpretive issues that arise under a more broadly drafted
provision such as that found in the 1971 Indenture.
Working together, the two aspects of the lien covenant in
the New Indenture are intended to protect investors by requiring
the Company to equally and ratably secure debt issued under the
New Indenture in the same manner as other secured
<PAGE> 13
debt that the Company might issue, while allowing such
exceptions to this general rule as are necesssary to permit the
Company operational flexibility under the covenant.
Sale and Leaseback Restrictions
_______________________________
Under the New Indenture, unless the Securities Resolution
provides otherwise, the Company and any Restricted Subsidiary
cannot enter into a sale-leaseback transaction with respect to
any Principal Property acquired or placed into service more than
180 days before inception of the lease unless (i) the term is
three years or less, (ii) the lease is between the Company and a
Restricted Subsidiary, (iii) a lien could be created at least
equal to discounted present value of net rent for the remaining
term of the lease ("Attributable Debt") or (iv) long-term debt
at least equal to the Attributable Debt is retired. This
covenant works together with the covenant restricting liens. It
treats transactions in which the Company sells and leases back a
principal property, which it has owned for 180 days or longer,
as the functional equivalent of a secured financing. The
objective of the covenant is to provide some measure of
assurance to holders of unsecured debt that the Company will not
pledge significant assets for financing purposes through the use
of the sale and lease-back technique in a manner not otherwise
contemplated by the covenant which restricts the imposition of
liens on Company assets.
Neither Consolidated nor its subsidiaries have engaged in
sale and leaseback transactions.
<PAGE> 14
The 1971 Indenture has no provision dealing with sale and
leaseback.
Additional Debt Incurrence Limitations
______________________________________
The New Indenture has no restrictions on incurrence of
unsecured debt, and secured debt could be incurred so long as
the lien restrictions in the New Indenture allowed the security
interest with respect to such debt or the Debt Securities under
the New Indenture were equally and ratably secured.
The 1971 Indenture provides that Funded Debt cannot be
incurred and subsidiary preferred stock cannot be issued unless
(i) the consolidated income available for interest and
subsidiary preferred stock dividends of the Company and its
subsidiaries for any 12 consecutive months within 15 months
immediately preceding the date additional funded debt is
incurred is not less than 2-1/2 times the sum of (a) total
annual interest charges and (b) total subsidiary preferred stock
dividends, assuming the incurrence of such additional Funded
Debt or issuance of such preferred stock, as the case may be,
and (ii) after giving effect to the incurrence of the additional
funded Debt and issuance of preferred stock, the sum of the (a)
outstanding consolidated debt of the Company and its
subsidiaries and (b) amount of outstanding subsidiary preferred
stock shall not be more than 60% of the CNTA of the Company and
its subsidiaries. The 1971 Indenture further provides that a
subsidiary of the Company cannot incur Funded Debt or issue
<PAGE> 15
preferred stock to a third party unless Funded Debt and
preferred stock of the subsidiary will not exceed 60%
of the total capitalization of the subsidiary, and the principal
amount of Funded Debt and amount of preferred stock of all
subsidiaries of the Company shall not exceed 15% of CNTA.
Issue and Sale of Stock of Subsidiaries
_______________________________________
The New Indenture has no restriction on the issuance and
sale of voting stock of any subsidiary.
The 1971 Indenture defines a restricted subsidiary ("1971
Restricted Subsidiary") as a subsidiary all of the common stock
of which and at least 75% of the voting shares of which are
owned by the Company and/or other 1971 Restricted Subsidiaries.
The 1971 Indenture prohibits the issuance and sale of voting
shares of a 1971 Restricted Subsidiary unless (i) all of such
shares are sold, (ii) the subsidiary remains a 1971 Restricted
Subsidiary, or (iii) after giving effect to such issuance and
sale, the total amount of securities, other than securities of
1971 Restricted Subsidiaries, shall not exceed 25% of CNTA as
defined in the 1971 Indenture.
Limitations on Dividends
________________________
There are no limitations on the payment of dividends in the
New Indenture.
<PAGE> 16
The 1971 Indenture limits the cumulative payment of
dividends or other distribution upon the Company's capital
stock, or the acquisition of its capital stock, to an amount
which cannot exceed, in the case of each series of debentures,
the consolidated net income available for dividends after
debenture issue date plus an amount of consolidated retained
earnings calculated to be free for dividends as of such issuance
date.
Defeasance
__________
The New Indenture permits the Company to, at any time,
terminate its covenant and payment obligations with respect to a
series of Debt Securities ("legal defeasance") or to terminate
its obligations only with respect to covenants applicable to the
series ("covenant defeasance"), in each case, upon deposit of
U.S. government obligations in trust for the payment of such
series of Debt Securities and satisfaction of certain other
conditions. The covenant defeasance option may, under
applicable tax laws, permit the Company to defease Debt
Securities in a broader range of circumstances.
The 1971 Indenture permits legal defeasance only and permits
defeasance only within six months of maturity or redemption of
an issue of debentures.
C. Business Reasons for New Indenture
Having considered the terms of the 1971 Indenture, in light
of a number of factors mentioned below, Consolidated has
<PAGE> 17
concluded that the restrictions contained in the 1971 Indenture
burden the Company without producing any apparent benefit to it
or investors or consumers or any effect on the public interest.
The present net earnings test, net tangible assets test,
capitalization test, dividend restriction and other terms of the
1971 Indenture are archaic from the point of view of what the
financial markets require for securities similar to the
Company's. Investors do not require the inclusion of financial
covenants in the indentures that govern new issues of investment
grade rated debt, such as the Company's. This is evidenced by
what other issuers in the natural gas industry presently
include, or do not include, in their debt instruments. A survey
of 19 major natural gas companies including Consolidated
indicates that all but Consolidated and another company (which
is experiencing financial distress) have eliminated any debt to
capitalization, fixed charge and dividend covenants. The other
18 companies in the survey are either exempt holding companies
under the Act or nonjurisdictional under the Act due to the
absence of ownership of any utility company subsidiaries.
Consolidated has, in the 1971 Indenture, the most onerous
indenture of all 19 companies. Although Consolidated is in full
compliance with the provisions in its current indenture and has
repeatedly expressed commitment to maintaining strong financial
integrity, continued adherence to its present indenture places
Consolidated at a competitive disadvantage to its peer group.
This is particularly inappropriate at this time given the
changing dynamics of the natural gas industry, the opportunities
that
<PAGE> 18
exist in business, and the evolving and volatile nature of the
financing markets. In the event that investor requirements
change in the future, however, covenant protection can be
inserted on an issue by issue basis at such time. Moreover, if
Consolidated's credit standing were to deteriorate notably,
investors could be expected to insist upon provisions giving
what the market considers appropriate protection.
The Company's credit and ability to raise debt financing
would not be adversely affected if the provisions in the 1971
Indenture were excluded from the New Indenture. Descriptions of
the New Indenture have been given to four credit rating agencies
that rate the Company's debt securities; they have indicated
that the omission of such covenants would not itself adversely
affect the ratings of the Company's securities.
Further, the New Indenture would result in a reduction of
costs associated with the sale and issuance of Debt Securities.
If the New Indenture were adopted by Consolidated, it is
estimated that there could be a cost savings of as much as
$40,000 with respect to each issuance of Debt Securities, and a
savings of approximately $9,000 per year in annual charges for
each series of Debt Securities issued. The Company as of
December 31, 1994 has 8 issues of debentures outstanding which
require the preparation of annual compliance materials. These
cost savings are expected to result from elimination of the need
to prepare a supplemental indenture and covenant compliance
certificate for each issue of debentures and, when book-entry
only issuances are made, elimination of engraved
<PAGE> 19
debenture certificates and costs associated with the
registration of transfers of certificates.
D. Section 7(d) Standards
Section 7(d) of the Act provides, in relevant part, that the
Commission shall permit a declaration to become effective unless
it finds that:
(1) the security is not reasonably adapted to the
security structure of the declarant and other companies in
the same holding company system;
(2) the security is not reasonably adapted to the
earning power of the declarant;
(3) financing by the issue and sale of the particular
security is not necessary or appropriate to the economical
and efficient operation of a business in which the applicant
lawfully is engaged or has an interest;
. . . .
(6) the terms and conditions of the issue or sale of the
security are detrimental to the public interest or the
interest of investors or consumers.
The Company proposes to issue Debt Securities under the New
Indenture. As discussed above, the New Indenture has been
prepared to take advantage of modern procedures for securities
issuance. As also indicated above, the New Indenture will not
<PAGE> 20
contain the following substantive covenants contained in the
1971 Indenture(4):
* limitation on incurrence of funded debt by the
Company to 60% of consolidated tangible net assets
and subject to a 2.5:1 net earnings test
* limitation of subsidiary debt to 60% of the total
capitalization of such subsidiary and of subsidiary
preferred stock to 15% of consolidated net tangible
assets of such subsidiary
* limitation on dividends and other distributions to
stockholders of the Company
* limitation on ownership by the Company and its
subsidiaries of less than wholly owned subsidiaries
to not more than 25% of the consolidated tangible
net assets of the Company(5)
In the Company's view, the absence of these provisions from
the New Indentures do not warrant a finding by the Commission
under Section 7(d) that the Company not be permitted to issue
securities thereunder. That is, none of the omitted provisions
are, in the view of the Company, necessary to meet the standards
of Section 7(d) of the Act. As discussed above, the
_______________
(4) The New Indenture will permit the inclusion of any of these
covenants, or any other covenant, with respect to a specific series
of securities merely by including the applicable covenant in the
authorization of the series of securities.
(5) As noted above, these covenants will continue to restrict the
Company, unless the 1971 Indenture is amended with the consent of
debenture holders, until all debentures issued under the 1971
Indenture are retired. The longest maturity outstanding are the
8-3/4% Debentures due October 1, 2019.
<PAGE> 21
Company believes, and its rating agencies have confirmed, that
the omission of such covenants will not, of itself, affect the
Company's credit ratings. The Company also believes, based on
the advice of investment bankers, that omission of such
covenants will not of itself increase its cost of borrowing.
The limitations on debt and restrictions on dividends
contained in the 1971 Indenture parallel the provisions that, in
the past, the Commission has required to be included in mortgage
bonds issued by utility companies that are subsidiary companies
of a registered holding company pursuant to its Statement of
Policy on First Mortgage Bonds, HCAR NO. 13105 (February 16,
1956) (the "SOP"). Among other things, the SOP requires that
additional bonds be issuable in an amount not in excess of 60%
of property additions and makes issuance of bonds subject to a
2:1 net earnings test. The Company concurs with
the Commission's belief (as stated in HCAR No. 25573 (July 7,
1992)) that the broad dissemination of information concerning
issuers such as the Company and their proposed securities
issuances as mandated by the disclosure obligations under its
Securities Act of 1933 and the Securities Exchange Act of 1934,
together with the sophisticated markets which prescribe the
nature and extent of the covenants and restrictions needed to
successfully sell debt securities and preference stock, have
eliminated this need for regulations (such as the SOP) created
to protect investors and the public from conditions that existed
when the Act was adopted.
Over time, the Commission has authorized a number of
departures from the SOP and a parallel Statement of Policy on
<PAGE> 22
Preferred Stock, HCAR No. 13106 (February 16, 1956) ("Preferred
Stock SOP") without making an adverse finding under Section
7(d). See e.g., Columbus Southern Power Company, HCAR No. 25060
(March 20, 1990) (substantially all provisions in the Preferred
Stock SOP waived); National Fuel Gas Company, HCAR No. 25116
(July 24, 1990). The Commission and the Staff have recognized
that the SOP is "anachronistic" and its provisions unnecessary
to the protection of investors.(6) For example,
the Commission no longer requires compliance with the SOPs as a
condition to the exemption from Section 6(a) of the Act for the
issuances of securities by public utility subsidiaries of
registered holding companies under Rule 52 (7), and has proposed
to eliminate any requirement to comply with the SOP or Preferred
Stock SOP in connection with financing by non-utility
subsidiaries of registered holding companies. See HCAR No.
25574 (July 7, 1992).
The imposition of rigid indenture covenants has in certain
circumstances the potential of working against the interests of
_______________
(6) "The SOPs, published by the Commission's Staff nearly 25 years ago,
are anachronistic in today's financial markets. . . . On many
occasions, the Commission has granted deviations from the five-year
limitation to permit an offer of first mortgage bonds to be marketed
successfully (footnote omitted). Other provisions of the SOPs that
appear no longer useful or that may present a hindrance to the
raising of capital by the registered holding-company system focus on
the dividend limitations, allowable funded debt as a percentage of
bonded debt, and short-term debt limitations." HCAR No. 25059 (March
19, 1990).
(7) The requirement to comply with the SOPs together with five other
requirements were deleted as conditions to the use of Rule 52 in HCAR
No. 25573 (July 7, 1992). While Rule 52 does not apply to the
Company, the Company believes that the position taken by the
Commission with respect to amending the rule is illustrative of, and
analogous to, the Company's point that the provisions of its 1971
Indenture which parallel certain provisions in the SOPs should no
longer be imposed on the Company.
<PAGE> 23
the Company, its investors and consumers. This can occur when
the Company reaches the limits of what it is able to do under
the 1971 Indenture and yet finds itself with financing needs
which must be met in some way. For example, the Company might
be in a position where it could not issue additional debt under
the 1971 Indenture but could issue preferred stock. A preferred
stock issuance would meet the financing requirement the Company
faced, but at a much greater cost. The greater cost would arise
from a dividend rate higher than what the interest rate would
have been on debt, and also because the dividends on preferred
stock are not deductible for tax purposes while the interest on
debt would have been so deductible. The Company believes it to
be unreasonable, from a business point of view, to be forced
into higher cost financing by virtue of inflexible Indenture
provisions.
The Company notes that even absent the foregoing
restrictions in the New Indenture, the Commission and the Staff
of the Office of Public Utility Regulation ("Staff") have
statutory authority and ample opportunity to maintain
surveillance of the Company's financial condition and the
suitability of its outstanding securities in light of the
requirements of Section 7(d). The Company files with the
Commission many periodic reports (Forms 10-K, 10-Q and U5S)
which include financial statements. The Company and its
subsidiaries will also continue to file Forms U-1 in connection
with almost all of their financing activities, and are now
filing 14 certificates of notification on a quarterly basis to
<PAGE> 24
keep the Staff apprised of developments under currently
outstanding authorizations granted under the Act.
The Commission's orders authorizing the Company to issue
debentures have traditionally been effective for a period of two
years. The Consolidated system companies have been filing a
Form U-1 annually for authorization of intra-system financings.
Other financings would generally be the subject of a specific
Form U-1 filing and Commission order. The Commission thus has
an on-going ability to pass upon securities issuances by the
Company and its subsidiaries and the compliance of such
issuances with the standards of Section 7 of the Act. In
connection with such procedures, the Commission will have the
statutory authority to impose such conditions on the Company's
issuances of securities in the future as it then deems
appropriate under the circumstances.(8) The Company believes,
therefore, that the inclusion of issuance and other restrictions
of the type set forth in its 1971 Indenture is not required in
order for the New Indenture to meet the standards of Section
7(d).
An analysis of each of the relevant subsections of Section
7(d) follows.
Section 7(d)(1)
_______________
Section 7(d)(1) permits the Commission to deny effectiveness
of an application made under Section 6(a) if it
_______________
(8) The Company believes that no such conditions should be imposed by the
Commissions in connection with the authorization requested in this
application.
<PAGE> 25
relates to a security that "is not reasonably adapted to the
security structure of the declarant and other companies in the
same holding company system." The retention of restrictive
covenants that are in the 1971 Indenture but not in the New
Indenture is not necessary to assure that the Debt Securities
are reasonably adapted to the security structure of Consolidated
and the other companies in the Consolidated System. The
Company's 1971 Indenture limits funded debt to 60% of total
capitalization. The SOP limits issuance of additional mortgage
bonds, except refundings, to 60% of unbonded property. The
Company's covenant is more onerous since it, and the
corresponding limitation on subsidiary debt, limit all debt of
the Company. The SOP provision limits only issuance of bonds
under that mortgage.
The Commission in numerous financing orders has recognized
that the maximum 65% debt and minimum 30% equity standards for
capitalization of holding companies and their subsidiary
companies is a guideline that may be departed from in
appropriate circumstances. See e.g., Eastern Utilities
Associates, Inc., HCAR 24879 (May 5, 1989) (capital structure
consisting of 80% debt, 15% preferred stock and 5% common stock
approved for generating subsidiary; temporary drop of
consolidated equity of regulated holding company system to 28%
approved); Columbia Gas System, Inc., HCAR No. 23971
(December 30, 1985) (Commission approved issuance and sale of
first mortgage bonds by transmission company and guaranty
thereof by parent). Although the Company has no present
<PAGE> 26
intention to incur debt beyond the 60% of total capitalization
limit contained in the 1971 Indenture, it believes that it
should not be precluded from doing so, in appropriate
circumstances, by indenture covenants which are not required by
the marketplace nor productive of savings in the Company's cost
of money.(9) The Company believes that debt to equity ratios
remain a significant factor in the ratings given its debt
securities by rating agencies. The Company therefore seeks to
maintain sufficient equity to continue its investment grade debt
ratings.
However, fixing debt to equity ratios in a form of indenture
creates an inflexible set of ground rules which do not allow for
even temporary variations when business reasons warrant them.
In the event legitimate business needs would require the Company
temporarily to incur debt in excess of the 60% ratio, it could
not do so even if it could soon restore its debt to equity ratio
below the 60% level in a manner which would not jeopardize its
investment grade rating. The Company does not believe such an
incurrence of temporary debt would be inconsistent with its
overall intention to maintain a conservative debt to equity
ratio which would permit it to keep an investment grade debt
rating. Rather in the Company's view, it should have
flexibility to so vary its debt to equity ratio if it believes
doing so is in its best business interests without running afoul
of rigid Indenture provisions. In addition, as noted above,
Commission approval will continue
_______________
(9) After giving effect to the incurrence of the $500 million of Debt
Securities requested to be authorized in this application, the
Company's Funded Debt would represent approximately 43% of total
capitalization.
<PAGE> 27
to be required to issue debt securities in the future. The
Commission will, of course, have the right to examine the
Company's capital structure in the context of any financing
declaration.
For much the same reasons, the limitation on subsidiary debt
contained in the 1971 Indenture is not necessary to insure an
appropriate capital structure for the Company system.
Incurrence of long-term debt by each of the Company's public
utility subsidiaries except Hope Gas, Inc. is subject to state
utility commission approval.(10) The suitability of utility
company capital structure is also considered by the state
utility commissions in rate proceedings. Issuances of
securities and other debt financings by the Company's
non-utility subsidiaries may be subject to Section 6(a) of the
Act and require, except as exempted by Rule 45 or Rule 52 (11),
that such subsidiary file a declaration with the Commission and
receive its approval before incurring such debt.
_______________
(10) Ohio Rev. Code Section 4905.40 (1991); 66 Pa. C.S.A. Section 1901 -
1905 (purdons); Va. Code Ann. Section 56-56. Hope Gas, Inc.'s
financings are reviewed by the Public Service Commission of West
Virginia in connection with rate proceedings.
(11) As noted above for illustrative purposes, the Commission has proposed
amendments to Rule 52 that would exempt many financings by
subsidiaries not subject to state utility commission jurisdiction.
HCAR No. 25574 (July 14, 1992). In proposing the amendments, the
Commission concluded that the exemption was justified "because of the
extensive reporting requirements imposed by the Act and other federal
securities laws, and the far greater scrutiny of reporting companies
generally since the passage of the Act fifty-seven years ago." Id.
Until such amendments are adopted the Commission will continue to
require applications to be filed with respect to all non-utility
subsidiary financings.
<PAGE> 28
Section 7(d)(2)
_______________
Section 7(d)(2) requires that the Commission consider
whether the securities to be issued are "not reasonably adapted
to the earning power of the (issuer)". The New Indenture would
not in any way cause the Debt Securities to be not reasonably
adapted to Consolidated's earning power. In the past, the
Commission has looked primarily at fixed charge coverage ratios
to determine whether a security meets this earning power test.
This test has, however, been applied flexibly by the Commission
in appropriate circumstances. For example, in Eastern Utilities
Associates, HCAR 24641 (May 12, 1988) the Commission approved
the issuance of mortgage bonds by EUA Power, which had no
current cash flow except payments under a tax sharing agreement,
on the basis of expected revenues once the Seabrook plant became
operational.
The Company's ratio of earnings to fixed charges is
disclosed in its periodic filings under the Securities Exchange
Act of 1934, as amended, and in filings under the Securities Act
of 1933 in connection with each offering of debentures. In
addition, earnings coverage of fixed charges plays a substantial
part in determining the rating afforded the Company's debentures
by the various rating agencies. All information material to an
investor's assessment of whether the Company can adequately
cover its fixed charge obligations is available to investors in
the Company's public filings with the Commission, which
information the Company believes is
<PAGE> 29
sufficient for an investor to make its own decision as to the
Company's credit-worthiness. The Commission, of course, will
have authority to impose restrictions on the issuance of
securities as to any specific financing applied for if it
believes circumstances at the time warrant restrictions.
Since the rates paid by consumers are based on the cost of
providing service to them, the impact of new issuances of debt
securities on the earning power of the Company should not affect
consumers. For a discussion of the interest of consumers in the
cost of the Company's debt financing see the text under the
heading "Section 7(d)(6)", below.
Section 7(d)(3)
_______________
Section 7(d)(3) permits the Commission to deny effectiveness
of a declaration if the issue of the Security is not necessary
or appropriate to the economical and efficient operation of the
(issuer's) business. There is no basis for such a finding here
with respect to the New Indenture. The Company has historically
financed the operations of the system companies through the
issuance of unsecured debentures by the holding company. After
consultation with professional advisers and rating agencies, the
Company believes that the issuance of Debt Securities under the
New Indenture will not, in itself, result in any increase in the
Company's cost of money in debt financings. Moreover, the
Company expects to realize administrative cost savings by using
the New Indenture, including reduced trustee's and accountant's
fees, which over
<PAGE> 30
time are expected to be substantial. As already indicated
above, the Company's preliminary estimates indicate that it
should be able to save approximately $40,000 per issue of
initial issuance costs and approximately $9,000 per issue of
annual administrative costs.
Section 7(d)(4)
_______________
Section 7(d)(4) permits the Commission to deny effectiveness
of a declaration if the fees, commissions, or other remuneration
paid, directly or indirectly, in connection with the sale, or
distribution of the Securities are not reasonable. The Company
believes that, to the extent such amounts can be estimated at
present, use of the New Indenture should not provide a basis for
such finding. As noted below in this application, the Company
estimates that use of the New Indenture is expected to reduce
issuance costs by up to $40,000 per issue, assuming the use of
global securities and no supplemental indenture. See, "Item 2,
Fees, Commissions and Expenses." The amount of commissions
which may be incurred with issuances under the New Indenture is
not presently determinable. However, the Company expects that
such commissions will be at the rates customarily charged.
Section 7(d)(6)
_______________
Section 7(d)(6) permits the Commission to deny effectiveness
of an application made under Section 6(a) if "the
<PAGE> 31
terms and conditions of the issue and sale of the security are
detrimental to the public interest or the interest of investors
or consumers." The Company does not believe that either the
inclusion or exclusion of the type of restrictions presently in
its 1971 Indenture protects investors or consumers, and
exclusion of such provisions is in no way detrimental to the
public interest. Investors and consumers are best protected by
the Company's interest in maintaining its access to capital
markets at the lowest cost practicable, and its related interest
in obtaining a credit rating for its securities which assists in
achieving such access. By adhering to the demands of the market
place, the Company consistently takes those steps which are
necessary so as to be able to attract investors willing to
provide it with relatively low-cost financing. This in turn
requires the Company to be protective of investors since to
obtain attractive financing the Company must, among other
things, refrain from becoming over-leveraged both at the holding
Company and the subsidiary levels. Furthermore, the Company
believes that today's sophisticated marketplace is able to
demand inclusion of covenants in securities, whether debt or
preferred stock, at the time such securities are marketed.
Failure to include covenants required by the market at the time
of issuance may result in increased financing costs or limited
access to the market. The ultimate beneficiaries of the
Company's concerns in this regard are the Company's system
company consumers whose utilities are able to obtain low-cost
financing from the Company. Rates paid by consumers are set, in
part, based on the cost of providing services. Costs
<PAGE> 32
includable for such purposes include, among other things, the
cost of capital including debt. Since the Company is an
important source of capital for its subsidiaries, subsidiary
borrowings from the Company bear an interest cost which is
directly related to the Company's cost of raising funds. The
subsidiaries' borrowing cost is in turn passed on to their
customers in rates. Thus, the lower the Company's borrowing
costs, the lower the subsidiaries' borrowings cost will be to
the extent they borrow from the Company. Lower borrowing cost
at the Company level, therefore, is reflected in lower costs
borne by consumers through rates.
The Company, therefore, believes that issuing Debt
Securities without including in the New Indenture limitations on
incurrence of additional unsecured debt or a dividend covenant
is not detrimental to the Company system companies' consumers or
to investors in those Debt Securities. If in the future the
market place requires certain restrictions be agreed to by the
Company to obtain financing at favorable rates, such
restrictions may be included on an issue-by-issue basis.
In addition, system consumers will be protected by state
utility regulators' jurisdiction over the financing of the
system public utility companies, the use of proceeds of
financings, and over the rates charged to consumers. Effective
regulation of utility companies at the state level today largely
eliminates the risk of the types of abuses which prevailed prior
to passage of the Act and which Section 7 was, in part, intended
to eliminate. In adopting Rule 52 and exempting from the
requirements of Section 6(a) and 7 issuances
<PAGE> 33
of securities by public utility companies if such issuance has
been approved by a state public utility commission, the
Commission recognized that state public utility commissions have
the adequate ability to regulate securities issuances for the
protection of consumers.
III. RULE 53 SATISFIED
Rule 54 promulgated under the Act states that in determining whether to
approve the issue or sale of a security by a registered holding company for
purposes other than the acquisition of an electric wholesale generator ("EWG")
or a foreign utility company ("FUCO"), or other transactions by such registered
holding company or its subsidiaries other than with respect to EWGs or FUCOs,
the Commission shall not consider the effect of the capitalization or earnings
of any subsidiary which is an EWG or a FUCO upon the registered holding company
system if Rules 53(a), (b) or (c) are satisfied. Currently Consolidated owns
indirectly a 1% general partnership and a 34% limited partnership interest in
Lakewood Cogeneration, L.P. ("Lakewood"), an EWG. On November 30, 1994, the 1%
general partnership interest in Lakewood was
acquired by CNG Power Services Corporation, an EWG and a newly-formed
wholly-owned subsidiary of Consolidated, from CNG Energy Company, another
wholly-owned subsidiary of Consolidated, in a transaction exempt under Rule
43(b)(2).
Consolidated does not own any interests in a FUCO. Consolidated believes that
Rule 53(a), (b) and (c) are satisfied in its case as follows.
Fifty percent of Consolidated's retained earnings as of September 30, 1994
was $702,436,000; Consolidated's aggregate investment (as defined in Rule
53(a)(l)(i)) in Lakewood on such date and in both its EWGs as of the date of
<PAGE> 34
filing of this Application-Declaration is estimated to be approximately
$18,000,000, thereby satisfying Rule 53(a)(l). Consolidated and its
subsidiaries maintain books and records to identify the investments in and
earnings from its EWGs in which they directly or indirectly hold an interest,
thereby satisfying Rule 53(a)(2). Employees of Consolidated's domestic
public-utility companies do not render services, directly or indirectly, to the
EWGs in the Consolidated System, thereby satisfying Rule 53(a)(3). No
application for EWG financing has been filed with the Commission since adoption
of Rule 53; Rule 53(a)(4) is correspondingly inapplicable at this time.
None of the conditions described in Rule 53(b) exist with respect to
Consolidated, thereby satisfying Rule 53(b) and making Rule 53(c) inapplicable.
(b) Describe briefly, and where practicable state the approximate
amount of, any material interest in the proposed transaction, direct or
indirect, of any associate company or affiliate of the applicant or declarant
or any affiliate of any such associate company.
None, except as set forth in Item 1(a) above.
(c) If the proposed transaction involves the acquisition of
securities not issued by a registered holding company or a subsidiary thereof,
describe briefly the business and property, present or proposed, of the issuer
of such securities.
Inapplicable.
(d) If the proposed transaction involves the acquisition or
disposition of assets, describe briefly such assets, setting forth original
cost, vendor's book cost (including the basis of determination) and applicable
valuation and qualifying reserves.
Inapplicable.
<PAGE> 35
Item 2. Fees, Commissions and Expenses
______________________________
(a) State (1) the fees, commissions and expenses paid or incurred,
or to be paid or incurred, directly or indirectly, in connection with the
proposed transaction by the applicant or declarant or any associate company
thereof, and (2) if the proposed transaction involves the sale of securities
at competitive bidding, the fees and expenses to be paid to counsel selected
by applicant or declarant to act for the successful bidder.
The following is an itemized statement of the estimated
amounts of all expenses in connection with the issuance of a
$200,000,000 segment of Debt Securities in a single transaction.
The first column shows the estimated costs if the 1971 Indenture
were used; the second column shows estimated costs under the New
Indenture assuming the use of global securities and no
supplemental indenture. The estimated aggregate fees and
expenses for offerings of Debt Securities would accordingly be
two and one half the $296,973 total shown in the table, or a
total of $742,433.
1971 New
Indenture Indenture
_________ _________
Filing Fees, Securities and Exchange
Commission $ 69,473 (12) $ 69,473 (12)
Printing of Registration Statement,
Prospectus, Supplemental Indenture
(if any), Definitive Debt Certificates
(if any), and Other Miscellaneous Papers 60,000 30,000
______________________
(12) The $69,473 consists of a two-fifths allocation of the sum of (i)
one-fourth of the total $125,000 filing fee paid in connection with
the Form S-3 filing (Registration Statement No. 33-49469); (ii) the
$137,932 filing fee paid in connection with the Form S-3 filing
(Registration Statement NO. 33-52585); (iii) one-fourth of the
$2,000 filing fee paid in connection with File No. 70-8167; (iv) the
total $2,000 filing fee paid in connection with File No. 70-8365;
(v) the total $2,000 filing fee paid in connection with this
Form U-1.
<PAGE> 36
1971 New
Indenture Indenture
_________ _________
Trustees Acceptance and Other Charges 7,000 3,000
Legal Fees of Counsel for the Trustee 3,500 1,000
Independent Accountants' Fees and Expenses 40,000 40,000
Rating Fees (Moody's Investors Service, Inc.,
Standard & Poor's Corporation, Duff and
Phelps, Inc.) 130,500 130,500
Blue Sky Fees 8,000 8,000
Service Charges, Consolidated Natural Gas
Service Company, Inc. 15,000 13,000
Other Miscellaneous Expenses 3,500 2,000
________ ________
Total Expenses $336,973 $296,973
======== ========
(b) If any person to whom fees or commissions have been or are to be
paid in connection with the proposed transaction is an associate company or an
affiliate of the applicant or declarant, or is an affiliate of an associate
company, set forth the facts with respect thereto.
The charges of Consolidated Natural Gas Service Company,
Inc., a subsidiary service company, for services on a cost basis
(including regularly employed counsel) rendered in connection
with the preparation of this Declaration to the Commission on
Form U-1, the Registration Statements filed or to be filed under
the Securities Act of 1933, the New Indenture, any supplemental
indenture(s) and other related documents and papers, are
disclosed above.
<PAGE> 37
Item 3. Applicable Statutory Provisions
_______________________________
(a) State the sections of the Act and the rules thereunder believed
to be applicable to the proposed transaction. If any section or rule would be
applicable in the absence of a specific exemption, state the basis of
exemption.
Sections 6(a) and 7 of the Act are considered applicable to
the issuance and sale of the Debt Securities by Consolidated.
(b) If an applicant is not a registered holding company or a
subsidiary thereof, state the name of each public utility company of which it
is an affiliate or of which it will become an affiliate as a result of the
proposed transaction, and the reasons why it is or will become such an
affiliate.
Inapplicable.
Item 4. Regulatory Approval
___________________
(a) State the nature and extent of the jurisdiction of any State
commission or any Federal commission (other than the Securities and Exchange
Commission) over the proposed transaction.
None.
(b) Describe the action taken or proposed to be taken before any
commission named in answer to paragraph (a) of this item in connection with
the proposed transaction.
None.
<PAGE> 38
Item 5. Procedure
_________
(a) State the date when Commission action is requested. If the date
is less than 40 days from the date of the original filing, set forth the
reasons for acceleration.
It is requested that the Commission permit this Declaration
to become effective by order issued by February 28, 1995 or at
the earliest possible date, so that Consolidated may obtain the
benefits of using the New Indenture as soon as possible. It is
further requested that the expiration date of any order issued
be June 30, 1996.
(b) State (i) whether there should be a recommended decision by a
hearing officer, (ii) whether there should be a recommended decision by any
other responsible officer of the Commission, (iii) whether the Division of
Corporate Regulation may assist in the preparation of the Commission's
decision, and (iv) whether there should be a 30-day waiting period between the
issuance of the Commission's order and the date on which it is to become
effective.
It is submitted that a recommended decision by a hearing or
other responsible officer of the Commission is not needed with
respect to the proposed transaction. The Office of Public
Utility Regulation may assist in the preparation of the
Commission's decision. There should be no waiting period
between the issuance of the Commission's order and the date on
which it is to become effective.
Item 6. Exhibits and Financial Statements
_________________________________
The following exhibits and financial statements are made a part of
this statement.
<PAGE> 39
(a) Exhibits
________
A - Form of Indenture.
B - Standard Purchase Agreement Provisions - Debt Securities
including Form of Purchase Agreement.
C - Form S-3 Registration Statement. (Incorporated by
reference to Registration Statement No. 33-49469
filed via EDGAR on April 6, 1993)
D - Form S-3 Registration Statement. (Incorporated by
reference to Registration Statement No. 33-52585
filed via EDGAR on March 9, 1994)
F - Opinion of Counsel.
H - Form of Proposed Notice pursuant to Rule 22(f).
(b) Financial Statements
____________________
(Index included in Financial Statements annexed hereto.)
Item 7. Information as to Environmental Effects
_______________________________________
(a) Describe briefly the environmental effects of the proposed
transactions in terms of the standards set forth in Section 102(2)(C) of the
National Environmental Policy Act (42 U.S.C. 4312(2)(C)). If the response to
this item is a negative statement as to the applicability of Section 102(2)(C)
in connection with the proposed transaction, also briefly state the reasons
for that response.
As more fully described in Item 1, the proposed transactions
subject to the jurisdiction of this Commission relate solely to
financing proposals and involve no major federal action
significantly affecting the human environment.
(b) State whether any other federal agency has prepared or is
preparing an environmental impact statement ("EIS") with respect to the
proposed transaction. If any other federal agency has prepared or is
preparing an EIS, state which agency or agencies and indicate the status of
that EIS preparation.
None.
<PAGE> 40
SIGNATURE
_________
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, the undersigned company has duly caused this statement to be
signed on its behalf by the undersigned thereunto duly authorized.
CONSOLIDATED NATURAL GAS COMPANY
By L. D. Johnson, Vice Chairman of
the Board and Chief Financial
Officer
Dated: February 21, 1995
<PAGE> 1 Exhibit A
CONSOLIDATED NATURAL GAS COMPANY
AND
TRUSTEE
___________________________________
INDENTURE
Dated as of ___________, 1995
_____________
DEBT SECURITIES
<PAGE> 2
PARTIAL CROSS-REFERENCE TABLE
Indenture Section TIA Section
2.05.......................................... 317(b)
2.06.......................................... 312(a), 313(c)
2.11.......................................... 316(a)
(last sentence)
4.07.......................................... 314(a)(4)
4.08.......................................... 314(a)(1)
6.03.......................................... 317(a)(1)
6.04.......................................... 316(a)(1)(B)
6.05.......................................... 316(a)(1)(A)
6.07.......................................... 317(a)(1)
7.04.......................................... 315(b)
7.05.......................................... 313(a)
7.05.......................................... 313(d)
7.07.......................................... 310(a), 310(b)
7.09.......................................... 310(a)(2)
7.10.......................................... 310(b)(1)
8.02.......................................... 310(a), 310(b)
9.04.......................................... 316(c)
10.01......................................... 318(a)
10.02......................................... 313(c)
10.03......................................... 314(c)(1)
314(c)(2)
10.04......................................... 314(e)
<PAGE> 3
TABLE OF CONTENTS
Article Section Heading Page
1 DEFINITIONS
1.01 Definitions .............................. 6
1.02 Other Definitions ........................ 8
1.03 Rules of Construction .................... 8
2 THE SECURITIES
2.01 Issuable in Series ....................... 9
2.02 Execution and Authentication.............. 10
2.03 Securities Agents ........................ 11
2.04 Bearer Securities ........................ 11
2.05 Paying Agent to Hold Money in
Trust ................................. 12
2.06 Securityholder Lists ..................... 12
2.07 Transfer and Exchange .................... 13
2.08 Replacement Securities ................... 13
2.09 Outstanding Securities ................... 13
2.10 Discounted Securities .................... 14
2.11 Treasury Securities ...................... 14
2.12 Global Securities ........................ 14
2.13 Temporary Securities ..................... 15
2.14 Cancellation ............................. 15
2.15 Defaulted Interest ....................... 15
3 REDEMPTION
3.01 Notices to Trustee ....................... 15
3.02 Selection of Securities to Be
Redeemed .............................. 16
3.03 Notice of Redemption ..................... 16
3.04 Effect of Notice of
Redemption ............................ 17
3.05 Payment of Redemption Price .............. 17
3.06 Securities Redeemed in Part .............. 17
4 COVENANTS
4.01 Certain Definitions ...................... 18
4.02 Payment of Securities .................... 22
4.03 Overdue Interest ......................... 22
4.04 Limitation on Liens ...................... 22
4.05 Limitation on Sale and
Leaseback ............................. 24
4.06 No Lien Created, etc. .................... 24
4.07 Compliance Certificate ................... 25
4.08 SEC Reports .............................. 25
<PAGE> 4
TABLE OF CONTENTS
Article Section Heading Page
5 SUCCESSORS
5.01 When Company May Merge, etc. ............. 25
6 DEFAULTS AND REMEDIES
6.01 Events of Default ........................ 26
6.02 Acceleration ............................. 27
6.03 Other Remedies ........................... 27
6.04 Waiver of Past Defaults .................. 28
6.05 Control by Majority ...................... 28
6.06 Limitation on Suits ...................... 28
6.07 Collection Suit by Trustee ............... 29
6.08 Priorities ............................... 29
7 TRUSTEE
7.01 Rights of Trustee ........................ 29
7.02 Individual Rights of Trustee ............. 30
7.03 Trustee's Disclaimer ..................... 30
7.04 Notice of Defaults ....................... 30
7.05 Reports by Trustee to Holders ............ 31
7.06 Compensation and Indemnity ............... 31
7.07 Replacement of Trustee ................... 31
7.08 Successor Trustee by Merger,
etc. .................................. 32
7.09 Trustee's Capital and Surplus ............ 32
8 DISCHARGE OF INDENTURE
8.01 Defeasance ............................... 33
8.02 Conditions to Defeasance ................. 33
8.03 Application of Trust Money ............... 34
8.04 Repayment to Company ..................... 34
9 AMENDMENTS
9.01 Without Consent of Holders ............... 34
9.02 With Consent of Holders .................. 35
9.03 Compliance with Trust
Indenture Act ......................... 36
9.04 Effect of Consents ....................... 36
9.05 Notation on or Exchange of
Securities ............................ 36
9.06 Trustee Protected ........................ 36
<PAGE> 5
TABLE OF CONTENTS
Article Section Heading Page
10 MISCELLANEOUS
10.01 Trust Indenture Act ...................... 36
10.02 Notices .................................. 37
10.03 Certificate and Opinion as to
Conditions Precedent .................. 38
10.04 Statements Required in
Certificate or Opinion ................ 38
10.05 Rules by Company and Agents .............. 38
10.06 Legal Holidays ........................... 38
10.07 No Recourse Against Others ............... 39
10.08 Duplicate Originals ...................... 39
10.09 Governing Law ............................ 39
SIGNATURES ........................................ 39
Exhibit A: A Form of Registered
Security ............................ 40
Exhibit B: A Form of Bearer Security ............. 46
Notes to Exhibits A and B ......................... 53
Exhibit C: A Form of Assignment .................. 54
<PAGE> 6
INDENTURE dated as of , 1995 between CONSOLIDATED
NATURAL GAS COMPANY, a Delaware corporation ("Company"), and , a
, as trustee ("Trustee").
Each party agrees as follows for the benefit of the Holders of the
Company's debt securities issued under this Indenture:
ARTICLE 1 - DEFINITIONS
SECTION 1.01. Definitions.
"Affiliate" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.
"Agent" means any Registrar, Transfer Agent or Paying Agent.
"Authorized Newspaper" means a newspaper that is:
(1) printed in the English language or in an official language of
the country of publication;
(2) customarily published on each business day in the place of
publication; and
(3) of general circulation in the relevant place or in the
financial community of such place.
Whenever successive publications in an Authorized Newspaper are required, they
may be made on the same or different business days and in the same or
different Authorized Newspapers.
"Bearer Security" means a Security payable to bearer.
"Board" means the Board of Directors of the Company or any authorized
committee of the Board.
"Company" means the party named as such above until a successor replaces
it and thereafter means the successor.
"coupon" means an interest coupon for a Bearer Security.
"Default" means any event which is, or after notice or passage of time
would be, an Event of Default.
"Discounted Security" means a Security where the amount of principal due
upon acceleration is less than the stated principal amount.
"Holder" or "Securityholder" means the person in whose name a Registered
Security is registered and the bearer of a Bearer Security or coupon.
<PAGE> 7
"Indenture" means this Indenture and any Securities Resolution as
amended from time to time.
"Officer" means the Chairman, any Vice-Chairman, the President, any
Executive Vice-President, any Senior Vice-President, any Vice-President, the
Treasurer, the Secretary, the Controller, any Assistant Treasurer, any
Assistant Secretary or any Assistant Controller of the Company.
"Officers' Certificate" means a certificate signed by two Officers or by
an Officer.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to
the Company or the Trustee.
"principal" of a debt security means the principal of the security plus
the premium, if and when applicable, on the security.
"Registered Security" means a Security registered as to principal and
interest by the Registrar.
"SEC" means the Securities and Exchange Commission.
"Securities" means the debt securities issued under this Indenture.
"Securities Resolution" means a resolution adopted by the Board or by an
Officer or committee of Officers pursuant to Board delegation authorizing a
series of Securities.
"series" means a series of Securities or the Securities of the series.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Section
77aaa-77bbbb) as in effect on the date shown above.
"Trustee" means the party named as such above until a successor replaces
it and thereafter means the successor.
"Trust Officer" means the Chairman of the Board, the President or any
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"United States" means the United States of America, its territories and
possessions and other areas subject to its jurisdiction.
<PAGE> 8
SECTION 1.02. Other Definitions.
Term Defined in Section
"Attributable Debt" 4.01
"Bankruptcy Law" 6.01
"Consolidated Net Tangible Assets" 4.01
"Custodian" 6.01
"Debt" 4.01
"Event of Default" 6.01
"Legal Holiday" 10.06
"Lien" 4.01
"Long-Term Debt" 4.01
"Paying Agent" 2.03
"Permitted Lien" 4.01
"Principal Property" 4.01
"Registrar" 2.03
"Restricted Subsidiary" 4.01
"Sale-Leaseback Transaction" 4.01
"Subsidiary" 4.01
"Transfer Agent" 2.03
"Treasury Regulations" 2.04
"U.S. Government Obligations" 8.02
"Voting Stock" 4.01
"Wholly Owned Subsidiary" 4.01
"Yield to Maturity" 4.01
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles in the United States;
(3) generally accepted accounting principles are those applicable
from time to time;
(4) all terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC
rule under the TIA have the meanings assigned to them by such
definitions;
(5) "or" is not exclusive; and
(6) words in the singular include the plural, and in the plural
include the singular.
<PAGE> 9
ARTICLE 2 - THE SECURITIES
SECTION 2.01. Issuable in Series.
The aggregate principal amount of Securities that may be issued under
this Indenture is unlimited. The Securities may be issued from time to time
in one or more series. Each series shall be created by a Securities
Resolution or a supplemental indenture that establishes the terms of the
series, which may include the following:
(1) the title of the series;
(2) the aggregate principal amount of the series;
(3) the interest rate, if any, or method of calculating the
interest rate;
(4) the date from which interest will accrue;
(5) the record dates for interest payable on Registered Securities;
(6) the dates when principal and interest are payable;
(7) the manner of paying principal and interest;
(8) the places where principal and interest are payable;
(9) the Registrar, Transfer Agent and Paying Agent;
(10) the terms of any mandatory or optional redemption by the
Company;
(11) the terms of any redemption at the option of Holders;
(12) the denominations in which Securities are issuable;
(13) whether Securities will be issuable as Registered Securities or
Bearer Securities;
(14) whether and upon what terms Registered Securities and Bearer
Securities may be exchanged;
(15) whether any Securities will be represented by a Security in
global form and the terms of any global Security;
(16) the terms of any tax indemnity;
(17) the currencies (including any composite currency) in which
principal or interest may be paid and if payments of principal
or interest may be made in a currency other than that in which
Securities are denominated, the manner for determining such
payments;
<PAGE> 10
(18) if amounts of principal or interest may be determined by
reference to an index, formula or other method, the manner for
determining such amounts;
(19) provisions for electronic issuance of Securities or for
Securities in uncertificated form;
(20) the portion of principal payable upon acceleration of a
Discounted Security;
(21) any Events of Default or covenants in addition to or in lieu of
those set forth in this Indenture;
(22) whether and upon what terms Securities may be defeased;
(23) the forms of the Securities or any coupon, which may be in the
form of Exhibit A or B;
(24) any terms that may be required by or advisable under U.S. or
other applicable laws; and
(25) any other terms not inconsistent with this Indenture.
All Securities of one series need not be issued at the same time and,
unless otherwise provided, a series may be reopened for issuances of
additional Securities of such series.
The creation and issuance of a series and the authentication and
delivery thereof are not subject to any conditions precedent.
SECTION 2.02. Execution and Authentication.
Two Officers shall sign the Securities by manual or facsimile signature.
The Company's seal shall be reproduced on the Securities. An Officer shall
sign any coupons by facsimile signature.
If an Officer whose signature is on a Security or its coupons no longer
holds that office at the time the Security is authenticated or delivered, the
Security and coupons shall nevertheless be valid.
A Security and its coupons shall not be valid until the Security is
authenticated by the manual signature of the Registrar. The signature shall
be conclusive evidence that the Security has been authenticated under this
Indenture.
Each Registered Security shall be dated the date of its authentication.
Each Bearer Security shall be dated the date of its original issuance or as
provided in the Securities Resolution.
Securities may have notations, legends or endorsements required by law,
stock exchange rule, agreement or usage.
<PAGE> 11
In the event Securities are issued in electronic or other uncertificated
form, such Securities may be validly issued without the signatures or seal
contemplated by this Section 2.02.
SECTION 2.03. Securities Agents.
The Company shall maintain an office or agency where Securities may be
authenticated ("Registrar"), where Securities may be presented for
registration of transfer or for exchange ("Transfer Agent") and where
Securities may be presented for payment ("Paying Agent"). Whenever the
Company must issue or deliver Securities pursuant to this Indenture, the
Registrar shall authenticate the Securities at the Company's request. The
Transfer Agent shall keep a register of the Securities and of their transfer
and exchange.
The Company may appoint more than one Registrar, Transfer Agent or
Paying Agent for a series. The Company shall notify the Trustee of the name
and address of any Agent not a party to this Indenture. If the Company fails
to maintain a Registrar, Transfer Agent or Paying Agent for a series, the
Trustee shall act as such.
SECTION 2.04. Bearer Securities.
U.S. laws and Treasury Regulations restrict sales or exchanges of and
payments on Bearer Securities. Therefore, except as provided below:
(1) Bearer Securities will be offered, sold and delivered only
outside the United States and will be delivered only upon
presentation of a certificate in a form prescribed by the
Company to comply with U.S. laws and regulations.
(2) Bearer Securities will not be issued in exchange for Registered
Securities.
(3) All payments of principal and interest (including original
issue discount) on Bearer Securities will be made outside the
United States by a Paying Agent located outside the United
States unless the Company determines that:
(A) such payments may not be made by such Paying Agent because
the payments are illegal or prevented by exchange controls
as described in Treasury Regulation Section
1.163-5(c)(2)(v); and
(B) making the payments in the United States would not have an
adverse tax effect on the Company.
<PAGE> 12
If there is a change in the relevant provisions of U.S. laws or Treasury
Regulations or the judicial or administrative interpretation thereof, a
restriction set forth in paragraph (1), (2) or (3) above will not apply to a
series if the Company determines that the relevant provisions no longer apply
to the series or that failure to comply with the relevant provisions would not
have an adverse tax effect on the Company or on Security holders or cause the
series to be treated as "registration-required" obligations under U.S. law.
The Company shall notify the Trustee of any determinations by the
Company under this Section.
"Treasury Regulations" means regulations of the U.S. Treasury Department
under the Internal Revenue Code of 1986, as amended.
SECTION 2.05. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent for a series other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of the persons entitled thereto all money held by the Paying Agent for
the payment of principal of or interest on the series, and will notify the
Trustee of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent
to pay all money so held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent shall have no further liability
for the money.
If the Company or an Affiliate acts as Paying Agent for a series, it
shall segregate and hold as a separate trust fund all money held by it as
Paying Agent for the series.
SECTION 2.06. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Transfer Agent, the Company shall
furnish to the Trustee semiannually and at such other times as the Trustee may
request a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Holders of Registered Securities and
Holders of Bearer Securities whose names are on the list referred to below.
The Transfer Agent shall keep a list of the names and addresses of
Holders of Bearer Securities who file a request to be included on such list.
A request will remain in effect for two years but successive requests may be
made.
Whenever the Company or the Trustee is required to mail a notice to all
Holders of Registered Securities of a series, it also shall mail the notice to
Holders of Bearer Securities of the series whose names are on the list.
<PAGE> 13
Whenever the Company is required to publish a notice to all Holders of
Bearer Securities of a series, it also shall mail the notice to such of them
whose names are on the list.
SECTION 2.07. Transfer and Exchange.
Where Registered Securities of a series are presented to the Transfer
Agent with a request to register a transfer or to exchange them for an equal
principal amount of Registered Securities of other denominations of the
series, the Transfer Agent shall register the transfer or make the exchange if
its requirements for such transactions are met.
The Transfer Agent may require a Holder to pay a sum sufficient to cover
any taxes imposed on a transfer or exchange.
If a series provides for Registered and Bearer Securities and for their
exchange, Bearer Securities may be exchanged for Registered Securities and
Registered Securities may be exchanged for Bearer Securities as provided in
the Securities or the Securities Resolution if the requirements of the
Transfer Agent for such transactions are met and if Section 2.04 permits the
exchange.
SECTION 2.08. Replacement Securities.
If the Holder of a Security or coupon claims that it has been lost,
destroyed or wrongfully taken, then, in the absence of notice to the Company
or the Trustee that the Security or coupon has been acquired by a bona fide
purchaser, the Company shall issue a replacement Security or coupon if the
Company and the Trustee receive:
(1) evidence satisfactory to them of the loss, destruction or
taking;
(2) an indemnity bond satisfactory to them; and
(3) payment of a sum sufficient to cover their expenses and any
taxes for replacing the Security or coupon.
A replacement Security shall have coupons attached corresponding to
those, if any, on the replaced Security.
Every replacement Security or coupon is an additional obligation of the
Company.
SECTION 2.09. Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Registrar except for those cancelled by it, those
delivered to it for cancellation, and those described in this Section as not
outstanding.
<PAGE> 14
If a Security is replaced pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If Securities are considered paid under Section 4.02, they cease to be
outstanding and interest on them ceases to accrue.
A Security does not cease to be outstanding because the Company or an
Affiliate holds the Security.
SECTION 2.10. Discounted Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, the principal
amount of a Discounted Security shall be the amount of principal that would be
due as of the date of such determination if payment of the Security were
accelerated on that date.
SECTION 2.11. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities
owned by the Company or an Affiliate shall be disregarded, except that for the
purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Securities which the Trustee knows
are so owned shall be so disregarded.
SECTION 2.12. Global Securities.
If the Securities Resolution so provides, the Company may issue some or
all of the Securities of a series in temporary or permanent global form. A
global Security may be in registered form, in bearer form with or without
coupons or in uncertificated form. A global Security shall represent that
amount of Securities of a series as specified in the global Security or as
endorsed thereon from time to time. At the Company's request, the Registrar
shall endorse a global Security to reflect the amount of any increase or
decrease in the Securities represented thereby.
The Company may issue a global Security only to a depository designated
by the Company. A depository may transfer a global Security only as a whole
to its nominee or to a successor depository.
The Securities Resolution may establish, among other things, the manner
of paying principal and interest on a global Security and whether and upon
what terms a beneficial owner of an interest in a global Security may exchange
such interest for definitive Securities.
<PAGE> 15
The Company, an Affiliate, the Trustee and any Agent shall not be
responsible for any acts or omissions of a depository, for any depository
records of beneficial ownership interests or for any transactions between the
depository and beneficial owners.
SECTION 2.13. Temporary Securities.
Until definitive Securities of a series are ready for delivery, the
Company may use temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations
that the Company considers appropriate for temporary Securities. Temporary
Securities may be in global form. Temporary Bearer Securities may have one or
more coupons or no coupons. Without unreasonable delay, the Company shall
deliver definitive Securities in exchange for temporary Securities.
SECTION 2.14. Cancellation.
The Company at any time may deliver Securities to the Registrar for
cancellation. The Transfer Agent and the Paying Agent shall forward to the
Registrar any Securities and coupons surrendered to them for payment, exchange
or registration of transfer. The Registrar shall cancel all Securities or
coupons surrendered for payment, registration of transfer, exchange or
cancellation as follows: the Registrar will cancel all Registered Securities
and matured coupons. The Registrar also will cancel all Bearer Securities and
unmatured coupons unless the Company requests the Registrar to hold the same
for redelivery. Any Bearer Securities so held shall be considered delivered
for cancellation under Section 2.09. The Registrar shall destroy cancelled
Securities and coupons unless the Company otherwise directs.
Unless the Securities Resolution otherwise provides, the Company may not
issue new Securities to replace Securities that the Company has paid or that
the Company has delivered to the Registrar for cancellation.
SECTION 2.15. Defaulted Interest
If the Company defaults in a payment of interest on Registered
Securities, it need not pay the defaulted interest to Holders on the regular
record date. The Company may fix a special record date for determining
Holders entitled to receive defaulted interest or the Company may pay
defaulted interest in any other lawful manner.
ARTICLE 3 - REDEMPTION
SECTION 3.01. Notices to Trustee.
Securities of a series that are redeemable before maturity shall be
redeemable in accordance with their terms and, unless the Securities
Resolution otherwise provides, in accordance with this Article.
<PAGE> 16
In the case of a redemption by the Company, the Company shall notify the
Trustee of the redemption date and the principal amount of Securities to be
redeemed. The Company shall notify the Trustee at least 45 days before the
redemption date unless a shorter notice is satisfactory to the Trustee.
If the Company is required to redeem Securities, it may reduce the
principal amount of Securities required to be redeemed to the extent it is
permitted a credit by the terms of the Securities and it notifies the Trustee
of the amount of the credit and the basis for it. If the reduction is based
on a credit for acquired or redeemed Securities that the Company has not
previously delivered to the Registrar for cancellation, the Company shall
deliver the Securities at the same time as the notice.
SECTION 3.02. Selection of Securities to Be Redeemed.
If less than all the Securities of a series are to be redeemed, the
Trustee shall select the Securities to be redeemed by a method the Trustee
considers fair and appropriate. The Trustee shall make the selection from
Securities of the series outstanding not previously called for redemption.
The Trustee may select for redemption portions of the principal of Securities
having denominations larger than the minimum denomination for the series.
Securities and portions thereof selected for redemption shall be in amounts
equal to the minimum denomination for the series or an integral multiple
thereof. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.03. Notice of Redemption.
At least 20 days but not more than 60 days before a redemption date, the
Company shall mail a notice of redemption by first-class mail to each Holder
of Registered Securities whose Securities are to be redeemed.
If Bearer Securities are to be redeemed, the Company shall publish a
notice of redemption in an Authorized Newspaper as provided in the Securities.
A notice shall identify the Securities of the series to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption, together with all
coupons, if any, maturing after the redemption date, must be
surrendered to the Paying Agent to collect the redemption
price;
(5) that interest on Securities called for redemption ceases to
accrue on and after the redemption date; and
<PAGE> 17
(6) whether the redemption by the Company is mandatory or optional.
A redemption notice given by publication need not identify Registered
Securities to be redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is given, Securities called for redemption
become due and payable on the redemption date at the redemption price stated
in the notice.
SECTION 3.05. Payment of Redemption Price.
On or before the redemption date, the Company shall deposit with the
Paying Agent money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date.
When the Holder of a Security surrenders it for redemption in accordance
with the redemption notice, the Company shall pay to the Holder on the
redemption date the redemption price and accrued interest to such date, except
that:
(1) the Company will pay any such interest (except defaulted
interest) to Holders on the record date of Registered
Securities if the redemption date occurs on an interest payment
date; and
(2) the Company will pay any such interest to Holders of coupons
that mature on or before the redemption date upon surrender of
such coupons to the Paying Agent.
Coupons maturing after the redemption date on a called Security are void
absent a payment default on that date. Nevertheless, if a Holder surrenders
for redemption a Bearer Security missing any such coupons, the Company may
deduct the face amount of such coupons from the redemption price.
If thereafter the Holder surrenders to the Paying Agent the missing coupons,
the Company will return the amount so deducted. The Company also may waive
surrender of the missing coupons if it receives an indemnity bond satisfactory
to the Company.
SECTION 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Company shall
deliver to the Holder a new Security of the same series equal in principal
amount to the unredeemed portion of the Security surrendered.
<PAGE> 18
ARTICLE 4 - COVENANTS
SECTION 4.01. Certain Definitions.
"Attributable Debt" for a lease means, as of the date of determination,
the present value of net rent for the remaining term of the lease. Rent shall
be discounted to present value at a discount rate that is compounded
semiannually. The discount rate shall be 10% per annum or, if the Company
elects, the discount rate shall be equal to the weighted average Yield to
Maturity of the Securities. Such average shall be weighted by the principal
amount of the Securities of each series or, in the case of Discounted
Securities, the amount of principal that would be due as of the date of
determination if payment of the Securities were accelerated on that date.
Rent is the lesser of (a) rent for the remaining term of the lease
assuming it is not terminated or (b) rent from the date of determination until
the first possible termination date plus the termination payment then due, if
any. The remaining term of a lease includes any period for which the lease
has been extended. Rent does not include (1) amounts due for maintenance,
repairs, utilities, insurance, taxes, assessments and similar charges or (2)
contingent rent, such as that based on sales. Rent may be reduced by the
discounted present value of the rent that any sublessee must pay from the date
of determination for all or part of the same property. If the net rent on a
lease is not definitely determinable, the Company may estimate it in any
reasonable manner.
"Consolidated Net Tangible Assets" means total assets less (a) total
current liabilities (excluding short-term Debt and payments due within one
year on Long-Term Debt) and deferred credits, (b) intangible assets, including
without limitation, goodwill, copyrights, trademarks, trade names, patents and
unamortized debt discount and expense, (c) reserves, including reserves for
estimated rate refunds pending the outcome of a rate proceeding to the extent
such refunds have not been finally determined, but excluding reserves for
deferred differences, (d) advances to finance oil and natural gas exploration
and development to the extent that the Debt related thereto is excluded from
Long-term Debt, (e) an amount equal to the amount excluded from Long-term Debt
representing "production payment" financing of oil or natural gas exploration
and development by the Company or its consolidated Subsidiaries, and (f)
minority interests in common stocks and surplus in subsidiaries, in each case
as reflected in the Company's most recent consolidated balance sheet preceding
the date of a determination under Section 4.04(11).
"Debt" means any debt for borrowed money or any guarantee of such a
debt; provided, however, Debt shall not include Debt of a partnership of which
a Subsidiary is a general partner except to the extent of the investment in
such Subsidiary by the Company or a Subsidiary and any guarantee of Debt of
such Subsidiary by the Company or a Subsidiary.
"Lien" means any mortgage, pledge, security interest or lien.
<PAGE> 19
"Long-Term Debt" means Debt that by its terms matures on a date more
than 12 months after the date it was created or Debt that the obligor may
extend or renew without the obligee's consent to a date more than 12 months
after the date the Debt was created; provided, however, Long-Term Debt shall
not include any of the foregoing to the extent such Debt is not required by
generally accepted accounting principles to be shown on the balance sheet of
the obligor; and, provided further, that Long-term Debt shall not include Debt
of the Company or any of its Subsidiaries incurred to finance outstanding
advances to others to finance oil or natural gas exploration and development
to the extent that the latter are not in default in their obligations to the
Company or such Subsidiary, nor shall such term include Debt of the Company or
any of its Subsidiaries incurred to finance oil or natural gas exploration and
development by means commonly referred to as a "production payment" to the
extent that the Company or any of its Subsidiaries have not guaranteed the
repayment of the production payment.
"Permitted Lien" means any of the following:
(1) Liens for taxes, assessments or governmental charges for the
then current year and taxes, assessments or governmental
charges not then delinquent; Liens for workers' compensation
awards and similar obligations not then delinquent; mechanics',
laborers', materialmen's and similar Liens not then
delinquent; and any of such Liens, whether or not delinquent,
whose validity is at the time being contested in good faith by
the Company or any Subsidiary;
(2) Liens and charges incidental to construction or current
operations which have not at the time been filed or asserted or
the payment of which has been adequately secured or which, in
the opinion of counsel, are not material in amount;
(3) Liens, securing obligations neither assumed by the Company or
any Subsidiary not on account of which any of them customarily
pays interest directly or indirectly, existing, either at the
date hereof, or, as to property hereafter acquired, at the time
of acquisition by the Company or a Subsidiary;
(4) Any right which any municipal or governmental body or agency
may have by virtue of any franchise, license, contract or
statute to purchase, or designate a purchaser of or order the
sale of, any property of the Company or any Subsidiary upon
payment of reasonable compensation therefor, or to terminate
any franchise, license or other rights or to regulate the
property and business of the Company or any Subsidiary;
(5) The Lien of judgments covered by insurance, or upon appeal and
covered, if necessary, by the filing of an appeal bond, or if
not so covered not exceeding at any one time $1,000,000 in
aggregate amount.
<PAGE> 20
(6) Easements or reservations in respect of any property of the
Company or any Subsidiary for the purpose of roads, pipelines,
utility transmission and distribution lines or other
rights-of-way and similar purposes, zoning ordinance,
regulations, reservations, restrictions, covenants, party wall
agreements, conditions of record and other encumbrances (other
than to secure the payment of money), none of which in the
opinion of counsel are such as to interfere with the proper
operation and development of the property affected thereby in
the business of the Company and its Subsidiaries for the use
intended;
(7) Any Lien or encumbrance, moneys sufficient for the discharge of
which have been deposited in trust with the Trustee hereunder
or with the trustee or mortgagee under the instrument
evidencing such Lien or encumbrance, with irrevocable authority
to the Trustee hereunder or to such other trustee or mortgagee
to apply such moneys to the discharge of such Lien or
encumbrance to the extent required for such purpose;
(8) Any defects of title and any terms, conditions, agreements,
covenants, exceptions and reservations expressed or provided in
deeds or other instruments, respectively, under and by virtue
of which the Company or any Subsidiary has acquired any
property or shall hereafter acquire any property, none of
which, in the opinion of counsel, materially adversely affects
the operation of the properties of the Company and its
Subsidiaries, taken as a whole;
(9) The pledge of cash or marketable securities for the purpose of
obtaining any indemnity, performance or other similar bonds in
the ordinary course of business, or as security for the payment
of taxes or other assessments being contested in good faith, or
for the purpose of obtaining a stay or discharge in the course
of any legal proceedings;
(10) The pledge or assignment in the ordinary course of business of
gas inventory, accounts receivable or customers' installment
paper;
(11) Rights reserved to or vested in others to take or receive any
part of the gas, by-products of gas or steam generated or
produced by or from any properties of the Company or with
respect to any other rights concerning gas supply,
transportation, or storage which are in use in the ordinary
course of the natural gas business;
(12) Any landlord's Lien;
<PAGE> 21
(13) Liens created or assumed by the Company or a Subsidiary in
connection with the issuance of debt securities, the interest
on which is excludable from the gross income of the holders of
such securities pursuant to Section 103 of the Internal Revenue
Code of 1986, or any successor section, for purpose of
financing, in whole or in part, the acquisition or construction
of property to be used by the Company or a Subsidiary, but such
Liens shall be limited to the property so financed (and the
real estate on which such property is to be located);
(14) Liens incurred pursuant to Section 7.06;
(15) Liens affixing to property of the Company or a Subsidiary at
the time a person consolidates with or merges into, or
transfers all or substantially all of its assets to, the
Company or a Subsidiary, provided that in the opinion of the
Board or Company management (evidenced by a certified Board
resolution or an Officers' Certificate delivered to the
Trustee) the property acquired pursuant to the consolidation,
merger or asset transfer is adequate security for the Lien.
"Principal Property" means any property or asset used in connection with
or relating to the transmission, distribution, exploration or production of
natural gas whether now or hereafter owned, located in the United States
(excluding territories and possessions) the net depreciated book value of
which on the date as of which the determination is being made exceeds 3% of
the Consolidated Net Tangible Assets of the Company, except any such property
or asset that in the opinion of the Board or Company management (evidenced by
a certified Board resolution or an Officers' Certificate delivered to the
Trustee) is not of material importance to the total business conducted by the
Company and its consolidated Subsidiaries.
"Restricted Subsidiary" means a Wholly Owned Subsidiary that has
substantially all of its assets located in the United States (excluding
territories and possessions) or Puerto Rico and owns a Principal Property.
"Sale-Leaseback Transaction" means an arrangement pursuant to which the
Company or a Restricted Subsidiary now owns or hereafter acquires a Principal
Property, transfers it to a person, and leases it back from the person.
"Subsidiary" means a corporation a majority of whose Voting Stock is
owned by the Company or a Subsidiary.
"Voting Stock" means capital stock having voting power under ordinary
circumstances to elect directors.
"Wholly Owned Subsidiary" means a corporation engaged in the business of
the transmission, distribution, exploration or production of natural gas all
of whose Voting Stock is owned by the Company or a Wholly Owned Subsidiary,
the accounts of which are consolidated with those of the Company in its
consolidated financial statements.
<PAGE> 22
"Yield to Maturity" means the yield to maturity on a Security at the
time of its issuance or at the most recent determination of interest on the
Security.
SECTION 4.02. Payment of Securities.
The Company shall pay the principal of and interest on a series in
accordance with the terms of the Securities for the series, any related
coupons, and this Indenture. Principal and interest on a series shall be
considered paid on the date due if the Paying Agent for the series holds on
that date money sufficient to pay all principal and interest then due on the
series.
SECTION 4.03. Overdue Interest.
Unless the Securities Resolution otherwise provides, the Company shall
pay interest on overdue principal of a Security of a series at the rate (or
Yield to Maturity in the case of a Discounted Security) borne by the series;
it shall pay interest on overdue installments of interest at the same rate or
Yield to Maturity to the extent lawful.
SECTION 4.04. Limitation on Liens.
Unless the Securities Resolution otherwise provides, the Company shall
not, and shall not permit any Restricted Subsidiary to, incur a Lien on
Principal Property to secure a Debt unless:
(1) the Lien equally and ratably secures the Securities and the
Debt. The Lien may equally and ratably secure the Securities
and any other obligation of the Company or a Subsidiary. The
Lien may not secure an obligation of the Company that is
subordinated to the Securities;
(2) the Lien secures Debt incurred to finance all or some of the
purchase price or the cost of construction or improvement of
property of the Company or a Restricted Subsidiary. The Lien
may not extend to any other Principal Property owned by the
Company or a Restricted Subsidiary at the time the Lien is
incurred. However, in the case of any construction or
improvement, the Lien may extend to unimproved real property
used for the construction or improvement. The Debt secured by
the Lien may not be incurred more than one year after the later
of the (a) acquisition, (b) completion of construction or
improvement, or (c) commencement of full operation, of the
property subject to the Lien;
(3) the Lien is on property of a corporation at the time the
corporation merges into or consolidates with the Company or a
Restricted Subsidiary;
<PAGE> 23
(4) the Lien is on property at the time the Company or a Restricted
Subsidiary acquires the property;
(5) the Lien is on property of a corporation at the time the
corporation becomes a Restricted Subsidiary;
(6) the Lien secures Debt of a Restricted Subsidiary owing to the
Company or another Restricted Subsidiary;
(7) the Lien is in favor of a government or governmental entity and
secures (a) payments pursuant to a contract or statute, (b) the
ability of the Company to maintain self-insurance under, or
participate under any State insurance fund under legislation
designed to insure employees of the Company against injury or
occupational diseases, or (c) Debt incurred to finance all or
some of the purchase price or cost of construction or
improvement of the property subject to the Lien;
(8) the Lien secures Debt which is payable, both with respect to
principal and interest, solely out of the proceeds of oil, gas,
coal or other minerals to be produced from the property subject
thereto and to be sold or delivered by the Company or a
Subsidiary, including any interest of the character commonly
referred to as a "production payment";
(9) the Lien created or assumed by a Subsidiary on oil, gas, coal
or other mineral property, owned or leased by a Subsidiary to
secure Debt of such Subsidiary for the purposes of developing
such properties, including any interest of the character
commonly referred to as a "production payment"; provided,
however, that neither the Company nor any other Subsidiary
shall assume or guarantee such Debt or otherwise be liable in
respect thereto;
(10) the Lien extends, renews or replaces in whole or in part a Lien
("existing Lien") permitted by any of clauses (1) through (9).
The Lien may not extend beyond (a) the property subject to the
existing Lien and (b) improvements and construction on such
property. However, the Lien may extend to property that at the
time is not Principal Property. The Debt secured by the Lien
may not exceed the Debt secured at the time by the existing
Lien unless the existing Lien or a predecessor Lien was
incurred under clause (1) or (6);
<PAGE> 24
(11) the Debt plus all other Debt secured by Liens on Principal
Property at the time does not exceed 10% of Consolidated Net
Tangible Assets.
However, the following Debt shall be excluded from all other
Debt in the determination: (a) Debt secured by a Lien permitted
by any of clauses (1) through (10) and (12) and (b) Debt
secured by a Lien incurred prior to the date of this Indenture
that would have been permitted by any of those clauses if this
Indenture had been in effect at the time the Lien was incurred.
Attributable Debt for any lease permitted by clause (3) of
Section 4.05 must be included in the determination and treated
as Debt secured by a Lien on Principal Property not otherwise
permitted by any of clauses (1) through (10) or (12); or
(12) the Lien is a Permitted Lien.
SECTION 4.05. Limitation on Sale and Leaseback.
Unless the Securities Resolution otherwise provides, the Company shall
not, and shall not permit any Restricted Subsidiary to, enter into a
Sale-Leaseback Transaction with respect to any Principal Property acquired or
placed into service more than 180 days before the effective date of such lease
unless:
(1) the lease has a term of three years or less;
(2) the lease is between the Company and a Restricted Subsidiary or
between Restricted Subsidiaries;
(3) the Company or a Restricted Subsidiary under any of clauses (2)
through (11) of Section 4.04 could create a Lien on the
property to secure Debt at least equal in amount to the
Attributable Debt for the lease; or
(4) the Company or a Restricted Subsidiary within 180 days of the
effective date of the lease retires Long-Term Debt of the
Company or a Restricted Subsidiary at least equal in amount to
the Attributable Debt for the lease. A Debt is retired when it
is paid or cancelled. However, the Company or a Restricted
Subsidiary may not receive credit for retirement of: Debt of
the Company that is subordinated to the Securities; or Debt, if
paid in cash, that is owned by the Company or a Restricted
Subsidiary.
SECTION 4.06. No Lien Created, etc.
This Indenture and the Securities do not create a Lien, charge or
encumbrance on any property of the Company or any Subsidiary.
<PAGE> 25
SECTION 4.07. Compliance Certificate.
The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company, a brief certificate signed by the
principal executive officer, principal financial officer or principal
accounting officer of the Company, as to the signer's knowledge of the
Company's compliance with all conditions and covenants under this Indenture
(determined without regard to any period of grace or requirement of notice
provided herein).
Any other obligor on the Securities also shall deliver to the Trustee
such a certificate similarly signed as to its compliance with this Indenture
within 120 days after the end of each of its fiscal years.
The certificates need not comply with Section 10.04.
SECTION 4.08. SEC Reports.
The Company shall file with the Trustee, within 15 days after the
Company is required to file the same with the SEC, copies of the annual
reports and of the information, documents, and other reports (or such portions
of the foregoing as the SEC may prescribe) which the Company is required to
file with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
Any other obligor on the Securities shall do likewise as to the above
items which it is required to file with the SEC pursuant to those Sections.
ARTICLE 5 - SUCCESSORS
SECTION 5.01. When Company May Merge, etc.
Unless the Securities Resolution otherwise provides, the Company shall
not consolidate with or merge into, or transfer all or substantially all of
its assets to, any person unless:
(1) the person is organized under the laws of the United States or
a State thereof;
(2) the person assumes by supplemental indenture all the
obligations of the Company under this Indenture, the Securities
and any coupons;
(3) immediately after the transaction no Default exists; and
(4) if, as a result of the transaction, a Principal Property would
become subject to a Lien not permitted by Section 4.04, the
Company or such person secures the Securities equally and
ratably with or prior to all obligations secured by the Lien.
<PAGE> 26
The successor shall be substituted for the Company, and thereafter all
obligations of the Company under this Indenture, the Securities and any
coupons shall terminate.
ARTICLE 6 - DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.
Unless the Securities Resolution otherwise provides, an "Event of
Default" on a series occurs if:
(1) the Company defaults in any payment of interest on any
Securities of the series when the same becomes due and payable
and the Default continues for a period of 60 days;
(2) the Company defaults in the payment of the principal of any
Securities of the series when the same becomes due and payable
at maturity or upon redemption, acceleration or otherwise;
(3) the Company defaults in the payment or satisfaction of any
sinking fund obligation with respect to any Securities of a
series as required by the Securities Resolution or supplemental
indenture establishing such series and the Default continues
for a period of 60 days;
(4) the Company defaults in the performance of any of its other
agreements applicable to the series and the Default continues
for 120 days after the notice specified below;
(5) the Company pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in
an involuntary case,
(C) consents to the appointment of a Custodian for it or for
all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors;
(6) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case,
(B) appoints a Custodian for the Company or for all or
substantially all of its property, or
(C) orders the liquidation of the Company;
<PAGE> 27
and the order or decree remains unstayed and in effect for 60
days; or
(7) any other Event of Default provided for in the series.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or State law for the relief of debtors. The term "Custodian" means
any receiver, trustee, assignee, liquidator or a similar official under any
Bankruptcy Law.
A Default under clause (4) is not an Event of Default until the Trustee
or the Holders of at least 25% in principal amount of the series notify the
Company of the Default and the Company does not cure the Default within the
time specified after receipt of the notice. The notice must specify the
Default, demand that it be remedied and state that the notice is a "Notice of
Default." If Holders notify the Company of a Default, they shall notify the
Trustee at the same time.
SECTION 6.02. Acceleration.
If an Event of Default occurs and is continuing on a series, the Trustee
by notice to the Company, or the Holders of at least 25% in principal amount
of the series by notice to the Company and the Trustee, may declare the
principal of and accrued interest on all the Securities of the series to be
due and payable immediately. Discounted Securities may provide that the
amount of principal due upon acceleration is less than the stated principal
amount.
The Holders of a majority in principal amount of the series by notice to
the Trustee may rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and if all existing Events of
Default on the series have been cured or waived except nonpayment of principal
or interest that has become due solely because of the acceleration.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing on a series, the Trustee
may pursue any available remedy to collect principal or interest then due on
the series, to enforce the performance of any provision applicable to the
series, or otherwise to protect the rights of the Trustee and Holders of the
series.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or coupons or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any
right or remedy accruing upon an Event of Default shall not impair the right
or remedy or constitute a waiver of or acquiescence in the Event of Default.
All remedies are cumulative to the extent permitted by law.
<PAGE> 28
SECTION 6.04. Waiver of Past Defaults.
Unless the Securities Resolution otherwise provides, the Holders of a
majority in principal amount of a series by notice to the Trustee may waive an
existing Default on the series and its consequences except:
(1) a Default in the payment of the principal of or interest on the
series, or
(2) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Securityholder
affected.
SECTION 6.05. Control by Majority.
The Holders of a majority in principal amount of a series may direct the
time, method and place of conducting any proceeding for any remedy available
to the Trustee, or of exercising any trust or power conferred on the Trustee,
with respect to the series. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture.
SECTION 6.06. Limitation on Suits.
A Securityholder of a series may pursue a remedy with respect to the
series only if:
(1) the Holder gives to the Trustee notice of a continuing Event of
Default on the series;
(2) the Holders of at least 25% in principal amount of the series
make a request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in
principal amount of the series do not give the Trustee a
direction inconsistent with such request.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
<PAGE> 29
SECTION 6.07. Collection Suit by Trustee.
If an Event of Default in payment of interest, principal or sinking fund
payment specified in Section 6.01(1), (2) or (3) occurs and is continuing on a
series, the Trustee may recover judgment in it own name and as trustee of an
express trust against the Company for the whole amount of principal and
interest remaining unpaid on the series.
SECTION 6.08. Priorities.
If the Trustee collects any money for a series pursuant to this Article,
it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.06;
Second: to Securityholders of the series for amounts due and
unpaid for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable for
principal and interest, respectively; and
Third: to the Company.
The Trustee may fix a payment date for any payment to Securityholders.
ARTICLE 7 - TRUSTEE
SECTION 7.01. Rights of Trustee.
(1) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter
stated in the document.
(2) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in
good faith in reliance on the Certificate or Opinion.
(3) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with
due care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(5) The Trustee may refuse to perform any duty or exercise any
right or power which it reasonably believes may expose it to
any loss, liability or expense unless it receives indemnity
satisfactory to it against such loss, liability or expense.
<PAGE> 30
(6) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the
Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by
law.
(7) The Trustee shall have no duty with respect to a Default unless
it has actual knowledge of the Default.
(8) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized
and within its powers.
(9) Any Agent shall have the same rights and be protected to the
same extent as if it were Trustee.
SECTION 7.02. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities or coupons and may otherwise deal with the Company or
an Affiliate with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
SECTION 7.03. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities or any coupons; it shall not be accountable
for the Company's use of the proceeds from the Securities; it shall not be
responsible for any statement in the Securities or any coupons; it shall not
be responsible for any overissue; it shall not be responsible for determining
whether the form and terms of any Securities or coupons were established in
conformity with this Indenture; and it shall not be responsible for
determining whether any Securities were issued in accordance with this
Indenture.
SECTION 7.04. Notice of Defaults.
If a Default occurs and is continuing on a series and if it is known to
the Trustee, the Trustee shall mail a notice of the Default within 90 days
after it occurs to Holders of Registered Securities of the series. Except in
the case of a Default in payment on a series, the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interest of Holders of the
series. The Trustee shall withhold notice of a Default described in Section
6.01(4) until at least 90 days after it occurs.
<PAGE> 31
SECTION 7.05. Reports by Trustee to Holders.
Any report required by TIA Section 313(a) to be mailed to
Securityholders shall be mailed by the Trustee on or before June 30 of each
year.
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange on which any Securities
are listed. The Company shall notify the Trustee when any Securities are
listed on a stock exchange.
SECTION 7.06. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred by it. Such expenses shall include the
reasonable compensation and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or liability
incurred by it. The Trustee shall notify the Company promptly of any claim
for which it may seek indemnity. The Company shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Company shall pay the reasonable fees and expenses of such counsel.
The Company need not pay for any settlement made without its consent.
The Company need not reimburse any expense or indemnify against any loss
or liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities and any coupons on all money or
property held or collected by the Trustee, except that held in trust to pay
principal or interest on particular securities.
SECTION 7.07. Replacement of Trustee.
A resignation of removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Securities may remove the Trustee by so
notifying the Trustee and may appoint a successor Trustee with the Company's
consent.
The Company may remove the Trustee if:
(1) the Trustee fails to comply with TIA Section 310(a) or Section
310(b) or with Section 7.09;
<PAGE> 32
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a Custodian or other public officer takes charge of the Trustee
or its property;
(4) the Trustee becomes incapable or acting; or
(5) an event of the kind described in Section 6.01(5) or (6) occurs
with respect to the Trustee.
The Company also may remove the Trustee with or without cause if the
Company so notifies the Trustee six months in advance and if no Default occurs
during the six-month period.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of a majority in principal amount of the Securities may petition
any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with TIA Section 310(a) or Section 310(b)
or with Section 7.09, any Securityholder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of Registered Securities. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee,
subject to the lien provided for in Section 7.06.
SECTION 7.08. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.09. Trustee's Capital and Surplus.
The Trustee at all times shall have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published report of
condition.
<PAGE> 33
ARTICLE 8 - DISCHARGE OF INDENTURE
SECTION 8.01. Defeasance.
Securities of a series may be defeased in accordance with their terms
and, unless the Securities Resolution otherwise provides, in accordance with
this Article.
The Company at any time may terminate as to a series all of its
obligations under this Indenture, the Securities of a series and any related
coupons ("legal defeasance option"). The Company at any time may terminate as
to a series its obligations under Sections 4.04 and 4.05 ("covenant defeasance
option"). However, in the case of the legal defeasance option, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.06, 7.07 and
8.04 shall survive until the Securities of the series are no longer
outstanding; thereafter the Company's obligations in Section 7.06 shall
survive.
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises
its legal defeasance option, a series may not be accelerated because of an
Event of Default. If the Company exercises its covenant defeasance option, a
series may not be accelerated by reference to Section 4.04 or 4.05.
The Trustee upon request shall acknowledge in writing the discharge of
those obligations that the Company terminates.
SECTION 8.02. Conditions to Defeasance.
The Company may exercise as to a series its legal defeasance option or
its covenant defeasance option if:
(1) the Company irrevocably deposits in trust with the Trustee or
another trustee money or U.S. Government Obligations;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants
expressing their opinion that the payments of principal and
interest when due on the deposited U.S. Government Obligations
without reinvestment plus any deposited money without
investment will provide cash at such times and in such amounts
as will be sufficient to pay principal and interest when due on
all the Securities of the series to maturity or redemption, as
the case may be;
(3) immediately after the deposit no Default exists;
(4) the deposit does not constitute a default under any other
agreement binding on the Company;
<PAGE> 34
(5) the deposit does not cause the Trustee to have a conflicting
interest under TIA Section 310(a) or Section 310(b) as to
another series;
(6) the Company delivers to the Trustee an Opinion of Counsel to
the effect that Holders of the series will not recognize
income, gain or loss for Federal income tax purposes as a
result of the defeasance; and
(7) 91 days pass after the deposit is made and during the 91-day
period no Default specified in Section 6.01(4) or (5) occurs
that is continuing at the end of the period.
Before or after a deposit the Company may make arrangements satisfactory
to the Trustee for the redemption of Securities at a future date in accordance
with Article 3.
"U.S. Government Obligations" means direct obligations of the United
States which have the full faith and credit of the United States pledged for
payment and which are not callable at the issuer's option, or certificates
representing an ownership interest in such obligations.
SECTION 8.03. Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 8.02. It shall apply the deposited
money and the money from U.S. Government Obligations through the Paying Agent
and in accordance with this Indenture to the payment of principal and interest
on Securities of the defeased series.
SECTION 8.04. Repayment to Company.
The Trustee and the Paying Agent shall promptly turn over to the Company
upon request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal or interest that remains
unclaimed for two years. After payment to the Company, Securityholders
entitled to the money must look to the Company for payment as unsecured
general creditors unless an abandoned property law designates another person.
ARTICLE 9 - AMENDMENTS
SECTION 9.01. Without Consent of Holders.
The Company and the Trustee may amend this Indenture, the Securities or
any coupons without the consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
<PAGE> 35
(2) to comply with Article 5;
(3) to provide that specific provisions of this Indenture shall not
apply to a series not previously issued;
(4) to create a series and establish its terms;
(5) to provide for a separate Trustee for one or more series; or
(6) to make any change that does not materially adversely affect
the rights of any Securityholder.
SECTION 9.02. With Consent of Holders.
Unless the Securities Resolution otherwise provides, the Company and the
Trustee may amend this Indenture, the Securities and any coupons with the
written consent of the Holders of a majority in principal amount of the
Securities of all series affected by the amendment voting as one class.
However, without the consent of each Securityholder affected, an amendment
under this Section may not:
(1) reduce the amount of Securities whose Holders must consent to
an amendment;
(2) reduce the interest on or change the time for payment of
interest on any Security;
(3) change the fixed maturity of any Security;
(4) reduce the principal of any non-Discounted Security or reduce
the amount of principal of any Discounted Security that would
be due upon an acceleration thereof;
(5) change the currency in which principal or interest on a
Security is payable; or
(6) make any change in Section 6.04 or 9.02, except to increase the
amount of Securities whose Holders must consent to an amendment
or waiver or to provide that other provisions of this Indenture
cannot be amended or waived without the consent of each
Securityholder affected thereby.
An amendment of a provision included solely for the benefit of one or
more series does not affect Securityholders of any other series.
Securityholders need not consent to the exact text of a proposed
amendment or waiver; it is sufficient if they consent to the substance
thereof.
<PAGE> 36
SECTION 9.03. Compliance with Trust Indenture Act.
Every amendment pursuant to Section 9.01 or 9.02 shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
SECTION 9.04. Effect of Consents.
An amendment or waiver becomes effective in accordance with its terms
and thereafter binds every Securityholder entitled to consent to it.
A consent to an amendment or waiver by a Holder of a Security is a
continuing consent by the Holder and every subsequent Holder of a Security
that evidences the same debt as the consenting Holder's Security. Any Holder
or subsequent Holder may revoke the consent as to his Security if the Trustee
receives notice of the revocation before the amendment or waiver becomes
effective.
The Company may fix a record date for the determination of Holders of
Registered Securities entitled to give a consent. The record date shall not
be less than 10 nor more than 60 days prior to the first written solicitation
of Securityholders.
SECTION 9.05. Notation on or Exchange of Securities.
The Company or the Trustee may place an appropriate notation about an
amendment or waiver on any Security thereafter authenticated. The Company may
issue in exchange for affected Securities new Securities that reflect the
amendment or waiver.
SECTION 9.06. Trustee Protected.
The Trustee need not sign any supplemental indenture that adversely
affects its rights.
ARTICLE 10 - MISCELLANEOUS
SECTION 10.01. Trust Indenture Act.
The provisions of TIA Sections 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not expressly set forth herein.
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.
<PAGE> 37
SECTION 10.02. Notices
Any notice by one party to another is duly given if in writing and
delivered in person, sent by facsimile transmission confirmed by mail or
mailed by first-class mail to the other's address shown below:
Company: Consolidated Natural Gas Company
CNG Tower
Pittsburgh, Pennsylvania 15222-3199
Attention: Chief Financial Officer
Trustee:
Attention:
A party by notice to the other parties may designate additional or
different addresses for subsequent notices.
Any notice mailed to a Securityholder shall be mailed to his address
shown on the register kept by the Transfer Agent or on the list referred to in
Section 2.06. Failure to mail a notice to a Securityholder or any defect in a
notice mailed to a Securityholder shall not affect the sufficiency of the
notice mailed to other Securityholders or the sufficiency of any published
notice.
If a notice is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice to Securityholders, it shall mail a copy
to the Trustee and each Agent at the same time.
If in the Company's opinion it is impractical to mail a notice required
to be mailed or to publish a notice required to be published, the Company may
give such substitute notice as the Trustee approves. Failure to publish a
notice as required or any defect in it shall not affect the sufficiency of any
mailed notice.
All notices shall be in the English language, except that any published
notice may be in an official language of the country of publication.
A "notice" includes any communication required by this Indenture.
<PAGE> 38
SECTION 10.03. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall if so requested furnish to
the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the Proposed action have been complied
with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 10.04. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 10.05. Rules by Company and Agents.
The Company may make reasonable rules for action by or at a meeting of
Securityholders. An Agent may make reasonable rules and set reasonable
requirements for its functions.
SECTION 10.06. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions are not required to be open. If a payment date is a Legal
Holiday at a place of payment, unless the Securities Resolution otherwise
provides, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
<PAGE> 39
SECTION 10.07. No Recourse Against Others.
All liability described in the Securities of any director, officer,
employee or stockholder, as such, of the Company is waived and released.
SECTION 10.08. Duplicate Originals.
The parties may sign any number of copies of this Indenture. One signed
copy is enough to prove this Indenture.
SECTION 10.09. Governing Law.
The laws of the State of New York shall govern this Indenture, the
Securities and any coupons, unless federal law governs.
SIGNATURES
Dated: , 1995 CONSOLIDATED NATURAL GAS COMPANY
By
Vice Chairman of the Board
and Chief Financial Officer
Attest: (SEAL)
_________________________
[Assistant] Secretary
Dated: , 1995
By
Attest: (SEAL)
_________________________
<PAGE> 40
EXHIBIT A
A Form of Registered Security
No. $
CONSOLIDATED NATURAL GAS COMPANY
[Title of Security]
Consolidated Natural Gas Company
promises to pay to
or registered assigns
the principal sum of Dollars on ,
Interest Payment Dates:
Record Dates:
Dated:
CONSOLIDATED NATURAL GAS COMPANY
Transfer Agent and Paying Agent
by
Chairman of the Board
Authenticated:
(SEAL)
Attest:
Registrar, by Secretary
Authorized Signature
<PAGE> 41
CONSOLIDATED NATURAL GAS COMPANY
[Title of Security]
1. Interest. (1)
Consolidated Natural Gas Company ("Company"), a Delaware
corporation, promises to pay interest on the principal amount of
this Security at the rate per annum shown above. The Company will
pay interest semiannually on and
of each year commencing , 19__. Interest on the
Securities will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from ,
19__. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment. (2)
The Company will pay interest on the Securities to the persons who
are registered holders of Securities at the close of business on the
record date for the next interest payment date, except as otherwise
provided in the Indenture. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company will pay
principal and interest in money of the United States that at the
time of payment is legal tender for payment of public and private
debts. The Company may pay principal and interest by check payable
in such money. It may mail an interest check to a holder's
registered address.
3. Securities Agents.
Initially, , , will act as Paying
Agent, Transfer Agent and Registrar. The Company may change any
Paying Agent, Transfer Agent or Registrar without notice. The
Company or any Affiliate may act in any such capacity. Subject to
certain conditions, the Company may change the Trustee.
4. Indenture.
The Company issued the securities of this series ("Securities")
under an Indenture dated as of , 1995 ("Indenture") between
the Company and ("Trustee"). The terms of the Securities include
those stated in the Indenture and in the Securities Resolution or
supplemental indenture creating the Securities and those made part
of the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb). Securityholders are referred to the
Indenture, the Securities Resolution or supplemental indenture and
such Act for a statement of such terms.
<PAGE> 42
5. Optional Redemption. (3)
On or after , the Company may redeem all the
Securities at any time or some of them from time to time at the
following redemption prices (expressed in percentages of principal
amount), plus accrued interest to the redemption date.
If redeemed during the 12-month period beginning,
Year Percentage Year Percentage
and thereafter at 100%.
6. Mandatory Redemption. (4)
The Company will redeem $ principal amount of Securities on
and on each thereafter through at a redemption price of 100% of
principal amount, plus accrued interest to the redemption date. (5)
The Company may reduce the principal amount of Securities to be
redeemed pursuant to this paragraph by subtracting 100% of the
principal amount (excluding premium) of any Securities (i) that the
Company has acquired or that the Company has redeemed other than
pursuant to this paragraph and (ii) that the Company has delivered
to the Registrar for cancellation. The Company may so subtract the
same Security only once.
7. Additional Optional Redemption. (6)
In addition to redemptions pursuant to the above paragraph(s), the
Company may redeem not more than $ principal amount of
Securities on and on each thereafter through
at a redemption price of 100% of principal amount, plus accrued
interest to the redemption date.
8. Notice of Redemption. (7)
Notice of redemption will be mailed at least 20 days but not more
than 60 days before the redemption date to each holder of Securities
to be redeemed at his registered address.
<PAGE> 43
9. Denominations, Transfer, Exchange.
The Securities are in registered form without coupons in
denominations of $1,000 (8) and whole multiples of $1,000. The
transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Transfer Agent may
require a holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees
required by law or the Indenture. The Transfer Agent need not
exchange or register the transfer of any Security or portion of a
Security selected for redemption. Also, it need not exchange or
register the transfer of any Securities for a period of 15 days
before a selection of Securities to be redeemed.
10. Persons Deemed Owners.
The registered holder of a Security may be treated as its owner for
all purposes.
11. Amendments and Waivers.
Subject to certain exceptions, the Indenture or the Securities may
be amended with the consent of the holders of a majority in
principal amount of the securities of all series affected by the
amendment. (9) Subject to certain exceptions, a default on a series
may be waived with the consent of the holders of a majority in
principal amount of the series.
Without the consent of any Securityholder, the Indenture or the
Securities may be amended, among other things, to cure any
ambiguity, omission, defect or inconsistency; to provide for
assumption of Company obligations to Securityholders; or to make any
change that does not materially adversely affect the rights of any
Securityholder.
12. Restrictive Covenants. (10)
The Securities are unsecured general obligations of the Company
limited to $ principal amount. The Indenture does not
limit other unsecured debt. It does limit certain mortgages and
sale-leaseback transactions if the property or asset mortgaged or
leased is used for, or related to, the transmission, distribution,
exploration or production of natural gas. The limitations are
subject to a number of important qualifications and exceptions.
<PAGE> 44
13. Successors.
When a successor assumes all the obligations of the Company under
the Securities and the Indenture, the Company will be released from
those obligations.
14. Defeasance Prior to Redemption or Maturity. (11)
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the
Indenture if the Company deposits with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on
the Securities to redemption or maturity. U.S. Government
Obligations are securities backed by the full faith and credit of
the United States of America or certificates representing an
ownership interest in such Obligations.
15. Defaults and Remedies.
An Event of Default (12) includes: default for 60 days in payment
of interest on the Securities; default in payment of principal on
the Securities; default for 60 days in the payment of any sinking
fund obligation; default by the Company for a specified period after
notice to it in the performance of any of its other agreements
applicable to the Securities; certain events of bankruptcy or
insolvency; and any other Event of Default provided for in the
series. If an Event of Default occurs and is continuing, the
Trustee or the holders of at least 25% in principal amount of the
Securities may declare the principal (13) of all the Securities to
be due and payable immediately.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, holders of a majority
in principal amount of the Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing default (except a default
in payment of principal or interest) if it determines that
withholding notice is in their interests. The Company must furnish
an annual compliance certificate to the Trustee.
<PAGE> 45
16. Trustee Dealings with Company.
, the Trustee under
the Indenture, in its individual or any other capacity, may make
loans to, accept deposits from, and perform services for the Company
or its Affiliates, and may otherwise deal with those persons, as if
it were not Trustee.
17. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their
creation. Each Securityholder by accepting a Security waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
18. Authentication.
This Security shall not be valid until authenticated by a manual
signature of the Registrar.
19. Abbreviations.
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as: TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with right of
survivorship and not as tenants in common), CUST (=custodian), and
U/G/M/A (=Uniform Gifts to Minors Act).
The Company will furnish to any Securityholder upon written request and
without charge a copy of the Indenture and the Securities Resolution, which
contains the text of this Security in larger type. Requests may be made to:
Secretary, Consolidated Natural Gas Company, CNG Tower, Pittsburgh,
Pennsylvania 15222-3199.
<PAGE> 46
EXHIBIT B
A Form of Bearer Security
No. $
CONSOLIDATED NATURAL GAS COMPANY
[Title of Security]
Consolidated Natural Gas Company
promises to pay to bearer
the principal sum of Dollars on ,
Interest Payment Dates:
Dated:
CONSOLIDATED NATURAL GAS COMPANY
Transfer Agent
by
Chairman of the Board
Authenticated:
(SEAL)
Attest:
Registrar, by Secretary
Authorized Signature
<PAGE> 47
CONSOLIDATED NATURAL GAS COMPANY
[Title of Security]
1. Interest. (1)
Consolidated Natural Gas Company ("Company"), a Delaware
corporation, promises to pay to bearer interest on the principal
amount of this Security at the rate per annum shown above. The
Company will pay interest semiannually on and of each
year commencing , 19 . Interest on the Securities will
accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from , 19 . Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. (2)
Holders must surrender Securities and any coupons to a Paying Agent
to collect principal and interest payments. The Company will pay
principal and interest in money of the United States that at the
time of payment is legal tender for payment of public and private
debts. The Company may pay principal and interest by check payable
in such money.
3. Securities Agents.
Initially, , , will act as Transfer
Agent, Paying Agent and Registrar. The Company may change any
Paying Agent, Transfer Agent or Registrar without notice. The
Company or any Affiliate may act in any such capacity. Subject to
certain conditions, the Company may change the Trustee.
4. Indenture.
The Company issued the securities of this series ("Securities")
under an Indenture dated as of , 1995 ("Indenture")
between the Company and ("Trustee"). The terms of
the Securities include those stated in the Indenture and the
Securities Resolution or supplemental indenture and those made part
of the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb). Securityholders are referred to the
Indenture, the Securities Resolution or supplemental indenture and
such Act for a statement of such terms.
<PAGE> 48
5. Optional Redemption. (3)
On or after , the Company may redeem all the Securities
at any time or some of them from time to time at the following
redemption prices (expressed in percentages of principal amount),
plus accrued interest to the redemption date.
If redeemed during the 12-month period beginning,
Year Percentage Year Percentage
and thereafter 100%.
6. Mandatory Redemption. (4)
The Company will redeem $ principal amount of Securities on
and on each thereafter through at a redemption
price of 100% of principal amount, plus accrued interest
to the redemption date. (5) The Company may reduce the principal
amount of Securities to be redeemed pursuant to this paragraph by
subtracting 100% of the principal amount (excluding premium) of any
Securities (i) that the Company has acquired or that the Company has
redeemed other than pursuant to this paragraph and (ii) that the
Company has delivered to the Registrar for cancellation. The
Company may so subtract the same Security only once.
7. Additional Optional Redemption. (6)
In addition to redemptions pursuant to the above paragraph(s), the
Company may redeem not more than $ principal amount of
Securities on and on each thereafter through at a
redemption price of 100% of principal amount, plus accrued interest
to the redemption date.
8. Notice of Redemption. (7)
Notice of redemption will be published once in an Authorized
Newspaper in the City of New York and if the Securities are listed
on any stock exchange located outside the United States and such
stock exchange so requires, in any other required city outside the
United States at least 20 days but not more than 60 days before the
redemption date. Notice of redemption also will be mailed to
holders who have filed their names and addresses with the Transfer
Agent within the two preceding years. A holder of Securities may
miss important notices if he fails to maintain his name and address
with the Transfer Agent.
<PAGE> 49
9. Denominations, Transfer, Exchange.
The Securities are in bearer form with coupons in denominations of
$5,000 (8) and whole multiples of $5,000. The Securities may be
transferred by delivery and exchanged as provided in the Indenture.
Upon an exhange, the Transfer Agent may require a holder, among
other things, to furnish appropriate documents and to pay any taxes
and fees required by law or the Indenture. The Transfer Agent need
not exchange any Security or portion of a Security selected for
redemption. Also, it need not exchange any Securities for a period
of 15 days before a selection of Securities to be redeemed.
10. Persons Deemed Owners.
The holder of a Security or coupon may be treated as its owner for
all purposes.
11. Amendments and Waivers.
Subject to certain exceptions, the Indenture or the Securities may
be amended with the consent of the holders of a majority in
principal amount of the securities of all series affected by the
amendment. (9) Subject to certain exceptions, a default on a series
may be waived with the consent of the holders of a majority in
principal amount of the series.
Without the consent of any Securityholder, the Indenture or the
Securities may be amended, among other things, to cure any
ambiguity, omission, defect or inconsistency; to provide for
assumption of Company obligations to Securityholders; or to make any
change that does not materially adversely affect the rights of any
Securityholder.
12. Restrictive Covenants. (10)
The Securities are unsecured general obligations of the Company
limited to $ principal amount. The Indenture does not limit
other unsecured debt. It does limit certain mortgages and
sale-leaseback transactions if the property or asset mortgaged or
leased is used for, or related to, the transmission, distribution,
exploration or production of natural gas. The limitations are
subject to a number of important qualifications and exceptions.
<PAGE> 50
13. Successors.
When a successor assumes all the obligations of the Company under
the Securities, any coupons and the Indenture, the Company will be
released from those obligations.
14. Defeasance Prior to Redemption or Maturity. (11)
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities, any coupons and
the Indenture if the Company deposits with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on
the Securities to redemption or maturity. U.S. Government
Obligations are securities backed by the full faith and credit of
the United States of America or certificates representing an
ownership interest in such Obligations.
15. Defaults and Remedies.
An Event of Default (12) includes: default for 60 days in payment
of interest on the Securities; default in payment of principal on
the Securities; default for 60 days in the making of any sinking
fund payment; default by the Company for a specified period after
notice to it in the performance of any of its other agreements
applicable to the Securities; certain events of bankruptcy or
insolvency; and any other Event of Default provided for in the
series. If an Event of Default occurs and is continuing, the
Trustee or the holders of at least 25% in principal amount of the
Securities may declare the principal (13) of all the Securities to
be due and payable immediately.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, holders of a majorityin
principal amount of the Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing default (except a default
in payment of principal or interest) if it determines that
withholding notice is in their interests. The Company must furnish
an annual compliance certificate to the Trustee.
<PAGE> 51
16. Trustee Dealings with Company.
, the Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Company or its Affiliates, and
may otherwise deal with those persons, as if it were not Trustee.
17. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their
creation. Each Securityholder by accepting a Security waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
18. Authentication.
This Security shall not be valid until authenticated by a manual
signature of the Registrar.
19. Abbreviations.
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as: TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with right of
survivorship and not as tenants in common), CUST (=custodian), and
U/G/M/A (=Uniform Gifts to Minors Act).
The Company will furnish to any Securityholder upon written request and
without charge a copy of the Indenture and the Securities Resolution, which
contains the text of this Security in larger type. Requests may be made to:
Secretary, Consolidated Natural Gas Company, CNG Tower, Pittsburgh,
Pennsylvania 15222-3199.
<PAGE> 52
[FACE OF COUPON]
...............
[$]............
Due............
CONSOLIDATED NATURAL GAS COMPANY
[Title of Security]
Unless the Security attached to this coupon has been called for
redemption, Consolidated Natural Gas Company ("Company") will pay to bearer,
upon surrender, the amount shown hereon when due. This coupon may be
surrendered for payment to any Paying Agent listed on the back of this coupon
unless the Company has replaced such Agent. Payment may be made by check.
This coupon represents six months' interest.
CONSOLIDATED NATURAL GAS COMPANY
By
[REVERSE OF COUPON]
PAYING AGENTS
<PAGE> 53
NOTES TO EXHIBITS A AND B
1 If the Security is not to bear interest at a fixed rate per annum,
insert a description of the manner in which the rate of interest is to
be determined. If the Security is not to bear interest prior to
maturity, so state.
2 If the method or currency of payment is different, insert a statement
thereof.
3 If applicable.
4 If applicable.
5 If the Security is a Discounted Security, insert amount to be redeemed
or method of calculating such amount.
6 If applicable. Also insert, if applicable, provisions for repayment of
Securities at the option of the Securityholder.
7 If applicable.
8 If applicable. Insert additional or different denominations.
9 If different terms apply, insert a brief summary thereof.
10 If applicable. If additional or different covenants apply, insert a
brief summary thereof.
11 If applicable. If different defeasance terms apply, insert a brief
summary thereof.
12 If additional or different Events of Default apply, insert a brief
summary thereof.
13 If the Security is a Discounted Security, set forth the amount due and
payable upon an Event of Default.
Note: U.S. tax law may require certain legends on Discounted and Bearer
Securities.
<PAGE> 54
EXHIBIT C
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
_________________________________________
: :
:_______________________________________:
(Insert assignee's soc. sec. or tax I.D. no.)
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Date: _______________ Your Signature:
(Sign exactly as your name appears on the other side of this Security)
<PAGE> 1 Exhibit B
CONSOLIDATED NATURAL GAS COMPANY
STANDARD PURCHASE AGREEMENT PROVISIONS -- DEBT SECURITIES
INCLUDING
FORM OF PURCHASE AGREEMENT
<PAGE> 2
CONSOLIDATED NATURAL GAS COMPANY
STANDARD PURCHASE AGREEMENT PROVISIONS -- DEBT SECURITIES
From time to time, Consolidated Natural Gas Company, a Delaware
corporation ("Company"), may enter into purchase agreements that provide for
the sale of designated securities to the purchaser or purchasers named
therein. The standard provisions set forth herein may be incorporated by
reference in any such purchase agreement ("Purchase Agreement"). The Purchase
Agreement, including the provisions incorporated therein by reference, is
herein sometimes referred to as "this Agreement". Unless otherwise defined
herein, terms defined in the Purchase Agreement are used herein as therein
defined.
1. Introductory. The Company proposes to issue and sell from time to
time debt securities registered under the registration statement referred to
in Section 2(a) ("Securities"). The Securities will be issued under an
Indenture, dated as of , 1995 between the Company and ,
as Trustee, Securities Resolutions (as defined in such Indenture) or
supplemental indentures, including a Securities Resolution or supplemental
indenture pertaining to the particular series of Securities involved in the
offering ("Indenture"), and will have varying designations, interest rates and
times of payment of any interest, maturities, redemption provisions and other
terms, with all such terms for any particular series of the Securities being
determined at the time of the sale. The Securities involved in any such
offering are hereinafter referred to as the "New Securities", and the
purchaser or purchasers, as the case may be, which agree to purchase the same
are hereinafter referred to as the "Purchasers" of such New Securities. The
terms "you" and "your" refer to those Purchasers who sign the Purchase
Agreement either on behalf of themselves only or on behalf of themselves and
as representatives of the several Purchasers named in Schedule A thereto
("Schedule A"), as the case may be, unless one of such Purchasers shall have
been appointed representative ("Representative") of all of the Purchasers who
sign the Purchase Agreement, in which case, the terms "you" and "your" shall
mean such Purchaser acting in its capacity as Representative.
2. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each Purchaser that:
(a) A registration statement on Form S-3 relating to the Securities
including a prospectus and all documents incorporated by reference therein has
been filed with the Securities and Exchange Commission ("Commission") and has
become effective. Such registration statement, including the prospectus set
forth therein, as amended by a prospectus supplement with respect to the
offering of New Securities referred to in Section 1 and all prior amendments
and supplements thereto (other than supplements and amendments relating to
Securities that are not New Securities), including all documents filed as a
part thereof or incorporated therein, is hereinafter referred to as the
"Registration Statement" and such prospectus, as so amended or supplemented
(including all material incorporated by reference therein) is hereinafter
referred to as the "Prospectus".
<PAGE> 3
(b) The Registration Statement and the Prospectus in all material
respects comply with the provisions of the Securities Act of 1933, as amended
("Act"), and the applicable rules and regulations of the Commission thereunder
("Rules and Regulations") and the Trust Indenture Act of 1939 ("Trust
Indenture Act"); the Registration Statement does 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
the Prospectus does 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, in the light of the circumstances under which
they were made, not misleading and all documents incorporated therein by
reference pursuant to Item 12 of Form S-3 as of the respective dates on which
they were filed complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
pertinent published rules and regulations thereunder (the "Exchange Act Rules
and Regulations") and, on said dates, and at the time of purchase, when read
together with the Prospectus, or the Prospectus as it may be otherwise amended
or supplemented, 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, in the light of circumstances under which they
were made, not misleading, except that the Company makes no warranty or
representation to any Purchaser with respect to any statement contained in or
any matter omitted from the Registration Statement or Prospectus, which
statements were made, or matters omitted, in reliance upon and in conformity
with information furnished in writing to the Company through you for use in
the Registration Statement and Prospectus.
(c) The Commission has issued an order under the Public Utility Holding
Company Act of 1935 ("PUHCA") permitting to become effective the Form U-1
Declaration filed by the Company with respect to the issue and sale of the
Securities (including the New Securities), such order being subject, however,
to such supplemental orders, if any, as the Commission may issue under PUHCA.
A copy of such order heretofore issued by the Commission has been or will be
delivered to the Purchasers.
(d) Except as otherwise contemplated herein, no approval, authorization,
consent, certificate or order of any State commission or regulatory authority
is necessary with respect to the issuance or the sale of the New Securities by
the Company.
(e) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, there has been no material and
unfavorable change in the condition of the Company and its subsidiaries, on a
consolidated basis, financial or otherwise, other than as referred to in the
Registration Statement and Prospectus.
(f) The consummation of the transactions herein contemplated and the
performance by the Company of the terms of this Agreement will not result in
the breach by the Company of any terms of, or constitute a default under, any
other agreement or undertaking of the Company.
<PAGE> 4
3. Delivery and Payment. Payment for the New Securities shall be made
to the Company or its order by certified or official bank check or checks
payable in New York Clearinghouse funds (unless otherwise specified in the
Purchase Agreement, in which case payment shall be made as so specified) at
the office of the Company, 44 Wall Street, New York, New York 10005 (unless
another place is specified in the Purchase Agreement, in which case such
payment shall be made at the place so specified), against the delivery of the
New Securities at said office to the Purchasers or you for the respective
accounts of the Purchasers. Such payment and delivery shall be made at 10:00
A.M., New York time, on the date set forth in the Purchase Agreement, unless
another time shall be agreed to by the Company and by you or unless postponed
in accordance with the provisions of Section 8 hereof. The time at which
payment and delivery are actually made is hereinafter sometimes called "time
of purchase".
You shall specify the denominations of the New Securities to be
delivered and the name and address in which each New Security is to be
registered, by notice delivered to the Company not later than 10:00 A.M., New
York time, on the third business day preceding the time of purchase. For the
purpose of expediting the checking of the New Securities by you, the Company
agrees to make the New Securities available to you, at an office in New York
City designated by the Trustee, not later than 2:00 P.M., New York time, on
the first business day preceding the time of purchase.
4. Covenants of the Company. The Company covenants and agrees with the
several Purchasers:
(a) To advise you promptly of any proposal to amend or supplement
the Registration Statement or the Prospectus with respect to any New
Securities at any time when a prospectus relating to such New Securities is
required to be delivered under the Act and will furnish to you a copy of each
such proposed amendment or supplement prior to the filing thereof;
(b) If at any time when a Prospectus relating to the New Securities
is required to be delivered under the Act any event occurs as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact, or omit to state any material fact necessary to
make the statements therein, in the light of circumstances under which they
were made, not misleading, or if it is necessary at any time to amend or
supplement the Registration Statement or the Prospectus to comply with the
Act, to promptly prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an amendment which
will effect such compliance;
(c) To furnish to you copies of the registration statement relating
to the Securities as originally filed and all amendments thereto (at least one
of which will be as filed with the Commission via EDGAR and will include all
exhibits except those incorporated by reference to previous filings with the
Commission), a copy of each consent and certificate of independent accountants
and of each other person whose profession gives authority to statements made
<PAGE> 5
by him and who is named in the Registration Statement as having prepared,
certified or reviewed any part thereof, each related prospectus, the
Prospectus, and all amendments and supplements to such documents (except
supplements relating to Securities that are not New Securities) as filed with
the Commission via EDGAR, in each case as soon as available and in such
quantities as you may reasonably request for the purpose contemplated by the
Act and to furnish to you sufficient copies of the foregoing (including copies
of the Registration Statement (other than exhibits and consents filed as
exhibits to the Registration Statement)) for distribution of two copies of the
Registration Statement and a sufficient number of copies of the Prospectus to
each of the other Purchasers;
(d) To furnish such proper information as may be required and
otherwise to cooperate in qualifying the New Securities for sale and in
determining their eligibility for investment under the laws of such
jurisdictions as you may designate and to pay or reimburse you for expenses
and reasonable legal fees incurred in connection therewith, provided, that the
Company shall not be required to qualify as a foreign corporation or to file a
consent to service of process in any state;
(e) To advise you promptly (confirming such advice in writing) of
any request made by the Commission for amendments to the Registration
Statement or Prospectus or for additional information with respect thereto or
of notice of institution of proceedings for, or the entry of, a stop order
suspending the effectiveness of the Registration Statement, and if such a stop
order should be entered by the Commission, to make every reasonable effort to
obtain the lifting or removal thereof as soon as possible;
(f) For a period of five years from the date hereof to furnish to
you and to each other Purchaser who may so request (i) as soon as practicable
after the close of each fiscal year a copy of the Company's annual report to
stockholders for such year; (ii) as soon as available, a copy of each report
or definitive proxy statement of the Company filed with the Commission under
the Exchange Act or mailed to stockholders; and (iii) copies of documents,
reports and information furnished to Securityholders pursuant to the
provisions of the Indenture;
(g) During such period of time after the effective date of the
Registration Statement as the Purchasers are required by law to deliver a
prospectus in connection with any sale of the New Securities contemplated by
the Prospectus, if any event relating to or affecting the Company or of which
the Company shall be advised in writing by you shall occur which in the
Company's opinion should be set forth in a supplement or amendment to the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances when it is delivered to a Purchaser, to amend or supplement the
Prospectus by either (i) preparing and filing with the Commission and
furnishing to you at the Company's expense a reasonable number of copies of a
supplement or supplements or an amendment or amendments to the Prospectus or
(ii) making an appropriate filing pursuant to Section 13 or 14 of the Exchange
Act, which will supplement or amend the Prospectus so that, as supplemented or
amended, it will not contain an untrue statement of a material fact or omit
<PAGE> 6
to state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a Purchaser, not misleading; provided that should
such event relate solely to the activities of any of the Purchasers, then the
Purchasers shall assume the expense of preparing any such amendment or
supplement;
(h) During such period of time after the date hereof as a
prospectus relating to the New Securities is required to be delivered under
the Act, to file promptly all documents required to be filed with the
Commission pursuant to Section 13 or 14 of the Exchange Act;
(i) To make generally available to its securityholders (as
contemplated by Rule 158 of the Rules and Regulations or otherwise) a
consolidated earnings statement of the Company and its subsidiaries covering a
twelve-month period beginning the first day of the first fiscal quarter
occurring after the effective date of the Registration Statement, as soon as
reasonably practicable after the termination of such twelve-month period;
(j) To pay all expenses, fees and taxes, other than transfer taxes,
in connection with (i) the preparation and filing of the Registration
Statement and Prospectus, any documents incorporated by reference therein at
or after the date thereof and any amendments or supplements thereto, (ii) the
issue, sale and delivery of the New Securities to the Purchasers, (iii) the
qualification of the New Securities for sale and the determination of their
eligibility for investment under laws as aforesaid, and (iv) the furnishing of
the opinions (other than the opinion of Counsel for the Purchasers) and
certificates referred to in Section 5 hereof;
(k) To pay the fees and expenses of Cahill Gordon & Reindel (herein
called "Counsel for the Purchasers") and to reimburse the Purchasers for their
reasonable out-of-pocket expenses incurred in contemplation of the performance
of this Agreement, in the event that the New Securities are not delivered to
and taken up and paid for by the Purchasers hereunder for any reason
whatsoever except the failure or refusal of any Purchaser to take up and pay
for the New Securities for some reason not permitted by the terms of this
Agreement. The Purchasers agree to pay the fees and expenses of Counsel for
the Purchasers in any other event;
(l) To apply the net proceeds from the sale of New Securities,
together with other funds of the Company, as set forth under the heading "Use
of Proceeds" in the Prospectus;
(m) If a public offering of the New Securities is to be made
(unless the Purchase Agreement shall provide otherwise), to use its best
efforts to list the New Securities on the New York Stock Exchange; and
(n) If a public offering of the New Securities is to be made, not
to offer or sell any of the Company's debt securities which are similar to the
New Securities prior to ten business days after the time of purchase without
your consent.
<PAGE> 7
5. Conditions of Purchasers' Obligations. The several obligations of
the Purchasers hereunder are subject to the following conditions:
(a) That at the time of purchase you shall be furnished with signed
copies of the following, addressed to the Purchasers and with photostatic
copies or signed or conformed counterparts thereof for each of the other
Purchasers:
(i) An opinion of counsel to the Company, stating in substance:
(A) That the Company has been duly incorporated and is at the
time of purchase validly existing as a corporation in good
standing under the laws of the State of Delaware, with charter
power to carry on the business in which it is now engaged;
(B) That the subsidiaries of the Company named in the
Prospectus are validly organized and existing under the laws of
the respective jurisdictions in which they are incorporated and
that all of the outstanding capital stock of each such
subsidiary company is owned by the Company and is not subject
to any lien or encumbrance;
(C) That this Agreement has been duly authorized, executed and
delivered by the Company;
(D) That the Indenture has been duly authorized, executed and
delivered by the Company and is a valid instrument, legally
binding upon the Company, that the New Securities have been
duly authorized and issued and constitute the legal, valid and
binding obligations of the Company and are entitled to the
benefits provided by the Indenture, except, in each case, as
limited by bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally, and that the remedy
of specific performance and other forms of equitable relief are
subject to the discretion of the court before which any
proceeding may be brought;
(E) That the New Securities conform in all material respects as
to legal matters with the statements concerning the New
Securities in the Prospectus;
(F) That the statements of the law and legal conclusions in the
Prospectus set forth in the section "The Company and Its
Subsidiaries", "Certain Terms and Description of Securities and
Indenture" and, in the Annual Report of the Company on Form
10-K incorporated by reference in the Prospectus (in the
sections "[insert appropriate sections of 10-K]"), are to the
best of the knowledge of said counsel true and accurate and do
not omit to state any material facts required to be stated
therein or necessary to make such statements not misleading;
<PAGE> 8
(G) That (i) the Registration Statement and the Prospectus and
any amendment or supplement thereto (other than the financial
statements and other financial and statistical information
contained therein, as to which such counsel need express no
opinion) comply as to form with the requirements of Form S-3,
the Rules and Regulations and the Trust Indenture Act; (ii) the
documents incorporated by reference in the Prospectus at the
time the Registration Statement became effective and at the
time of purchase (other than the financial statements and other
financial and statistical information contained therein, as to
which such counsel need express no opinion) complied when
filed pursuant to the Exchange Act as to form with the
requirements of the Exchange Act and the Exchange Act Rules and
Regulations; and (iii) the Indenture has been duly qualified
under the Trust Indenture Act;
(H) The original order of the Commission referred to in
subsection (c) of Section 2 of this Agreement has been obtained
and, to the best of the knowledge of said counsel, is in full
force and effect; any required supplemental order of the
Commission, referred to in subsection (c) of Section 2 of this
Agreement, has been duly issued and, to the best of the
knowledge of said counsel, is in full force and effect; and no
further approval, authorization, consent, certificate or order
of any Federal commission or regulatory authority is necessary
with respect to the execution and delivery of the Indenture or
the issue and sale of the New Securities by the Company as
contemplated in this Agreement;
(I) That all contracts of the Company and its subsidiaries that
are required to be filed as exhibits to the Registration
Statement under the Act and the Rules and Regulations have been
so filed, and that to the extent required all material
contracts of the Company and its subsidiaries have been
properly described in the Registration Statement and
Prospectus; and
(J) That such counsel has participated in the preparation of
the Registration Statement and Prospectus and no facts have
come to the attention of such counsel to lead such counsel to
believe that either the Registration Statement or the
Prospectus at the time the Registration Statement or any
amendment thereto became effective, or the Prospectus or any
amendment or supplement thereto when the Prospectus or such
amendment or supplement was filed, or the Prospectus as it may
be amended or supplemented as of the time of purchase, contains
an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading;
<PAGE> 9
(ii) An opinion of Counsel for the Purchasers as to matters
referred to in paragraph (a)(i) of this Section 5 under the
subheadings (C), (D), (E), the third clause of (G) and (H) (except
for the third clause, in lieu of which such counsel shall state that
they are not aware of any approval of any other regulatory body
being so required), and that the Registration Statement and the
Prospectus, as of the date the Registration Statement became
effective (other than the financial statements and other financial
and statistical information contained therein, Exhibit 12 to the
Registration Statement and the Form T-1 of the Trustee, as to which
such counsel need express no opinion), appear to comply as to form
in all material respects with the requirements of Form S-3 and the
Rules and Regulations and the Trust Indenture Act. In addition such
counsel shall state that they have participated in conferences with
officers and other representatives of the Company, counsel for the
Company and representatives of the independent accountants of the
Company at which the contents of the Registration Statement and
Prospectus and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus (except as to
the matters referred to in paragraph (a)(i) of this Section 5 under
subheading (E)), on the basis of the foregoing (relying as to
materiality to a large extent upon the opinions of officers, counsel
and other representatives of the Company), no facts have come to the
attention of such counsel which lead them to believe that the
Registration Statement or any amendment thereto when such
Registration Statement or amendment became effective or the
Prospectus or any supplement thereto when such supplement was filed
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, in the light of the circumstances in which
they were made, not misleading (it being understood that such
counsel need make no comment with respect to the financial
statements and other financial and statistical data included in the
Registration Statement or Prospectus, Exhibit 12 to the Registration
Statement, and the Form T-1 of the Trustee); and
(iii) A letter, dated the time of purchase addressed to the
Purchasers from the independent accountants for the Company to the
effect that:
(A) they are independent accountants within the meaning of the Act
and the Rules and Regulations;
(B) in their opinion, the consolidated financial statements audited
by them and incorporated by reference in the Registration
Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and
Regulations with respect to registration statements on Form
S-3;
<PAGE> 10
(C) on the basis of procedures (but not an examination in
accordance with generally accepted auditing standards)
consisting of:
(1) reading the minutes of meetings of thestockholders and the
Board of Directors of the Company and its consolidated
subsidiaries since December 31, of the most recent
preceding year as set forth in the minute books, but in no
event through a specified date not more than five business
days prior to the date of delivery of such letter;
(2) reading the unaudited consolidated balance sheets and the
unaudited consolidated statements of income, of cash flows
and of retained earnings for the periods included in the
Company's quarterly reports on Form 10-Q for the current
year (for the quarters ended March 31, June 30 and
September 30, as the case may be), incorporated by
reference in the Registration Statement;
(3) reading the unaudited consolidated financial data of the
Company and subsidiaries for the period from the latest
quarterly reporting period to the date of the latest
available interim data, furnished by the Company, officials
of the Company having advised them that no such
consolidated financial data as of any date or for any
period subsequent to such latest date were available; and
(4) making inquiries of certain officials of the Company who
have responsibility for financial and accounting matters
regarding the specific items for which representations are
requested below;
nothing has come to their attention as a result of the foregoing
procedures that caused them to believe that:
(a) the unaudited condensed consolidated data statements
incorporated by reference in the Registration Statement
do not comply as to form in all material respects with
the applicable accounting requirements of the Exchange
Act as it applies to Form 10-Q and the Exchange Act
Rules and Regulations or said financial data are not
stated on a basis substantially consistent with that of
the audited financial statements incorporated by
reference in the Registration Statement;
<PAGE> 11
(b) for the period from the date of the latest quarterly
report on Form 10-Q to the date of the latest available
unaudited consolidated income statement read by such
accountants, there were any decreases, as compared with
the corresponding period of the prior year, in
consolidated total operating revenue, in operating
income or in net income, except in all instances for
decreases which the Registration Statement discloses
have occurred or may occur, or they shall state any
specific decreases;
(c) at the date of the latest available balance sheet read
by such accountants, and at a subsequent specified date
not more than five days prior to the date of delivery
of such letter, there was any change in common stock or
long-term debt of the Company, or any decrease in total
stockholders' equity as compared with amounts shown on
the latest unaudited condensed consolidated balance
sheet included in the Registration Statement (including
documents incorporated by reference), [except as to
dividends on common stock that have been delcared in
the normal course of business, amortization of
long-term debt discount or premium, the retirement of
long-term debt to satisfy mandatory sinking fund
requirements, and the issuance of common stock in
connection with the Company's long-term incentive plans
and thrift plans] (1) or, from the date of the latest
available unaudited condensed consolidated income
statement read by such accountants to the subsequent
specified date, any decreases, as compared with the
corresponding period in the preceding year, in
consolidated total operating revenues, in operating
income or in net income, except in all instances for
changes or decreases which the Registration Statement
(including documents incorporated by reference)
discloses have occurred or may occur, or except as
otherwise noted in such letter.
_______________
(1) Relevant exceptions will be stated.
<PAGE> 12
(D) the specified dollar amounts (or percentages derived from such
dollar amounts) under captions specified by the purchasers and
agreed to by such independent accountants contained in the
Registration Statement (including documents incorporated by
reference), in each case to the extent that such dollar amounts
and percentages are obtained from the general accounting
records of the Company and its subsidiaries subject to the
internal controls of the Company's accounting system or are
derived directly from such records by analysis or computation,
is in agreement with such records or computations made
therefrom, except as otherwise specified in such letter;
(b) That no amendment to the Registration Statement in the form
in which the Registration Statement is effective at the date of this
Agreement, filed subsequent to the execution of this Agreement, or supplement
to the Prospectus constituting a part of such Registration Statement, filed
subsequently to the execution of this Agreement, shall contain information
substantially different from that contained in such Registration Statement or
Prospectus which shall be unsatisfactory in substance to you or unsatisfactory
in form to Counsel for the Purchasers;
(c) That prior to the time of purchase, no stop order with
respect to the effectiveness of the Registration Statement shall have been
issued under the Act by the Commission or proceedings therefor initiated or
threatened; that at the time of purchase the Registration Statement, as
amended or supplemented, shall 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 that the
Prospectus, as amended or supplemented, shall 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, in the light of the
circumstances under which they were made, not misleading;
(d) That since the respective dates as of which information is
given in the Registration Statement and Prospectus and prior to the time of
purchase, no material and unfavorable change in the condition of the Company
and its subsidiaries on a consolidated basis, financial or otherwise, shall
have taken place (other than as referred to in the Registration Statement and
Prospectus); and the Company will, at the time of purchase, deliver to you,
with photostatic copies for delivery to each of the Purchasers, a certificate
of its Chairman of the Board or its President or a Vice President and its
Treasurer or an Assistant Treasurer that such a change has not occurred;
(e) That subsequent to the date of this Agreement and prior to
the time of purchase there shall not have occurred (i) any downgrading in the
rating of any debt securities of the Company by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Act); (ii) any banking moratorium declared by Federal or New York
authorities; or (iii) any outbreak or escalation of major hostilities in
<PAGE> 13
which the United States is involved, any declaration of war by Congress or any
other substantial national or international calamity or emergency if, in your
reasonable judgment, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the New Securities; and
(f) That the Company shall have performed such of its
obligations under this Agreement as are to be performed by the terms hereof at
or before the time of purchase.
6. Conditions of Company's Obligations. The obligations of
the Company with respect to the delivery of New Securities shall be subject to
the following conditions:
(a) That prior to the time of purchase, no stop order with
respect to the effectiveness of the Registration Statement shall have been
issued under the Act by the Commission or proceedings therefor initiated or
threatened; and
(b) That no order or supplement to any order of the Commission
relating to the issue or sale of the New Securities or to the application of
the proceeds thereof shall contain any conditions or provisions that are not
acceptable to the Company, it being understood that no order in effect as of
the date of this Agreement contains any such unacceptable conditions or
provisions.
7. Termination of Agreement. If a public offering of the New
Securities is to be made by the Purchasers, this Agreement may be terminated
at any time prior to 5:30 P.M., New York time, on the first business day
following the date of this Agreement (but not after the initial public
offering of the New Securities) by you with the consent of the Purchasers
(including you) who have agreed to purchase in the aggregate 50% or more of
the aggregate principal amount of the New Securities agreed to be purchased
hereunder, if trading in securities on the New York Stock Exchange shall have
been suspended or limited, or minimum prices shall have been established on
such exchange, or a banking moratorium shall have been declared by either
Federal or New York State authorities. This Agreement may also be terminated
by you, with like consent whether or not a public offering of the New
Securities has been made, at any time prior to the time of purchase, if the
Company or any of its subsidiaries shall have sustained a loss by fire, flood,
accident or other calamity that is substantial with respect to the property of
the Company and its subsidiaries as a whole and that, in your judgment, shall
render it inadvisable to proceed with the delivery of the New Securities,
whether or not such loss shall have been insured.
The time of the "initial public offering", for the purposes of this
Section 7, shall mean the time, after the execution of this Agreement, of the
release by you for publication of the first newspaper advertisement referring
to the New Securities, or the time, after the execution of this Agreement, at
which the New Securities are first generally offered by the Purchasers to the
public or to dealers by letter or telegram or otherwise, whichever shall first
occur.
<PAGE> 14
If this Agreement is terminated as provided in this Section 7, the
Company and each other Purchaser shall be notified promptly by telephone or
telegram, confirmed by letter. If this Agreement shall not be carried out by
any Purchaser for any reason permitted under this Agreement or if the sale of
the New Securities to the Purchasers as herein contemplated shall not be
carried out because the Company shall be unable in good faith to comply with
any of the terms of this Agreement or if the Company shall not deliver the New
Securities for any reasons specified in Section 6 hereof, the Company shall
not be under any obligation under this Agreement (except that the Company
shall remain liable to the extent provided in Sections 4(j), 4(k), 9 and 11
hereof) and the Purchasers (except any Purchasers in default hereunder) shall
be under no liability to the Company nor be under any liability under this
Agreement to one another.
8. Default of Purchasers. If any Purchaser or Purchasers default in
their obligations to purchase New Securities hereunder and the aggregate
principal amount of New Securities which such defaulting Purchaser or
Purchasers agreed but failed to purchase is 10% of the principal amount of New
Securities or less, you may make arrangements satisfactory to the Company for
the purchase of such New Securities by other persons, including any of the
Purchasers, but if no such arrangements are made by the time of purchase the
non-defaulting Purchasers shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the New Securities which such
defaulting Purchasers agreed but failed to purchase. If any Purchaser or
Purchasers so default and the aggregate principal amount of New Securities
with respect to which such default or defaults occur is more than the above
percentage and arrangements satisfactory to you and the Company for the
purchase of such New Securities by other persons are not made within
thirty-six (36) hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Purchaser or the Company,
except as provided in Sections 4(j), 4(k), 9, 10 and 11. In the event that
any Purchaser or Purchasers default in their obligation to purchase New
Securities hereunder, the Company may, by prompt written notice to the
non-defaulting Purchasers, postpone the time of purchase for a period of not
more than five (5) full business days in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus or
in any other documents, and the Company will promptly file any amendments to
the Registration Statement or supplements to the Prospectus which may thereby
be made necessary. Nothing in this Section 8, however, shall obligate any
Purchaser to purchase or find purchasers for any principal amount of New
Securities in excess of that agreed to be purchased by such Purchaser under
the terms of this Agreement; nor shall anything herein operate to limit any
rights which the Company may have against any Purchaser who shall for any
reason other than a reason permitted hereunder fail to purchase the principal
amount of New Securities purchasable by it upon tender thereof in accordance
with the terms of this Agreement. The term "Purchaser" as used in this
Agreement shall refer to and include each Purchaser substituted under this
Section 8, with like effect as if said substituted Purchaser had originally
been named in Schedule A.
<PAGE> 15
9. Indemnity by the Company. The Company agrees to indemnify, defend
and and hold harmless each Purchaser and each person, if any, who controls any
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any loss, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or severally,
any such Purchaser or person may incur under the Act or otherwise, insofar as
such loss, expense, liability or claim arises out of or is based upon any
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof) or in the Prospectus (the term "Prospectus" for the purpose
of this Section 9 shall be deemed to include any preliminary prospectus, the
prospectus included in the Registration Statement at the time it became
effective, the Prospectus, the Prospectus as amended or supplemented and any
document incorporated by reference therein pursuant to Item 12 of Form S-3),
or arises out of or is based upon any alleged omission to state a material
fact required to be stated in either such Registration Statement or such
Prospectus or necessary to make the statements made in such Registration
Statement not misleading or necessary to make the statements in such
Prospectus, in the light of the circumstances under which they were made, not
misleading, except insofar as any such loss, expense, liability or claim
arises out of or is based upon any alleged untrue statement of a material fact
contained in information furnished in writing to the Company through you for
use in such Registration Statement or in such Prospectus or arises out of or
is based upon any alleged omission from information furnished in writing to
the Company on behalf of any Purchaser through you to state a material fact in
connection with such information required to be stated therein or necessary to
make such information when used in such Registration Statement not misleading,
or necessary to make such information when used in such Prospectus, in the
light of the circumstances under which it was used, not misleading. The
Company's agreement to indemnify or reimburse any such Purchaser or person
with respect to any such loss, expense, liability or claim is expressly
conditioned upon its being notified of the action in connection therewith
brought against such Purchaser or person by letter or telegram addressed to
the Company within ten days after the summons or other first legal process
which discloses the nature of the liability or claim shall have been
personally served upon such Purchaser or person (or after he shall have
received notice of such service upon any agent designated by him) but failure
so to notify the Company shall not relieve the Company from any liability
which it may have to such Purchaser or person otherwise than on account of the
indemnity agreement contained in this Section 9. The Company shall be
entitled to assume the investigation of any liability or claim or the defense
of any suit brought to enforce any such liability or claim and the Purchaser
or person against whom such suit is brought shall be entitled to participate
in such investigation and defense. If the Company assumes the investigation
and defense, such investigation and defense shall be conducted by counsel of
good standing chosen by the Company and satisfactory to such Purchaser or
person, and in such case such Purchaser or person shall bear the expense of
his investigation and the fees and expenses of any additional counsel retained
by him, except those incurred after notifying the Company of such claim and
prior to being advised by the Company of its intention to assume such
<PAGE> 16
investigation or defense. If the Company does not assume the investigation of
any such claim or the defense of any such suit, or if the Company shall agree
in writing to pay such fees and expenses, or if such Purchaser or person shall
reasonably conclude that there may be defenses available to it or them which
are different from or in addition to those available to the Company, the
Company will reimburse such Purchaser or person for the reasonable fees and
expenses of any counsel retained by him; provided, however, that in such event
the Company shall be entitled, at its own expense, to participate in the
investigation or defense.
The Company's indemnity agreement contained in this Section 9 and its
warranties and representations in this Agreement shall remain in full force
and effect regardless of any investigation made by or on behalf of any
Purchaser or controlling person, and shall survive any termination of this
Agreement or the issue and delivery of the New Securities.
The Company agrees promptly to notify the Purchasers of the commencement
of any litigation or proceedings against the Company or any of its officers or
directors in connection with the issue and sale of the New Securities, or such
Registration Statement or Prospectus.
10. Warranties of and Indemnity by Purchasers.
(a) Each Purchaser warrants and represents that the information
furnished in writing to the Company through you for use in the Registration
Statement or in the Prospectus does not contain an untrue statement of a
material fact and does not omit to state a material fact in connection with
such information required to be stated therein or necessary to make such
information when used in such Registration Statement not misleading, or
necessary to make such information when used in such Prospectus, in the light
of the circumstances under which it was used, not misleading. Each Purchaser,
in addition to any other information furnished to the Company through you for
use in the Registration Statement and Prospectus, hereby authorizes you to
furnish to the Company the information with regard to the terms of offering of
the New Securities by such Purchaser, for use in the Registration Statement.
(b) Each Purchaser severally agrees to indemnify, defend and hold
harmless the Company and its directors and officers and each person, if any,
who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any loss, expense, liability
or claim (including the reasonable cost of investigation) which, jointly or
severally, the Company or any such person may incur under the Act or
otherwise, insofar as such loss, expense, liability or claim arises out of or
is based upon any alleged untrue statement of a material fact contained in
information furnished in writing to the Company through you for use in the
Registration Statement (or in the Registration Statement as amended by any
post-effective amendment thereof), or in the prospectus (or in the Prospectus
as amended or supplemented), or arises out of or is based upon any alleged
omission from information furnished in writing to the Company on behalf of any
Purchaser through you to state a material fact in connection with such
information required to be stated therein or necessary to make such
<PAGE> 17
information when used in such Registration Statement not misleading, or
necessary to make such information when used in such Prospectus, in the light
of the circumstances under which it was used, not misleading. The agreement
of such Purchaser to indemnify or reimburse the Company or any such person
with respect to any such loss, expense, liability or claim is expressly
conditioned upon such Purchaser being notified of the action in connection
therewith brought against the Company or any such person, by letter or
telegram addressed to you, within ten days after the summons or other first
legal process which discloses the nature of the liability or claim shall have
been personally served upon the Company or any such person (or after the
Company or any such person shall have received notice of such service on any
agent designated by the Company or any such person), but failure so to notify
such Purchaser shall not relieve such Purchaser from any liability which it
may have to the Company or any such person otherwise than on account of the
indemnity agreement contained in this Section 10(b). Such Purchaser shall be
entitled to assume the investigation of any liability or claim and the defense
of any suit brought to enforce any such liability or claim, if such liability
or claim is based solely upon such alleged misstatement or omission on the
part of such Purchaser, and the Company or any person against whom such action
is brought shall be entitled to participate in such investigation and defense.
If such Purchaser shall be entitled to assume and does assume the
investigation and defense, such investigation and defense shall be conducted
by counsel of good standing chosen by such Purchaser and satisfactory to the
Company or such person, and in such case the Company or such person shall bear
the expense of its investigation and the fees and expenses of any additional
counsel retained by it except those incurred after notifying such Purchaser of
such claim and prior to being advised by such Purchaser of its intention to
assume such investigation or defense. If such Purchaser shall be entitled to
assume but does not assume the investigation of any such claim or the defense
of any such suit, or if such Purchaser shall agree in writing to pay such fees
and expenses, or if the Company or such person shall reasonably conclude that
there may be defenses available to it or him which are different from or in
addition to those available to such Purchaser, such Purchaser will reimburse
the Company or such person for the reasonable fees and expenses of any counsel
retained by it; provided, however, that in such event, such Purchaser shall be
entitled, at its own expense, to participate in the investigation or defense.
The indemnity agreement on the part of such Purchaser contained in this
Section 10(b) and the warranties and representations of such Purchaser
contained in this Agreement shall remain in full force and effect regardless
of any investigation made by or on behalf of the Company or such person, and
shall survive any termination of this Agreement or the issue and delivery of
the New Securities.
Each Purchaser agrees promptly to notify the Company and each other
Purchaser of the commencement of any litigation or proceedings against such
Purchaser in connection with the issue and sale of the New Securities, or such
Registration Statement or Prospectus.
<PAGE> 18
11. Contribution by the Company and the Purchasers.
(a) If the indemnification provided for in Section 9 or Section 10
is unavailable to an indemnified party under such Sections in respect of any
losses, expenses, liabilities or claims referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, expenses, liabilities or claims (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Purchasers on the other hand from the offering of the New
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Purchasers on the
other in connection with the statements or omissions which resulted in such
losses, expenses, liabilities or claims, as well as any other relevant
equitable consideration. The relative benefits received by the Company on the
one hand and the Purchasers on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the
Company bear to the underwriting discounts and commissions received by the
Purchasers, in each case as set forth in the table on the cover page of the
Prospectus or Prospectus Supplement with respect to the New Securities if the
same be so set forth. The relative fault of the Company on the one hand and
of the Purchasers on the other shall be determined by reference to, among
other things, whether the untrue statement or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Purchasers through
you and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid
or payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any claim or action.
(b) The Company and Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined by pro
rata allocation (even if the Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 11, no Purchaser
shall be required to contribute any amount in excess of the amount by which
the total price at which the New Securities purchased by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Purchasers' obligations to contribute
pursuant to this Section 11 are several in proportion to their respective
underwriting commitments and not joint.
<PAGE> 19
(c) The contribution agreement contained in this Section 11 shall
remain in full force and effect regardless of any investigation made by or on
behalf of any Purchaser, or any person who controls any Purchaser within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or
on behalf of the Company, its directors and officers or any person who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, and shall survive any termination of this Agreement or
the issuance and delivery of the New Securities.
12. Notices. All notices hereunder shall, unless otherwise
expressly permitted, be in writing and be delivered at or mailed to the
following address, or be sent by telegram to the following address: if to the
Purchasers or you, to you at your address as it appears in the Purchase
Agreement, and if to the Company, to the Company at 625 Liberty Avenue, CNG
Tower, Pittsburgh, Pennsylvania 15222-3199.
13. Parties in Interest. The Agreement herein set forth has been
and is made solely for the benefit of the Purchasers and the Company, and the
directors, officers and controlling persons referred to in Sections 9, 10 and
11 hereof, and their respective successors, assigns, executors and
administrators and no other person shall acquire or have any right under or by
virtue of this Agreement.
The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not part of this Agreement. The
term "Purchasers", "persons", "firms" and "corporations" as used herein shall
include the singular of such terms as well as the plural. The term
"successor" to any Purchaser shall not include any subsequent holder of the
New Securities merely by reason of such holding.
14. Construction. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
15. Counterparts. This Agreement may be executed in one or more
counterparts and it is not necessary that the signatures of all parties appear
on the same counterpart, but such counterparts together shall constitute but
one and the same agreement.
<PAGE> 20
CONSOLIDATED NATURAL GAS COMPANY
PURCHASE AGREEMENT
DEBT SECURITIES
Dated: ____________________
Consolidated Natural Gas Company
625 Liberty Avenue
CNG Tower
Pittsburgh, Pennsylvania 15222-3199
Dear Sirs:
Referring to the debt securities of Consolidated Natural Gas Company
(the "Company") covered by Registration Statement No. 33- (the
"Registration Statement"), on the basis of the representations, warranties and
agreements contained in this Agreement, but subject to the terms and
conditions herein set forth, the purchasers named in Schedule A hereto
("Purchasers") agree to purchase, severally, and the Company agrees to sell to
the Purchasers, severally, $_____________ aggregate principal amount of ____%
_________ due _____ (the "New Securities") in the respective principal amounts
set forth opposite the names of the Purchasers on Schedule A hereto.
The price at which the New Securities shall be purchased from the
Company by the Purchasers shall be __% of the principal amount thereof [plus
accrued interest from __________]. (1) The new Securities will be offered as
set forth in the Prospectus Supplement relating to such New Securities.
The New Securities will have the following terms(2):
Interest Rate: _____% per annum accruing from ________
Interest Payment Dates: ____ and ____ commencing _______
Maturity: ____________
Redemption Provisions: (1)
Mandatory and Optional
Sinking Fund
Provisions:(1)
___________________
(1) To be included or deleted as appropriate.
(2) To be either described in the Prospectus and the Prospectus Supplement
for the New Securities or included in this Agreement.
<PAGE> 21
All of the provisions contained in the document entitled "Consolidated
Natural Gas Company Standard PurchaseAgreement Provisions - Debt Securities,"
a copy of which has been filed as Exhibit 1 to the Registration Statement and
has been previously furnished to us, are hereby incorporated by reference in
their entirety and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein.
The "time of purchase" (as defined in Section 3 of the aforementioned
Standard Purchase Agreement Provisions) shall be ____________________.
[The payment for the New Securities shall be made in
________________________ funds.] (3)
[The place at which the New Securities shall be purchased shall be
_______________.](3)
Notices to the [Purchasers] [Representatives] (3) shall be sent to the
following addresses:
[We represent that we are authorized to act for the several Purchasers
named in Schedule A hereto in connection with this financing and any action
under this Agreement by any of us will be binding upon all the Purchasers.](4)
___________________
(3) To be completed and included as appropriate.
(4) To be included if the Purchase Agreement is being executed by one or
more Purchasers acting as Representatives for purposes of this
Agreement.
<PAGE> 22
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement between the Company and the
several Purchasers in accordance with its terms.
Very truly yours,
By_______________________
By_______________________
[Acting on behalf of and as
Representative of the several
Purchasers named in Schedule
A hereto.] (5)
The foregoing Purchase Agreement is hereby
confirmed as of the date first above written.
CONSOLIDATED NATURAL GAS COMPANY
By______________________________
___________________
(5) To be completed and included as appropriate.
<PAGE> 23
SCHEDULE A
Principal
Name of Purchasers Amount of Securities
__________________ ____________________
<PAGE> 1
EXHIBIT F
February 21, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Consolidated Natural Gas Company
SEC File No. 70-8107
Dear Sirs:
As counsel for Consolidated Natural Company ("Consolidated") and at its
request, I submit the following opinion for filing as an exhibit to Amendment
No. 3 to Consolidated's Declaration on Form U-1 at File No. 70-8107
("Declaration'), relating to the issue and sale by Consolidated of up to
$500,000,000 principal amount of its Debt Securities ("Debt Securities").
By order dated April 21, 1993 ("First Order"), Release No. 35-25800, File
No. 70-8167, the Securities and Exchange Commission ("Commission") authorized
Consolidated to issue and sell on or before June 30, 1995 up to $400,000,000
principal amount of debentures maturing in not more than thirty years. On
August 24, 1993, Consolidated issued and sold $150,000,000 principal amount of
5-3/4% Debentures Due August 1, 2003 pursuant to the First Order. On December
8, 1993, Consolidated issued and sold $150,000,000 principal amount of 6-5/8%
Debentures Due December 1, 2013 under the First Order. Both series of these
debenture were issued pursuant to an indenture dated as of May 1, 1971 ("1971
Indenture") between Consolidated and Chemical Bank. The expiration date of
the First Order was extended from June 30, 1995 to June 30, 1996 by Commission
supplemental order dated November 21, 1994 ("First Supplemental Order"),
Release No. 35-26165.
By order dated April 14, 1994 (Second Order"), Release No 35-26026, File
No. 70-8365, the Commission authorized Consolidated to issue and sell on or
before June 30, 1995 up to an additional $400,000,000 principal amount of
debentures maturing in not more than thirty years. No debentures have been
issued under the Second Order. The $100,000,000 principal amount of
securities remaining available for issue under the First Order and the
$400,000,000 principal amount of securities available for issue under the
Second Order are the "Debt Securities."
By the First Supplemental Order in File No. 70-8167 and by Commission
supplemental order dated November 21, 1994 ("Second Supplemental Order"),
Release No. 35-26166, in File No. 70-8365, Consolidated was authorized to
amend the 1971 Indenture to reserve the right, without consent of the holders
of future debentures, to change covenants requiring certain income coverage
and debt to equity ratio tests before additional funded debt (as defined in
the 1971 Indenture) could be incurred. Any need to use such covenant
<PAGE> 2
changing authorizations would be obviated if Consolidated were authorized to
use the New Indenture. The First Order, First Supplemental Order, Second
Order, and Second Supplemental Order are collectively referred to herein as
the "Orders."
The foregoing is referred to as the "proposed transaction" and is more
fully described in the Declaration, as amended.
With respect to the above, I have examined:
(a) the Declaration and the Form U-1 proceedings under File No. 70-8167
and 70-8365, as amended, and the exhibits thereto;
(b) the Orders;
(c) the Certificate of Incorporation and the By-Laws of Consolidated;
(d) Registration Statement No. 33-49469 on Form S-3, filed on April 6,
1993, which registers the offering and sale of $100,000,000 principal
amount of the Debt Securities under the Securities Act of 1933 ("1933
Act") and which became effective on April 13, 1993;
(e) Registration Statement No. 33-52585 on Form S-3, filed on March 9,
1994, which registers the offering and sale of $400,000,000 principal
amount of the Debt Securities under the 1933 Act and which became
effective on March 17, 1994;
(f) the corporate records and proceedings relating to the issue and sale
of the Debt Securities; and
(g) such other documents and matters of law as I have considered
necessary to enable me to render this opinion.
Based upon the foregoing and relaying thereupon, I am of the opinion that
when the Commission shall have permitted the Declaration to become effective,
any additional requisite filings have become effective under the 1933 Act, and
the proposed transaction shall have been consummated in accordance with the
Declaration and the aforesaid registration statements, then:
(i) All state laws applicable to the proposed transaction will have been
complied with;
(ii) Consolidated, the issuer of up to $500,000,000 principal amount of
Debt Securities, is validly organized and duly existing;
(iii) The Debt Securities will be valid and binding obligations of
Consolidated, in accordance with their terms; and
(iv) The consummation of the proposed transaction will not violate the
legal rights of the holders of any securities issued by Consolidated or
any associate company thereof.
<PAGE> 3
I hereby consent to the use of this opinion as an exhibit to the
Declaration, as amended.
Very truly yours,
N. F. Chandler
Attorney
