INDIANA GAS CO INC
8-K, 1997-12-05
NATURAL GAS DISTRIBUTION
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                       SECURITIES AND EXCHANGE COMMISSION

                               Washington, D.C.  20549


                 ---------------------------------------------------

                                    FORM 8-K

                 ---------------------------------------------------


                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934



          Date of Report (Date of earliest event reported): November 19, 1997



                              INDIANA GAS COMPANY, INC.
                (Exact name of registrant as specified in its charter)



                                       INDIANA
                    (State or other jurisdiction of incorporation)


                    1-6494                                  35-0793669
               (Commission File Number) (IRS Employer Identification No.)


                           1630 North Meridian Street
                           Indianapolis, Indiana 46202
                 (Address of principal executive offices) (Zip Code)

                 Registrant's telephone number, including area code:
                                     (317) 926-3351


                                                        -1-

<PAGE>










               Item 7.   Financial Statements and Exhibits.


               The following exhibits are filed as part of this report:


          Exhibit 1   Distribution Agreement dated Novemeber 19, 1997,
                      among Indiana Gas Company, Inc. and Merrill Lynch & Co.,
                      Merrill Lynch, Pierce, Fenner & Smith Incorporated



                                                        -2-

<PAGE>










                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.


                                        INDIANA GAS COMPANY, INC.



                                        By:  /s/ Ronald E. Christian
                                             -----------------------------------
                                             Ronald E. Christian, Esquire,
                                              Secretary and General Counsel


          Date: December 5, 1997


                                                        -3-



                                                                     Exhibit (1)


                            INDIANA GAS COMPANY, INC.

                                   $95,000,000

                           Medium-Term Notes, Series F

                             Distribution Agreement


                                                               November 19, 1997
                                                              New York, New York




Merrill Lynch & Co.
Merrill Lynch, Pierce,
  Fenner & Smith Incorporated
World Financial Center - North Tower
250 Vesey Street
New York, New York  10281

Ladies and Gentlemen:

                  Indiana  Gas  Company,   Inc.,  an  Indiana  corporation  (the
"Company"),  proposes to issue and sell from time to time its Medium-Term Notes,
Series F (the  "Securities") in an aggregate amount up to $95,000,000 and agrees
with you (the "Agent") as set forth in this Agreement.

                  Subject to the terms and  conditions  stated herein and to the
reservation by the Company of the right to sell  Securities  directly on its own
behalf, the Company hereby (i) appoints the Agent as an agent of the Company for
the purpose of soliciting and receiving  offers to purchase  Securities from the
Company  pursuant  to  Section  2(a)  hereof  and (ii)  agrees  that,  except as
otherwise  contemplated  herein,  whenever  it  determines  to  sell  Securities
directly  to the Agent as  principal,  it will enter  into a separate  agreement
(each,  a "Terms  Agreement"),  substantially  in the  form of  Annex I  hereto,
relating to such sale in accordance with Section 2(b) hereof.  A Terms Agreement
may be an oral agreement confirmed in writing. This Distribution Agreement shall
not be construed to create  either an  obligation  on the part of the Company to
sell any  Securities  or an  obligation  of the Agent to purchase  Securities as
principal.




<PAGE>



                  The Company will notify the Agent of its  appointment  of such
other agents,  dealers or underwriters in accordance with the provisions of this
paragraph and of the principal  amount of Securities  sold to such other agents,
dealers or  underwriters.  Such other agents,  dealers or  underwriters  will be
required (i) if in connection with a particular  issuance of Securities only and
not in connection with being named the Agent, to acknowledge delivery to it of a
letter from the Company  substantially in the form of Exhibit A hereto, and (ii)
if such other agent,  dealer or underwriter is to be named the Agent, to deliver
to the  Company a letter  substantially  in the form of Exhibit B hereto,  to be
signed and returned by the Company.

                  The Securities will be issued under an indenture,  dated as of
February 1, 1991 (the "Indenture"), between the Company and First Trust National
Association  (successor  to Bank of America  Illinois  which is the successor to
Continental  Bank,  National  Association),   as  Trustee  (the  "Trustee"),  as
heretofore  supplemented.  The Securities  shall have the  maturities,  interest
rates  and  redemption  provisions,  if any,  and  other  terms set forth in the
Prospectus  referred to below as it may be amended or supplemented  from time to
time.  The  Securities  will  be  issued,  and  the  terms  and  rights  thereof
established, from time to time by the Company in accordance with the Indenture.

                  1.       The Company represents and warrants to, and agrees
with, the Agent that:

                       (a)  A registration statement on Form S-3 (File No.
333-39085  in  respect  of  $95,000,000   aggregate  principal  amount  of  debt
securities,  including the  Securities,  has been filed with the  Securities and
Exchange  Commission (the "Commission")  pursuant to the Securities Act of 1933,
as amended  (the  "Act");  such  registration  statement,  as  amended,  and any
post-effective amendment thereto, each in the form heretofore delivered or to be
delivered to such Agent, excluding exhibits to such registration statement,  but
including all documents  incorporated  by reference in the  prospectus  included
therein,  have been declared  effective by the Commission in such form; no other
document with respect to such registration statement or document incorporated by
reference  therein has heretofore  been filed or transmitted for filing with the
Commission  (other than the  prospectuses  filed  pursuant to Rule 424(b) of the
rules  and  regulations  of the  Commission  under  the  Act,  each in the  form
heretofore   delivered  to  the  Agent);   and  no  stop  order  suspending  the
effectiveness of such  registration  statement has been issued and no proceeding
for that  purpose  has been  initiated  or  threatened  by the  Commission  (any
preliminary prospectus included in such registration statement or filed with the
Commission  pursuant  to  Rule  424(a)  of  the  rules  and  regulations  of the
Commission under the Act, is hereinafter

                                                      -2-
                                                                           


<PAGE>



called a  "Preliminary  Prospectus";  the  various  parts  of such  registration
statement,  including  all exhibits  thereto and the documents  incorporated  by
reference in the prospectus contained in the registration  statement at the time
such part of the registration statement became effective but excluding Form T-1,
each as  amended  at the time such  part of the  registration  statement  became
effective, is hereinafter collectively called the "Registration Statement";  the
prospectus (including, if applicable, any prospectus supplement) relating to the
Securities, in the form in which it has most recently been filed, or transmitted
for filing,  with the Commission on or prior to the date of this  Agreement,  is
hereinafter  called the  "Prospectus";  any reference  herein to any Preliminary
Prospectus  or the  Prospectus  shall be  deemed  to refer  to and  include  the
documents  incorporated  by reference  therein  pursuant to the applicable  form
under the Act, as of the date of such Preliminary  Prospectus or Prospectus,  as
the case may be; any reference to any amendment or supplement to any Preliminary
Prospectus or the  Prospectus,  including any supplement to the Prospectus  that
sets forth only the terms of a particular  issue of the  Securities  (a "Pricing
Supplement"),  shall be deemed to refer to and include any documents filed after
the date of such Preliminary Prospectus or Prospectus, as the case may be, under
the  Securities  Exchange Act of 1934,  as amended  (the  "Exchange  Act"),  and
incorporated  therein  by  reference;  any  reference  to any  amendment  to the
Registration Statement shall be deemed to refer to and include any annual report
of the Company  filed  pursuant to Section  13(a) or 15(d) of the  Exchange  Act
after the effective date of the  Registration  Statement that is incorporated by
reference in the Registration Statement;  and any reference to the Prospectus as
amended or  supplemented  shall be deemed to refer to and include the Prospectus
as amended or supplemented (including by the applicable Pricing Supplement filed
in  accordance  with Section 4(a) hereof) in relation to  Securities  to be sold
pursuant to this Agreement, in the form filed or transmitted for filing with the
Commission  pursuant to Rule 424(b) under the Act and in accordance with Section
4(a) hereof, including any documents incorporated by reference therein as of the
date of such filing);

                  (b) The documents incorporated by reference in the Prospectus,
when they became  effective or were filed with the  Commission,  as the case may
be,  conformed in all material  respects to the  requirements  of the Act or the
Exchange Act, as  applicable,  and the rules and  regulations  of the Commission
thereunder,  and none of such  documents  contained  an  untrue  statement  of a
material fact or omitted to state a material fact required to be stated  therein
or  necessary to make the  statements  therein not  misleading;  and any further
documents  so filed and  incorporated  by reference  in the  Prospectus,  or any
further amendment or supplement thereto, when such documents become

                                                      -3-
                                                                           


<PAGE>



effective or are filed with the Commission,  as the case may be, will conform in
all material  respects to the  requirements  of the Act or the Exchange  Act, as
applicable,  and the rules and regulations of the Commission thereunder and will
not contain an untrue  statement of a material  fact or omit to state a material
fact required to be stated therein or necessary to make the  statements  therein
not misleading;

                  (c)  Neither  the  Company  nor  any of its  subsidiaries  has
sustained since the date of the latest audited financial  statements included or
incorporated  by reference in the Prospectus  any material loss or  interference
with its business from fire, explosion,  flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree,  otherwise than as set forth or contemplated in the Prospectus;
and,  since  the  respective  dates  as of  which  information  is  given in the
Registration Statement and the Prospectus,  there has not been any change in the
capital  stock or  long-term  debt of the  Company  (other  than any  changes in
long-term  debt  resulting  from the  issuance  of  Securities  pursuant to this
Agreement) or any of its  subsidiaries or any material  adverse  change,  or any
development involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, shareholders' equity or results
of operations of the Company and its  subsidiaries,  otherwise than as set forth
or contemplated in the Prospectus;

                  (d) The  Company  has been duly  incorporated  and is  validly
existing  as  a  corporation   under  the  laws  of  the   jurisdiction  of  its
incorporation,  with  power  and  authority  (corporate  and  other)  to own its
properties and conduct its business as described in the Prospectus;

                  (e) The Company has an authorized  capitalization as set forth
in the Prospectus,  and all of the issued shares of capital stock of the Company
have  been  duly and  validly  authorized  and  issued  and are  fully  paid and
non-assessable;

                  (f) The Securities have been duly authorized, and, when issued
and delivered pursuant to this Agreement and any Terms Agreement, will have been
duly executed, authenticated, issued and delivered and will constitute valid and
legally binding  obligations of the Company entitled to the benefits provided by
the Indenture,  which will be  substantially  in the form filed as an exhibit to
the  Registration  Statement;  the Indenture has been duly  authorized  and duly
qualified  under the Trust  Indenture  Act and  constitutes  a valid and legally
binding  instrument,  enforceable in accordance with its terms,  subject,  as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting

                                                      -4-
                                                                           


<PAGE>



creditors' rights and to general equity  principles;  and the Indenture conforms
and the Securities of any particular  issuance of Securities will conform to the
descriptions  thereof  contained in the Prospectus as amended or supplemented to
relate to such issuance of Securities;

                  (g) The issue and sale of the  Securities,  the  compliance by
the Company with all of the provisions of the  Securities,  the Indenture,  this
Agreement and any Terms  Agreement,  and the  consummation  of the  transactions
herein and therein  contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions  of, or constitute a default  under,
any indenture,  mortgage,  deed of trust,  loan agreement or other  agreement or
instrument  to which the  Company is a party or by which the Company is bound or
to which any of the property or assets of the Company is subject,  nor will such
action  result  in  any   violation  of  the   provisions  of  the  Articles  of
Incorporation,  as amended,  or the By-laws of the Company or any statute or any
order,  rule or  regulation of any court or  governmental  agency or body having
jurisdiction  over  the  Company  or  any  of its  properties;  and no  consent,
approval,  authorization,  order,  registration or  qualification of or with any
court or governmental  agency or body is required for the solicitation of offers
to purchase Securities, the issue and sale of the Securities or the consummation
by the Company of the other  transactions  contemplated by this  Agreement,  any
Terms  Agreement or the  Indenture,  except such as have been, or will have been
prior to the Commencement Date (as defined in Section 3 hereof),  obtained under
the Act or the Trust Indenture Act and such consents, approvals, authorizations,
registrations  or  qualifications  as may be required under state  securities or
Blue Sky laws in  connection  with the  solicitation  by such Agent of offers to
purchase  Securities  from the Company and with  purchases of Securities by such
Agent as principal,  as the case may be, in each case in the manner contemplated
hereby;

                  (h)  Neither the  Company  nor any of its  subsidiaries  is in
violation  of its  Articles  of  Incorporation  or  By-laws or in default in the
performance  or  observance  of any material  obligation,  covenant or condition
contained in any indenture,  mortgage,  deed of trust, loan agreement,  lease or
other  agreement or  instrument  to which it is a party or by which it or any of
its properties may be bound;

                  (i) The  statements  set  forth in the  Prospectus  under  the
captions  "Description of the Debt Securities" and "Supplemental  Description of
the Notes",  insofar as they purport to constitute a summary of the terms of the
Securities, and under the captions "Plan of Distribution" and "Supplemental Plan
of Distribution", insofar as they purport to describe the provisions

                                                      -5-
                                                                           


<PAGE>



of the laws and documents referred to therein, are accurate, complete and fair;

                  (j) Other  than as set forth in the  Prospectus,  there are no
legal or  governmental  proceedings  pending to which the  Company or any of its
subsidiaries  is a party or to which any  property  of the Company or any of its
subsidiaries is subject, which, if determined adversely to the Company or any of
its subsidiaries, would individually or in the aggregate have a material adverse
effect on the current or future consolidated  financial position,  shareholders'
equity or results of operations of the Company and its subsidiaries, and, to the
best  of  the  Company's  knowledge,  no  such  proceedings  are  threatened  or
contemplated by governmental authorities or threatened by others;

                  (k) The  Company  is not,  and  after  giving  effect  to each
offering and sale of the Securities  will not be, an "investment  company" or an
entity "controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");

                  (l)  Neither  the  Company  nor  any  of its  affiliates  does
business with the government of Cuba or with any person or affiliate  located in
Cuba within the meaning of Section 517.075, Florida Statutes;

                  (m)  Immediately  after any sale of  Securities by the Company
hereunder or under any Terms Agreement, the aggregate amount of Securities which
shall have been  issued  and sold by the  Company  hereunder  or under any Terms
Agreement and of any debt securities of the Company (other than such Securities)
that shall have been issued and sold pursuant to the Registration Statement will
not exceed  the  amount of debt  securities  registered  under the  Registration
Statement;

                  (n) Arthur Andersen LLP, who have certified  certain financial
statements  of  the  Company  and  its  subsidiaries,   are  independent  public
accountants  as  required  by the Act  and  the  rules  and  regulations  of the
Commission thereunder; and

                  (o) The order of the  Indiana  Utility  Regulatory  Commission
(the  "Indiana  Commission"),  dated August 17, 1994,  authorizing  the Company,
among other things,  to issue up to $125,000,000 of debt  securities,  including
the  Securities  and the order of the Indiana  Commission  dated March 13, 1997,
extending  to and  including  September  30, 1998 the  authority  granted in the
Indiana  Commission  order dated August 17, 1994 with  respect to the  issuance,
sale and  delivery  of up to  $125,000,000  aggregate  principal  amount of debt
securities, including the Securities

                                                      -6-
                                                                           


<PAGE>



(the "Indiana Commission Orders"),  are in full force and effect and are not the
subject of any appeal or other proceeding.

                  2. (a) On the  basis  of the  representations  and  warranties
herein contained,  and subject to the terms and conditions herein set forth, the
Agent hereby agrees, as agent of the Company,  to use its reasonable  efforts to
solicit and receive offers to purchase the Securities  from the Company upon the
terms and conditions set forth in the Prospectus as amended or supplemented from
time to time. So long as this  Agreement  shall remain in effect with respect to
the Agent, the Company shall not, without the consent of such Agent,  solicit or
accept offers to purchase,  or sell, any debt  securities with a maturity at the
time of  original  issuance  of 9 months or more from  date of  issuance  except
pursuant to this Agreement (including,  without limitation,  the third paragraph
hereof),  any Terms  Agreement,  or except  pursuant to a private  placement not
constituting a public offering under the Act or except in connection with a firm
commitment  underwriting  pursuant to an  underwriting  agreement  that does not
provide for a continuous offering of medium-term debt securities.  However,  the
Company  reserves  the  right to sell,  and may  solicit  and  accept  offers to
purchase,  Securities  directly on its own behalf in  transactions  with persons
other than broker-dealers,  and, in the case of any such sale not resulting from
a solicitation  made by the Agent, no commission will be payable with respect to
such sale.  These  provisions shall not limit Section 4(f) hereof or any similar
provision included in any Terms Agreement.

                  Procedural  details  relating  to the  issue and  delivery  of
Securities, the solicitation of offers to purchase Securities and the payment in
each  case  therefor  shall  be as set  forth  in the  Administrative  Procedure
attached  hereto as Annex II as it may be  amended  from time to time by written
agreement  between the Agent and the Company (the  "Administrative  Procedure").
The provisions of the  Administrative  Procedure shall apply to all transactions
contemplated hereunder other than those made pursuant to a Terms Agreement.  The
Agent and the Company  agree to perform the  respective  duties and  obligations
specifically  provided  to be  performed  by each of them in the  Administrative
Procedure.  The Company will furnish to the Trustee a copy of the Administrative
Procedure as from time to time in effect.

                  The Company  reserves the right,  in its sole  discretion,  to
instruct  the  Agent  to  suspend  at any  time,  for  any  period  of  time  or
permanently,  the solicitation of offers to purchase the Securities.  As soon as
practicable,  but in any event not later than one business day in New York City,
after receipt of notice from the Company, the Agent will suspend solicitation of
offers to purchase Securities from the Company until such time as the

                                                      -7-
                                                                           


<PAGE>



Company has advised the Agent that such solicitation may be resumed. During such
period,  the Company  shall not be required  to comply  with the  provisions  of
Sections  4(h),  4(i),  4(j)  and  4(k).  Upon  advising  the  Agent  that  such
solicitation may be resumed,  however, the Company shall simultaneously  provide
the documents  required to be delivered by Sections 4(h),  4(i),  4(j) and 4(k),
and the Agent  shall  have no  obligation  to  solicit  offers to  purchase  the
Securities  until such documents  have been received by the Agent.  In addition,
any failure by the Company to comply with its obligations  hereunder,  including
without limitation its obligations to deliver the documents required by Sections
4(h), 4(i), 4(j) and 4(k), shall automatically terminate the Agent's obligations
hereunder,  including  without  limitation its  obligations to solicit offers to
purchase the Securities  hereunder as agent or to purchase Securities  hereunder
as principal.

                  Unless otherwise agreed upon in a Terms Agreement, the Company
agrees to pay the Agent a commission, at the time of settlement of any sale of a
Security by the Company as a result of a solicitation  made by such Agent, in an
amount equal to the following  applicable  percentage of the principal amount of
such Security sold:

                                                    Commission (percentage of
                                                    aggregate principal amount
        Range of Maturities                          of Securities sold)

From 9 months to less than 1 year                               .125%

From 1 year to less than 18 months                              .150%

From 18 months to less than 2 years                             .200%

From 2 years to less than 3 years                               .250%

From 3 years to less than 4 years                               .350%

From 4 years to less than 5 years                               .450%

From 5 years to less than 6 years                               .500%

From 6 years to less than 7 years                               .550%

From 7 years to less than 10 years                              .600%

From 10 years to less than 15 years                             .625%

From 15 years to less than 20 years                             .700%

From 20 years to 30 years                                       .750%

From more than 30 years                      as agreed to by the Company
                                             and the applicable agent at
                                             the time of sale



                                                      -8-
                                                                           


<PAGE>



                  (b) Each sale of Securities to the Agent as principal shall be
made in accordance  with the terms of this Agreement and (unless the Company and
such Agent shall otherwise agree) a Terms Agreement,  which will provide for the
sale of such  Securities  to, and the purchase  thereof by, such Agent.  A Terms
Agreement may also specify certain provisions relating to the reoffering of such
Securities by such Agent. The commitment of the Agent to purchase  Securities as
principal, whether pursuant to any Terms Agreement or otherwise, shall be deemed
to have been  made on the basis of the  representations  and  warranties  of the
Company herein contained and shall be subject to the terms and conditions herein
set forth. Each Terms Agreement shall specify the principal amount of Securities
to be  purchased  by the  agent  pursuant  thereto,  the price to be paid to the
Company for such  Securities,  the  underwriting  discounts or commissions to be
paid to the agents,  if different  from those  specified in the table in Section
2(a) of this  Agreement,  any provisions  relating to rights of, and default by,
underwriters acting together with such Agent in the reoffering of the Securities
and the time and date and place of delivery of and payment for such  Securities.
Such Terms  Agreement  shall also  specify  any  requirements  for  opinions  of
counsel,  accountants' letters and officers'  certificates pursuant to Section 4
hereof. The Agent proposes to offer Securities  purchased by it as principal for
sale at prevailing  market prices or prices related thereto at the time of sale,
which  may be  equal  to,  greater  than or less  than the  price at which  such
Securities are purchased by such Agent from the Company.

                  For each sale of Securities to the Agent as principal  that is
not made pursuant to a Terms Agreement,  the procedural  details relating to the
issue and delivery of such Securities and payment therefor shall be as set forth
in the Administrative  Procedure.  For each such sale of Securities to the Agent
as principal that is not made pursuant to a Terms Agreement,  the Company agrees
to pay such Agent a commission (or grant an equivalent  discount) as provided in
Section 2(a) hereof and in accordance with the schedule set forth therein.

                  Each time and date of delivery  of and payment for  Securities
to be  purchased  by the  Agent  as  principal,  whether  set  forth  in a Terms
Agreement or in accordance  with the  Administrative  Procedure,  is referred to
herein as a "Time of Delivery".

                  (c) The Agent agrees, with respect to any Security denominated
in a currency other than U.S. dollars, as agent, directly or indirectly,  not to
solicit  offers to  purchase,  and as  principal  under any Terms  Agreement  or
otherwise,  directly or indirectly, not to offer, sell or deliver, such Security
in, or

                                                      -9-
                                                                           


<PAGE>



to  residents  of, the country  issuing  such  currency,  except as permitted by
applicable law.

                  3. The documents  required to be delivered pursuant to Section
6 hereof on the  Commencement  Date (as defined below) shall be delivered to the
Agent at the offices of Reid & Priest LLP, 40 West 57th  Street,  New York,  New
York, at 11:00 a.m.,  New York City time, on the date of this  Agreement,  which
date and time of such  delivery may be postponed by agreement  between the Agent
and the Company but in no event shall be later than the day prior to the date on
which solicitation of offers to purchase Securities is commenced or on which any
Terms  Agreement is executed (such time and date being referred to herein as the
"Commencement Date").

                  4.  The Company covenants and agrees with the Agent:

                  (a) (i) To make no amendment or supplement to the Registration
Statement or the  Prospectus (A) prior to the  Commencement  Date which shall be
disapproved by the Agent promptly after  reasonable  notice thereof or (B) after
the date of any Terms  Agreement  or other  agreement  by the Agent to  purchase
Securities as principal and prior to the related Time of Delivery which shall be
disapproved  by the Agent  party to such Terms  Agreement  or so  purchasing  as
principal  promptly  after  reasonable  notice  thereof;  (ii) to prepare,  with
respect to any  Securities to be sold through or to such Agent  pursuant to this
Agreement,  a Pricing  Supplement  with  respect  to such  Securities  in a form
previously  approved by such Agent and to file such Pricing Supplement  pursuant
to Rule  424(b)(3)  under the Act not later  than the close of  business  of the
Commission  on the  fifth  business  day after  the date on which  such  Pricing
Supplement  is first  used;  (iii) to make no  amendment  or  supplement  to the
Registration  Statement  or  Prospectus,   other  than  any  Pricing  Supplement
(including,  without  limitation,  any Pricing Supplement relating to Securities
sold to or through an underwriter  or agent  pursuant to the third  paragraph of
this  Agreement),  at any time prior to having  afforded  the Agent a reasonable
opportunity to review and comment thereon; (iv) to file promptly all reports and
any  definitive  proxy or  information  statements  required  to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange  Act  for so  long as the  delivery  of a  prospectus  is  required  in
connection  with the  offering or sale of the  Securities,  and during such same
period to advise such Agent, promptly after the Company receives notice thereof,
of the time when any amendment to the  Registration  Statement has been filed or
has  become  effective  or any  supplement  to  the  Prospectus  or any  amended
Prospectus  (other than any Pricing  Supplement  that relates to Securities  not
purchased through or by such Agent) has been filed with the

                                                      -10-
                                                                           


<PAGE>



Commission,  of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any prospectus  relating to the  Securities,
of the suspension of the qualification of the Securities for offering or sale in
any  jurisdiction,  of the  initiation or  threatening of any proceeding for any
such  purpose,  or of any  request  by  the  Commission  for  the  amendment  or
supplement  of the  Registration  Statement  or  Prospectus  or  for  additional
information;  and (v) in the event of the  issuance of any such stop order or of
any such  order  preventing  or  suspending  the use of any such  prospectus  or
suspending  any such  qualification,  to use promptly its best efforts to obtain
its withdrawal;

                  (b) Promptly to take such action as such Agent may  reasonably
request to qualify the  Securities  for offering  and sale under the  securities
laws of such  jurisdictions  as such Agent may  request  and to comply with such
laws so as to permit the  continuance of sales and dealings  therein for as long
as may be  necessary  to complete the  distribution  or sale of the  Securities;
provided,  however,  that in  connection  therewith  the  Company  shall  not be
required  to qualify as a foreign  corporation  or to file a general  consent to
service of process in any jurisdiction;

                  (c) To  furnish  such Agent  with  copies of the  Registration
Statement and each amendment thereto, with copies of the Prospectus as each time
amended or supplemented,  other than any Pricing  Supplement (except as provided
in the  Administrative  Procedure),  in the form in  which it is filed  with the
Commission  pursuant to Rule 424 under the Act, and with copies of the documents
incorporated  by reference  therein,  all in such  quantities  as such Agent may
reasonably  request from time to time;  and, if the delivery of a prospectus  is
required at any time in connection  with the offering or sale of the  Securities
(including Securities purchased from the Company by such Agent as principal) and
if at such  time  any  event  shall  have  occurred  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 in order to make
the statements  therein, in the light of the circumstances under which they were
made when such  Prospectus is delivered,  not  misleading,  or, if for any other
reason it shall be necessary  during such same period to amend or supplement the
Prospectus  or to file  under the  Exchange  Act any  document  incorporated  by
reference in the Prospectus in order to comply with the Act, the Exchange Act or
the Trust  Indenture  Act, to notify such Agent and request  such Agent,  in its
capacity as agent of the Company, to suspend  solicitation of offers to purchase
Securities  from the Company (and,  if so notified,  such Agent shall cease such
solicitations as soon as practicable, but in any event not later than one

                                                      -11-
                                                                           


<PAGE>



business day later);  and if the Company shall decide to amend or supplement the
Registration Statement or the Prospectus as then amended or supplemented,  to so
advise such Agent promptly by telephone  (with  confirmation  in writing) and to
prepare and cause to be filed  promptly  with the  Commission  an  amendment  or
supplement to the  Registration  Statement or the  Prospectus as then amended or
supplemented  that will  correct  such  statement  or  omission  or effect  such
compliance;  provided,  however,  that if during  such same  period  such  Agent
continues  to own  Securities  purchased  from  the  Company  by such  Agent  as
principal or such Agent is otherwise required to deliver a prospectus in respect
of transactions in the Securities,  the Company shall promptly  prepare and file
with the Commission such an amendment or supplement;

                  (d) To make generally available to its securityholders as soon
as  practicable,  but in any event  not later  than  eighteen  months  after the
effective  date of the  Registration  Statement (as defined in Rule 158(c) under
the Act), an earnings statement of the Company and its subsidiaries  (which need
not be  audited)  complying  with  Section  11(a) of the Act and the  rules  and
regulations  of the  Commission  thereunder  (including,  at the  option  of the
Company, Rule 158);

                  (e) So long as any Securities are  outstanding,  to furnish to
such Agent copies of all reports or other  communications  (financial  or other)
furnished  to  shareholders,  and  deliver to such Agent (i) as soon as they are
available,  copies of any reports and financial statements furnished to or filed
with the  Commission or any national  securities  exchange on which any class of
securities of the Company is listed; (ii) such additional information concerning
the business and financial  condition of the Company as such Agent may from time
to time reasonably  request (such  financial  statements to be on a consolidated
basis to the  extent  the  accounts  of the  Company  and its  subsidiaries  are
consolidated  in  reports  furnished  to its  shareholders  generally  or to the
Commission);  and (iii) information relating to any downgrading in the rating of
the Securities or any other debt securities of the Company,  or any published or
publicly  disseminated  proposal to  consider a  downgrade  in the rating of the
Securities  or any other debt  securities  of the  Company,  by any  "nationally
recognized  statistical  rating  organization"  (as defined for such purposes of
Rule 436(g) under the Act),  as soon as an  executive  officer of the Company is
informed of any such downgrading or publicly  disseminated  proposal to consider
such downgrading;

                  (f) That, from the date of any Terms Agreement with such Agent
or other  agreement  by such  Agent to  purchase  Securities  as  principal  and
continuing to and including the later

                                                      -12-
                                                                           


<PAGE>



of (i) the termination of the trading  restrictions for the Securities purchased
thereunder,  as notified to the Company by such Agent and (ii) the related  Time
of Delivery,  not to offer,  sell,  contract to sell or otherwise dispose of any
debt  securities  of the Company which both mature more than 9 months after such
Time of Delivery and are  substantially  similar to the Securities,  without the
prior written consent of such Agent;

                  (g)  That  each  acceptance  by the  Company  of an  offer  to
purchase Securities hereunder (including any purchase by such Agent as principal
not  pursuant to a Terms  Agreement),  and each  execution  and  delivery by the
Company  of a  Terms  Agreement  with  such  Agent,  shall  be  deemed  to be an
affirmation to such Agent that the representations and warranties of the Company
contained in or made  pursuant to this  Agreement are true and correct as of the
date of such  acceptance  or of such  Terms  Agreement,  as the case may be,  as
though made at and as of such date, and an undertaking that such representations
and  warranties  will be true  and  correct  as of the  settlement  date for the
Securities relating to such acceptance or as of the Time of Delivery relating to
such  sale,  as the case may be, as though  made at and as of such date  (except
that  such  representations  and  warranties  shall be  deemed  to relate to the
Registration  Statement and the Prospectus as amended and supplemented  relating
to such Securities);

                  (h) That  reasonably in advance of each time the  Registration
Statement or the Prospectus  shall be amended or  supplemented  (other than by a
Pricing  Supplement),  each time a document  filed under the Act or the Exchange
Act is incorporated by reference into the Prospectus,  and each time the Company
sells  Securities to such Agent as principal  pursuant to a Terms  Agreement and
such Terms Agreement  specifies the delivery of an opinion or opinions by Reid &
Priest LLP,  counsel to the Agent,  as a condition to the purchase of Securities
pursuant to such Terms Agreement, the Company shall furnish to such counsel such
papers and information as they may reasonably  request to enable them to furnish
to such Agent the opinion or opinions referred to in Section 6(b) hereof;

                  (i)  That  each  time  the   Registration   Statement  or  the
Prospectus   shall  be  amended  or  supplemented   (other  than  by  a  Pricing
Supplement),  each time a document  filed under the Act or the  Exchange  Act is
incorporated  by reference  into the  Prospectus and each time the Company sells
Securities  to such Agent as principal  pursuant to a Terms  Agreement  and such
Terms Agreement  specifies the delivery of an opinion under this Section 4(i) as
a condition to the purchase of Securities pursuant to such Terms Agreement,  the
Company shall furnish or cause to be furnished forthwith to such Agent a written
opinion of Barnes & Thornburg, counsel for the Company, or other counsel for the
Company

                                                      -13-
                                                                           


<PAGE>



satisfactory  to such  Agent,  dated  the  date of such  amendment,  supplement,
incorporation or Time of Delivery  relating to such sale, as the case may be, in
form  satisfactory  to such Agent, to the effect that such Agent may rely on the
opinion of such  counsel  referred  to in  Section  6(c)  hereof  which was last
furnished  to such Agent to the same  extent as though it were dated the date of
such  letter  authorizing  reliance  (except  that the  statements  in such last
opinion  shall  be  deemed  to  relate  to the  Registration  Statement  and the
Prospectus  as  amended  and  supplemented  to such  date)  or,  in lieu of such
opinion, an opinion of the same tenor as the opinion of such counsel referred to
in Section 6(c) hereof but modified to relate to the Registration  Statement and
the Prospectus as amended and supplemented to such date;

                  (j)  That  each  time  the   Registration   Statement  or  the
Prospectus  shall be amended or supplemented and each time that a document filed
under  the  Act or the  Exchange  Act is  incorporated  by  reference  into  the
Prospectus,  in either case to set forth  financial  information  included in or
derived from the  Company's  consolidated  financial  statements  or  accounting
records,  and each time the Company sells  Securities to such Agent as principal
pursuant to a Terms Agreement and such Terms Agreement specifies the delivery of
a letter under this  Section  4(j) as a condition to the purchase of  Securities
pursuant  to such Terms  Agreement,  the  Company  shall  cause the  independent
certified public accountants who have certified the financial  statements of the
Company  and its  subsidiaries  included or  incorporated  by  reference  in the
Registration  Statement forthwith to furnish such Agent a letter, dated the date
of such amendment,  supplement,  incorporation  or Time of Delivery  relating to
such sale, as the case may be, in form  satisfactory  to such Agent, of the same
tenor as the letter referred to in Section 6(d) hereof but modified to relate to
the Registration  Statement and the Prospectus as amended or supplemented to the
date of such letter, with such changes as may be necessary to reflect changes in
the  financial  statements  and other  information  derived from the  accounting
records  of the  Company,  to the extent  such  financial  statements  and other
information  are available as of a date not more than three  business days prior
to the  date of such  letter;  provided,  however,  that,  with  respect  to any
financial  information  or other  matter,  such letter may reconfirm as true and
correct at such date as though made at and as of such date,  rather than repeat,
statements  with respect to such  financial  information or other matter made in
the letter  referred to in Section 6(d) hereof which was last  furnished to such
Agent;

                  (k)  That  each  time  the   Registration   Statement  or  the
Prospectus   shall  be  amended  or  supplemented   (other  than  by  a  Pricing
Supplement), each time a document filed under the Act or

                                                      -14-
                                                                           


<PAGE>



the Exchange Act is  incorporated by reference into the Prospectus and each time
the Company sells Securities to such Agent as principal and the applicable Terms
Agreement  specifies the delivery of a certificate  under this Section 4(k) as a
condition to the purchase of Securities  pursuant to such Terms  Agreement,  the
Company  shall  furnish  or  cause to be  furnished  forthwith  to such  Agent a
certificate, dated the date of such supplement, amendment, incorporation or Time
of Delivery relating to such sale, as the case may be, in such form and executed
by such officers of the Company as shall be  satisfactory  to such Agent, to the
effect that the statements contained in the certificates  referred to in Section
6(h) hereof which were last furnished to such Agent are true and correct at such
date as though made at and as of such date (except that such statements shall be
deemed to relate to the Registration Statement and the Prospectus as amended and
supplemented to such date) or, in lieu of such certificate,  certificates of the
same tenor as the certificates  referred to in said Section 6(h) but modified to
relate  to  the  Registration  Statement  and  the  Prospectus  as  amended  and
supplemented to such date; and

                  (l)  To  offer  to any  person  who  has  agreed  to  purchase
Securities  from the Company as the result of an offer to purchase  solicited by
such Agent the right to refuse to purchase  and pay for such  Securities  if, on
the related settlement date fixed pursuant to the Administrative  Procedure, any
condition  set forth in Section 6(a),  6(e),  6(f) or 6(g) hereof shall not have
been  satisfied  (it being  understood  that the  judgment  of such  person with
respect to the impracticability or inadvisability of such purchase of Securities
shall be  substituted,  for purposes of this Section  4(l),  for the  respective
judgments  of the Agent  with  respect to certain  matters  referred  to in such
Sections  6(e) and 6(g),  and that such Agent  shall have no duty or  obligation
whatsoever to exercise the judgment  permitted under such Sections 6(e) and 6(g)
on behalf of any such person).

                  5. The  Company  covenants  and agrees with the Agent that the
Company will pay or cause to be paid the following:  (i) the fees, disbursements
and expenses of the Company's  counsel and  accountants  in connection  with the
registration  of the  Securities  under  the  Act  and  all  other  expenses  in
connection  with  the  preparation,  printing  and  filing  of the  Registration
Statement,   any  Preliminary   Prospectus,   the  Prospectus  and  any  Pricing
Supplements and all other amendments and supplements thereto and the mailing and
delivering of copies  thereof to such Agent;  (ii) the fees,  disbursements  and
expenses of counsel for the Agent in connection  with the  establishment  of the
program  contemplated  hereby,  any  opinions  to be  rendered  by such  counsel
hereunder  and under  any  Terms  Agreement  and the  transactions  contemplated
hereunder and under any Terms Agreement; (iii) the cost of

                                                      -15-
                                                                           


<PAGE>



printing,  producing or reproducing  this Agreement,  any Terms  Agreement,  any
Indenture,  any Blue  Sky and  Legal  Investment  Memoranda,  closing  documents
(including any compilations  thereof) and any other documents in connection with
the offering,  purchase, sale and delivery of the Securities;  (iv) all expenses
in connection  with the  qualification  of the  Securities for offering and sale
under state  securities  laws as provided in Section 4(b) hereof,  including the
fees and  disbursements  of  counsel  for the  Agent  in  connection  with  such
qualification and in connection with the Blue Sky and legal investment  surveys;
(v) any fees charged by securities  rating  services for rating the  Securities;
(vi) any filing fees incident to, and the fees and  disbursements of counsel for
the Agent in connection with, any required review by the National Association of
Securities Dealers,  Inc. of the terms of the sale of the Securities;  (vii) the
cost of preparing  the  Securities;  (viii) the fees and expenses of any Trustee
and any agent of any Trustee and any transfer or paying agent of the Company and
the  fees  and  disbursements  of  counsel  for any  Trustee  or such  agent  in
connection with any Indenture and the Securities;  (ix) any advertising expenses
connected with the solicitation of offers to purchase and the sale of Securities
so long as such advertising  expenses have been approved by the Company; and (x)
all other costs and  expenses  incident to the  performance  of its  obligations
hereunder  which are not  otherwise  specifically  provided for in this Section.
Except as  provided  in  Sections 7 and 8 hereof,  the Agent shall pay all other
expenses it incurs.

                  6. The  obligation of the Agent,  as agent of the Company,  at
any time ("Solicitation  Time") to solicit offers to purchase the Securities and
the obligation of the Agent to purchase Securities as principal, pursuant to any
Terms  Agreement or  otherwise,  shall in each case be subject,  in such Agent's
discretion,  to the condition that all  representations and warranties and other
statements of the Company herein (and, in the case of an obligation of the Agent
under  a  Terms  Agreement,  in or  incorporated  by  reference  in  such  Terms
Agreement)  are  true and  correct  at and as of the  Commencement  Date and any
applicable  date  referred  to in  Section  4(k)  hereof  that is  prior to such
Solicitation Time or Time of Delivery, as the case may be, and at and as of such
Solicitation  Time or Time of Delivery,  as the case may be, the condition  that
prior to such  Solicitation  Time or Time of  Delivery,  as the case may be, the
Company shall have performed all of its obligations  hereunder theretofore to be
performed, and the following additional conditions:

                  (a) (i) With  respect  to any  Securities  sold at or prior to
such Solicitation  Time or Time of Delivery,  as the case may be, the Prospectus
as amended or supplemented  (including the Pricing  Supplement)  with respect to
such Securities shall have

                                                      -16-
                                                                           


<PAGE>



been filed with the Commission  pursuant to Rule 424(b) under the Act within the
applicable  time period  prescribed for such filing by the rules and regulations
under the Act and in  accordance  with Section  4(a) hereof;  (ii) no stop order
suspending  the  effectiveness  of the  Registration  Statement  shall have been
issued  and no  proceeding  for  that  purpose  shall  have  been  initiated  or
threatened by the Commission;  and (iii) all requests for additional information
on the part of the  Commission  shall have been complied with to the  reasonable
satisfaction of such Agent;

                  (b)  Reid & Priest  LLP,  counsel  to the  Agent,  shall  have
furnished  to such Agent (i) such opinion or  opinions,  dated the  Commencement
Date,  with respect to the matters  covered in paragraphs  (i), (iv), (v), (vi),
(ix),  (xi) and (xiii) of  subsection  (c) below,  as well as such other related
matters  as such  Agent may  reasonably  request;  and (ii) if and to the extent
requested by such Agent,  with respect to each  applicable  date  referred to in
Section  4(h)  hereof that is on or prior to such  Solicitation  Time or Time of
Delivery,  as the case may be, an opinion  or  opinions,  dated such  applicable
date,  to the effect that such Agent may rely on the  opinion or opinions  which
were last  furnished  to such Agent  pursuant to this  Section  6(b) to the same
extent  as though it or they  were  dated  the date of such  letter  authorizing
reliance  (except that the  statements in such last opinion or opinions shall be
deemed to relate to the Registration Statement and the Prospectus as amended and
supplemented  to such  date)  or,  in any case,  in lieu of such an  opinion  or
opinions,  an opinion or  opinions  of the same tenor as the opinion or opinions
referred to in clause (i) but modified to relate to the  Registration  Statement
and the  Prospectus as amended and  supplemented  to such date; and in each case
such  counsel  shall  have  received  such  papers and  information  as they may
reasonably request to enable them to pass upon such matters;

                  (c) Barnes &  Thornburg,  counsel  for the  Company,  or other
counsel for the Company satisfactory to such Agent, shall have furnished to such
Agent their written  opinions,  dated the Commencement  Date and each applicable
date referred to in Section 4(i) hereof that is on or prior to such Solicitation
Time or Time of Delivery, as the case may be, in form and substance satisfactory
to such Agent, to the effect that:

                     (i) The Company has been duly  incorporated  and is validly
         existing as a  corporation  under the laws of the  jurisdiction  of its
         incorporation,  with power and authority  (corporate  and other) to own
         its properties and conduct its business as described in the Prospectus;


                                                      -17-
                                                                           


<PAGE>



                      (ii) The Company has an authorized  capitalization  as set
         forth in the  Prospectus  and all of the issued shares of capital stock
         of the Company have been duly and validly authorized and issued and are
         fully paid and non-assessable;

                     (iii) To the best of such  counsel's  knowledge  and  other
         than as set forth in the Prospectus, there are no legal or governmental
         proceedings  pending to which the Company or any of its subsidiaries is
         a  party  or to  which  any  property  of  the  Company  or  any of its
         subsidiaries is subject which,  if determined  adversely to the Company
         or any of its subsidiaries, would individually or in the aggregate have
         a  material  adverse  effect  on the  current  or  future  consolidated
         financial  position,  shareholders'  equity or results of operations of
         the Company  and its  subsidiaries;  and to the best of such  counsel's
         knowledge,  no such  proceedings  are  threatened  or  contemplated  by
         governmental authorities or threatened by others;

                     (iv) This Agreement and any applicable Terms Agreement have
         been duly authorized, executed and delivered by the Company;

                     (v) The Securities have been duly authorized and, when duly
         executed,  authenticated,  issued and  delivered by the  Company,  will
         constitute  valid  and  legally  binding  obligations  of  the  Company
         entitled to the benefits  provided by the Indenture;  and the Indenture
         and  the  Securities  conform  to  the  descriptions   thereof  in  the
         Prospectus;

                     (vi) The Indenture has been duly  authorized,  executed and
         delivered by the parties  thereto and  constitutes  a valid and legally
         binding instrument,  enforceable in accordance with its terms, subject,
         as  to  enforcement,   to  (i)  the  United  States   Bankruptcy  Code,
         insolvency, fraudulent conveyance, reorganization, moratorium and other
         similar  laws now or  hereafter  in  effect  relating  to or  affecting
         creditors'  rights or remedies  generally  and (ii)  general  equitable
         principles  (regardless of whether such  enforcement is considered in a
         proceeding  at  law  or in  equity)  and to  judicial  discretion.  The
         Indenture has been duly  qualified  under the Trust  Indenture Act. All
         taxes and fees required to be paid with respect to the execution of the
         Indenture and the issuance of the Securities have been paid;

                     (vii) The issue and sale of the Securities,  the compliance
         by the  Company  with  all of the  provisions  of the  Securities,  the
         Indenture,  this Agreement and any applicable  Terms  Agreement and the
         consummation of the transactions

                                                      -18-
                                                                           


<PAGE>



         herein and therein  contemplated  will not conflict with or result in a
         breach or violation of any of the terms or provisions of, or constitute
         a default under, any indenture, mortgage, deed of trust, loan agreement
         or other  agreement  or  instrument  known to such counsel to which the
         Company is a party or by which the  Company is bound or to which any of
         the property or assets of the Company is subject,  nor will such action
         result  in  any  violation  of  the   provisions  of  the  Articles  of
         Incorporation, as amended, of the Company or the By-laws of the Company
         or any statute or any order,  rule or regulation  known to such counsel
         of any court or governmental  agency or body having  jurisdiction  over
         the Company or any of its properties;

                    (viii) The Company and its parent, Indiana Energy, Inc., are
         presently  exempt from the  provisions  of the Public  Utility  Holding
         Company Act of 1935, as amended (except Section 9 thereof), which would
         otherwise  require them to register  thereunder;  and the Company's gas
         distribution  activities  are exempt from or do not require  compliance
         with the provisions of the Natural Gas Act;

                      (ix) The statements set forth in the Prospectus  under the
         captions   "Description  of  the  Debt  Securities"  and  "Supplemental
         Description  of the Notes",  insofar as they  purport to  constitute  a
         summary  of  the  terms  of  the  Securities,  and  under  the  caption
         "Supplemental  Plan  of  Distribution",  insofar  as  they  purport  to
         describe the provisions of the laws and documents  referred to therein,
         are accurate and complete in all material respects;

                      (x) The  Company is not and,  after  giving  effect to the
         offering  and  sale  of the  Securities,  will  not  be an  "investment
         company" or an entity "controlled" by an "investment  company", as such
         terms are defined in the Investment Company Act;

                     (xi)  The  documents   incorporated  by  reference  in  the
         Prospectus (other than the financial  statements and related schedules,
         financial data or  statistical  information  therein,  as to which such
         counsel need express no  opinion),  when they became  effective or were
         filed with the  Commission,  as the case may be, complied as to form in
         all material  respects with the requirements of the Act or the Exchange
         Act, as  applicable,  and the rules and  regulations  of the Commission
         thereunder;  and  although  they are not passing upon and do not assume
         any  responsibility for the accuracy and completeness of the statements
         contained in such  documents,  such counsel advises you on the basis of
         the discussions and inquiries concerning various legal and

                                                      -19-
                                                                           


<PAGE>



         related  subjects  and  reviews of and  reports  on  certain  corporate
         records, documents and proceedings and conferences with representatives
         of the  Company  at  which  certain  portions  of such  documents  were
         discussed  (relying as to certain facts relevant to a determination  of
         materiality  upon the  representations  of the Company),  no facts have
         come to our  attention  which would lead us to believe that any of such
         documents, when they became effective or were so filed, as the case may
         be,  contained,  in the case of a registration  statement  which became
         effective  under the Act,  an untrue  statement  of a material  fact or
         omitted  to state a  material  fact  required  to be stated  therein or
         necessary to make the statements  therein not  misleading,  and, in the
         case of other  documents which were filed under the Act or the Exchange
         Act with the  Commission,  an untrue  statement  of a material  fact or
         omitted  to  state a  material  fact  necessary  in  order  to make the
         statements  therein, in the light of the circumstances under which they
         were made when such documents were so filed, not misleading;

                (xii) To such counsel's knowledge, the Indiana Commission Orders
         are in full force and effect and are  sufficient  to permit the Company
         to  enter  into  and  perform  the  transactions  contemplated  by this
         Agreement;  and  no  other  consent,  approval,  authorization,  order,
         registration or  qualification  of any court or governmental  agency or
         body is required for solicitation of offers to purchase Securities, the
         issue and sale of the Securities or the  consummation by the Company of
         the other transactions  contemplated by this Agreement,  any applicable
         Terms  Agreement,  or the Indenture,  except such as have been obtained
         under the Act and the Trust  Indenture  Act and such as may be required
         under the blue sky laws of any jurisdiction in connection with the sale
         of the Securities as contemplated by this Agreement; and

                 (xiii) The  Registration  Statement and the  Prospectus  (other
         than the financial statements and related schedules,  financial data or
         statistical  information therein, as to which such counsel need express
         no  opinion)  comply  as to  form in all  material  respects  with  the
         requirements  of the Act and the Trust Indenture Act and the applicable
         rules  and  regulations  thereunder;  further,  although  they  are not
         passing upon and do not assume any  responsibility for the accuracy and
         completeness of the statements contained in the Registration  Statement
         and the  Prospectus,  such  counsel  advises  you on the  basis  of the
         discussions and inquiries concerning various legal and related subjects
         and reviews of and reports on certain corporate records,  documents and
         proceedings and conferences

                                                      -20-
                                                                           


<PAGE>



         with  representatives  of the Company at which certain  portions of the
         Registration Statement and the Prospectus were discussed (relying as to
         certain  facts  relevant to a  determination  of  materiality  upon the
         representations  of the  Company),  no facts have come to our attention
         which would lead us to believe that (A) as of its effective  date,  the
         Registration Statement (other than the financial statements and related
         schedules,  financial data or statistical  information  therein,  as to
         which  such  counsel  need  express  no  opinion)  contained  an untrue
         statement  of a  material  fact or  omitted  to state a  material  fact
         required  to be stated  therein  or  necessary  to make the  statements
         therein  not  misleading,   (B)  as  of  their  respective  dates,  the
         Prospectus  (other than the financial  statements and related schedules
         therein,  financial data or statistical  information,  as to which such
         counsel  need express no opinion)  contained  an untrue  statement of a
         material fact or omitted to state a material fact necessary to make the
         statements  therein,  in the light of the  circumstances  in which they
         were  made,  not  misleading  or (C) as of the date  hereof  either the
         Registration  Statement  or the  Prospectus  (other than the  financial
         statements  and  related  schedules,   financial  data  or  statistical
         information  therein, as to which such counsel need express no opinion)
         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, in the light of the circumstances under which they
         were made, not misleading; and they do not know of any amendment to the
         Registration  Statement  required to be filed or any contracts or other
         documents  of a  character  required  to be filed as an  exhibit to the
         Registration Statement or required to be incorporated by reference into
         the Prospectus as amended or  supplemented  or required to be described
         in  the  Registration   Statement  or  the  Prospectus  as  amended  or
         supplemented  which  are not  filed or  incorporated  by  reference  or
         described as required;

                  (d) Not later than  10:00  a.m.,  New York City  time,  on the
Commencement Date and on each applicable date referred to in Section 4(j) hereof
that is on or prior to such Solicitation  Time or Time of Delivery,  as the case
may be, the  independent  certified  public  accountants  who have certified the
financial   statements  of  the  Company  and  its   subsidiaries   included  or
incorporated by reference in the Registration  Statement shall have furnished to
such Agent a letter, dated the Commencement Date or such applicable date, as the
case may be, in form and substance satisfactory to such Agent, to the effect set
forth in Annex III hereto;


                                                      -21-
                                                                           


<PAGE>



                  (e) (i) Neither the Company nor any of its subsidiaries  shall
have  sustained  since  the  date of the  latest  audited  financial  statements
included  or   incorporated  by  reference  in  the  Prospectus  as  amended  or
supplemented  prior  to the  date  of the  Pricing  Supplement  relating  to the
Securities  to be  delivered  at the  relevant  Time  of  Delivery  any  loss or
interference  with its business from fire,  explosion,  flood or other calamity,
whether  or not  covered  by  insurance,  or from any labor  dispute or court or
governmental  action,   order  or  decree,   otherwise  than  as  set  forth  or
contemplated in the Prospectus as amended or  supplemented  prior to the date of
the  Pricing  Supplement  relating  to the  Securities  to be  delivered  at the
relevant  Time of  Delivery  and (ii)  since  the  respective  dates as of which
information is given in the Prospectus as amended or  supplemented  prior to the
date of the Pricing Supplement relating to the Securities to be delivered at the
relevant  Time of  Delivery  there shall not have been any change in the capital
stock or long-term debt of the Company or any of its subsidiaries or any change,
or any development  involving a prospective  change, in or affecting the general
affairs,  management,  financial  position,  shareholders'  equity or results of
operations of the Company and its  subsidiaries,  otherwise than as set forth or
contemplated in the Prospectus as amended or  supplemented  prior to the date of
the  Pricing  Supplement  relating  to the  Securities  to be  delivered  at the
relevant Time of Delivery,  the effect of which,  in any such case  described in
Clause (i) or (ii),  is in the judgment of such Agent so material and adverse as
to make it impracticable or inadvisable to proceed with the solicitation by such
Agent of offers to purchase  Securities from the Company or the purchase by such
Agent of Securities  from the Company as  principal,  as the case may be, on the
terms  and  in  the  manner   contemplated  in  the  Prospectus  as  amended  or
supplemented  prior  to the  date  of the  Pricing  Supplement  relating  to the
Securities to be delivered at the relevant Time of Delivery;

                  (f) On or after the date hereof (i) no downgrading  shall have
occurred in the rating accorded the Company's debt securities by any "nationally
recognized  statistical  rating  organization",  as that term is  defined by the
Commission  for  purposes  of Rule  436(g)(2)  under  the Act,  and (ii) no such
organization  shall have publicly  announced that it has under  surveillance  or
review, with possible negative implications,  its rating of any of the Company's
debt securities;

                  (g) On or after the date hereof there shall not have  occurred
any of the  following:  (i) a suspension  or material  limitation  in trading in
securities  generally  on the  New  York  Stock  Exchange;  or  (ii)  a  general
moratorium  on  commercial  banking  activities  in New York  declared by either
Federal or New York State authorities; or (iii) the outbreak or escalation of

                                                      -22-
                                                                           


<PAGE>



hostilities  involving the United States or the declaration by the United States
of a national  emergency  or war, if the effect of any such event  specified  in
this  Clause  (iii) in the  judgment  of such Agent  makes it  impracticable  or
inadvisable to proceed with the solicitation of offers to purchase Securities or
the purchase of the  Securities  from the Company as  principal  pursuant to the
applicable Terms Agreement or otherwise, as the case may be, on the terms and in
the manner contemplated in the Prospectus; and

                  (h) The Company shall have furnished or caused to be furnished
to such Agent  certificates  of officers of the Company  dated the  Commencement
Date and each  applicable  date referred to in Section 4(k) hereof that is on or
prior to such Solicitation Time or Time of Delivery, as the case may be, in such
form and executed by such  officers of the Company as shall be  satisfactory  to
such Agent,  as to the accuracy of the  representations  and  warranties  of the
Company herein at and as of the  Commencement  Date or such applicable  date, as
the case may be, as to the  performance by the Company of all of its obligations
hereunder  to be  performed  at or  prior  to  the  Commencement  Date  or  such
applicable  date, as the case may be, as to the matters set forth in subsections
(a) and (e) of this  Section 6, and as to such  other  matters as such Agent may
reasonably request.

                  7. (a) The Company will  indemnify and hold harmless the Agent
against any losses, claims,  damages or liabilities,  joint or several, to which
such  Agent may  become  subject,  under the Act or  otherwise,  insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based  upon an untrue  statement  or  alleged  untrue  statement  of a
material  fact  contained  in  any  Preliminary  Prospectus,   the  Registration
Statement,  the  Prospectus,  the Prospectus as amended or  supplemented  or any
other  prospectus  relating to the  Securities,  or any  amendment or supplement
thereto,  or arise out of or are based upon the omission or alleged  omission to
state therein a material fact required to be stated therein or necessary to make
the  statements  therein not  misleading,  and will reimburse such Agent for any
legal  or  other  expenses   reasonably   incurred  by  it  in  connection  with
investigating  or  defending  any such  action  or claim  as such  expenses  are
incurred;  provided,  however,  that the Company shall not be liable in any such
case to the extent that any such loss, claim,  damage or liability arises out of
or is based upon an untrue  statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement,
the  Prospectus,  the  Prospectus  as  amended  or  supplemented  or  any  other
prospectus relating to the Securities,  or any such amendment or supplement,  in
reliance  upon and in  conformity  with  written  information  furnished  to the
Company by such Agent expressly for use therein.


                                                      -23-
                                                                           


<PAGE>



                  (b) The Agent will  indemnify  and hold  harmless  the Company
against  any losses,  claims,  damages or  liabilities  to which the Company may
become  subject,  under the Act or  otherwise,  insofar as such losses,  claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an  untrue  statement  or  alleged  untrue  statement  of a  material  fact
contained  in  any  Preliminary  Prospectus,  the  Registration  Statement,  the
Prospectus,  the Prospectus as amended or supplemented  or any other  prospectus
relating to the Securities, or any amendment or supplement thereto, or arise out
of or are  based  upon the  omission  or  alleged  omission  to state  therein a
material fact required to be stated  therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such  untrue  statement  or alleged  untrue  statement  or  omission  or alleged
omission was made in any Preliminary Prospectus, the Registration Statement, the
Prospectus,  the Prospectus as amended or supplemented  or any other  prospectus
relating to the  Securities,  or any such amendment or  supplement,  in reliance
upon and in conformity with written information furnished to the Company by such
Agent expressly for use therein; and will reimburse the Company for any legal or
other  expenses   reasonably   incurred  by  the  Company  in  connection   with
investigating  or  defending  any such  action  or claim  as such  expenses  are
incurred.

                  (c)  Promptly  after  receipt by an  indemnified  party  under
subsection (a) or (b) above of notice of the  commencement  of any action,  such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying  party  under such  subsection,  notify the  indemnifying  party in
writing  of  the  commencement  thereof;  but  the  omission  so to  notify  the
indemnifying  party shall not relieve it from any liability which it may have to
any  indemnified  party otherwise than under such  subsection.  In case any such
action shall be brought  against any  indemnified  party and it shall notify the
indemnifying party of the commencement  thereof, the indemnifying party shall be
entitled to participate  therein and, to the extent that it shall wish,  jointly
with any other  indemnifying  party  similarly  notified,  to assume the defense
thereof,  with counsel  satisfactory to such  indemnified  party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party),  and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof,  the indemnifying  party shall
not be liable to such  indemnified  party  under such  subsection  for any legal
expenses  of other  counsel  or any other  expenses,  in each case  subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or

                                                      -24-
                                                                           


<PAGE>



compromise  of, or consent to the entry of any  judgment  with  respect  to, any
pending or  threatened  action or claim in respect of which  indemnification  or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or  potential  party to such  action or claim)  unless  such  settlement,
compromise or judgment (i) includes an unconditional  release of the indemnified
party from all  liability  arising out of such action or claim and (ii) does not
include a statement as to, or an admission of, fault,  culpability  or a failure
to act, by or on behalf of any indemnified party.

                  (d) If the  indemnification  provided for in this Section 7 is
unavailable  or  insufficient  to  hold  harmless  an  indemnified  party  under
subsection  (a) or (b)  above in  respect  of any  losses,  claims,  damages  or
liabilities  (or actions in respect  thereof)  referred  to  therein,  then each
indemnifying  party  shall  contribute  to the  amount  paid or  payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect  thereof) in such proportion as is appropriate to reflect the
relative  benefits  received by the Company on the one hand and the Agent on the
other from the offering of the Securities to which such loss,  claim,  damage or
liability (or action in respect thereof)  relates.  If, however,  the allocation
provided by the  immediately  preceding  sentence is not permitted by applicable
law or if the  indemnified  party  failed  to give  the  notice  required  under
subsection  (c) above,  then each  indemnifying  party shall  contribute to such
amount  paid or  payable  by such  indemnified  party in such  proportion  as is
appropriate  to reflect not only such  relative  benefits  but also the relative
fault of the  Company  on the one hand and the Agent on the other in  connection
with the statements or omissions which resulted in such losses,  claims, damages
or liabilities  (or actions in respect  thereof),  as well as any other relevant
equitable  considerations.  The relative benefits received by the Company on the
one hand and the Agent on the other shall be deemed to be in the same proportion
as the  total  net  proceeds  from  the  sale of  Securities  (before  deducting
expenses)  received by the Company  bear to the total  commissions  or discounts
received  by such  Agent  in  respect  thereof.  The  relative  fault  shall  be
determined by reference  to, among other  things,  whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact required to be stated  therein or necessary in order to make the
statements therein not misleading relates to information supplied by the Company
on the one hand or by the Agent on the other and the parties'  relative  intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
statement or omission. The Company and the Agent agree that it would not be just
and equitable if contribution pursuant to this subsection (d) were determined by
per capita allocation or by any other method of

                                                      -25-
                                                                           


<PAGE>



allocation which does not take account of the equitable  considerations referred
to above in this  subsection  (d). The amount paid or payable by an  indemnified
party as a result of the losses,  claims,  damages or liabilities (or actions in
respect  thereof)  referred to above in this  subsection  (d) shall be deemed to
include any legal or other  expenses  reasonably  incurred  by such  indemnified
party in connection  with  investigating  or defending any such action or claim.
Notwithstanding  the provisions of this  subsection  (d), the Agent shall not be
required  to  contribute  any  amount in excess of the amount by which the total
public  offering price at which the  Securities  purchased by or through it were
sold  exceeds  the amount of any  damages  which such Agent has  otherwise  been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.  No person guilty of fraudulent  misrepresentation  (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution  from
any  person  who  was  not  guilty  of such  fraudulent  misrepresentation.  The
obligations  of each of the Agent under this  subsection  (d) to contribute  are
several in proportion to the respective purchases made by or through it to which
such loss, claim, damage or liability (or action in respect thereof) relates and
are not joint.

                  (e) The  obligations of the Company under this Section 7 shall
be in addition to any liability  which the Company may otherwise  have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
the Agent within the meaning of the Act; and the  obligations of the Agent under
this  Section 7 shall be in  addition  to any  liability  which  such  Agent may
otherwise  have and shall extend,  upon the same terms and  conditions,  to each
officer and director of the Company and to each person, if any, who controls the
Company within the meaning of the Act.

                  8. The Agent, in soliciting offers to purchase Securities from
the Company and in  performing  the other  obligations  of such Agent  hereunder
(other than in respect of any purchase by the Agent as principal,  pursuant to a
Terms Agreement or otherwise), is acting solely as agent for the Company and not
as principal.  The Agent will make  reasonable  efforts to assist the Company in
obtaining  performance by each purchaser whose offer to purchase Securities from
the Company was  solicited  by such Agent and has been  accepted by the Company,
but such Agent  shall not have any  liability  to the  Company in the event such
purchase is not consummated for any reason.  If the Company shall default on its
obligation to deliver Securities to a purchaser whose offer it has accepted, the
Company  shall (i) hold the Agent  harmless  against  any loss,  claim or damage
arising  from  or  as  a  result  of  such  default  by  the  Company  and  (ii)
notwithstanding such default, pay to the Agent that solicited such offer any

                                                      -26-
                                                                           


<PAGE>



commission to which it would be entitled in connection with such sale.

                  9. The respective  indemnities,  agreements,  representations,
warranties  and other  statements  by the Agent and the  Company set forth in or
made pursuant to this Agreement shall remain in full force and effect regardless
of any  investigation (or any statement as to the results thereof) made by or on
behalf of the Agent or any controlling  person of the Agent, or the Company,  or
any officer or  director or any  controlling  person of the  Company,  and shall
survive each delivery of and payment for any of the Securities.

                  10.  The  provisions  of  this   Agreement   relating  to  the
solicitation of offers to purchase  Securities from the Company may be suspended
or  terminated  at any time by the Company as to the Agent or by the Agent as to
such Agent upon the giving of written  notice of such  suspension or termination
to such  Agent  or the  Company,  as the  case  may  be.  In the  event  of such
suspension or termination  with respect to the Agent,  (x) this Agreement  shall
remain in full  force and  effect  with  respect  to the Agent as to which  such
suspension or termination  has not occurred,  (y) this Agreement shall remain in
full force and effect with  respect to the rights and  obligations  of any party
which have  previously  accrued or which relate to Securities  which are already
issued,  agreed to be issued or the  subject  of a pending  offer at the time of
such suspension or termination and (z) in any event, this Agreement shall remain
in full force and effect  insofar as the fourth  paragraph of Section 2(a),  and
Sections 4(d), 4(e), 5, 7, 8 and 9 hereof are concerned.

                  11. Except as otherwise specifically provided herein or in the
Administrative Procedure, all statements, requests, notices and advice hereunder
shall be in writing, or by telephone if promptly confirmed in writing, and if to
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated shall be
sufficient  in  all  respects  when  delivered  or  sent  by  telex,   facsimile
transmission or registered mail to Merrill Lynch & Co., World Financial  Center,
North Tower, 10th Floor, New York, New York 10281-1310,  Facsimile  Transmission
No. (212) 449-2234,  Attention:  MTN Product  Management,  and if to the Company
shall  be  sufficient  in all  respects  when  delivered  or sent  by  facsimile
transmission  or  registered  mail to  Indiana  Gas  Company,  Inc.,  1630 North
Meridian Street,  Indianapolis,  Indiana 46202-1496,  Facsimile Transmission No.
(317) 321-0508, Attention: Vice President and Treasurer.

                  12. This  Agreement and any Terms  Agreement  shall be binding
upon, and inure solely to the benefit of, the Agent and the Company,  and to the
extent provided in Sections 7, 8 and 9

                                                      -27-
                                                                           


<PAGE>



hereof,  the officers  and  directors of the Company and any person who controls
the  Agent  or the  Company,  and  their  respective  personal  representatives,
successors  and assigns,  and no other  person  shall  acquire or have any right
under or by virtue of this Agreement or any Terms Agreement. No purchaser of any
of the  Securities  through  or from  the  Agent  hereunder  shall  be  deemed a
successor or assign by reason merely of such purchase.

                  13.  Time shall be of the  essence in this  Agreement  and any
Terms Agreement. As used herein, the term "business day" shall mean any day when
the Commission's office in Washington, D.C. is open for business.

                  14. This Agreement and any Terms  Agreement  shall be governed
by, and construed in accordance with, the laws of the State of New York.

                  15. This Agreement and any Terms Agreement,  respectively, may
be executed  by any one or more of the parties  hereto and thereto in any number
of counterparts,  each of which shall be an original, but all of such respective
counterparts shall together constitute one and the same instrument.


                                                      -28-
                                                                           


<PAGE>




                  If the  foregoing is in  accordance  with your  understanding,
please sign and return to us six counterparts hereof,  whereupon this letter and
the  acceptance  by each of you thereof  shall  constitute  a binding  agreement
between the Company and each of you in accordance with its terms.

                                                     Very truly yours,

                                                     INDIANA GAS COMPANY, INC.


                                                     By: /s/ Neil C. Ellerbrook
                                                        Name: Neil C. Ellerbrook
                                                        Title: President and 
                                                                 Chief Operating
                                                                 Officer
Accepted in New York, New York, as of the date hereof:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE,
  FENNER & SMITH INCORPORATED



By: /s/ Richard N. Doyle
   Name: Richard N. Doyle
   Title: Authorized Signatory

                                                      -29-
                                                                           


<PAGE>




                                                                       EXHIBIT A



                                     [Date]



[Address]




         Re:  [Amount of Issue] Medium Term Notes, Series F



Ladies and Gentlemen:

                  We hereby confirm that, in consideration  for your agreeing to
distribute this issue,  for the purpose of this issue only, we will treat you in
all respects as an agent for our  $95,000,000  Medium-Term  Note Program and you
will enjoy all rights and benefits, and be subject to all the obligations of the
Agent as set out in the Distribution Agreement,  dated November 19, 1997, a copy
of which has been delivered to you.

                  This letter shall be governed by, and  construed in accordance
with, the laws of the State of New York.

                  Please  confirm your  acceptance  of the  following by signing
this letter and returning it to us.

                                                     Yours faithfully,

                                                     INDIANA GAS COMPANY, INC.


                                                     By:
                                      Name:
                                     Title:


Acknowledged and Accepted:


By:
   Name:
   Title

                                                      -30-
                                                                           


<PAGE>



                                                                       EXHIBIT B

                         FORM OF DEALER ACCESSION LETTER


                                     [Date]



Indiana Gas Company, Inc.
1630 North Meridian Street
Indianapolis, Indiana  46202-1496

Attention:


         Re:  $95,000,000 Medium Term Notes, Series F


Ladies and Gentlemen:

                  We refer to the  Distribution  Agreement,  dated  November 19,
1997, entered into in respect of the above $95,000,000  Medium-Term Note Program
(the  "Program")  and  made  between  you and the  Agent  party  thereto  (which
agreement, as amended from time to time, is herein referred to as the
"Agreement").

Conditions Precedent

                  We confirm that we are in receipt of the documents  referenced
below:

         -        a copy of the Agreement;

         -        a copy of all documents referred to in Section 6 of the
                  Agreement;

         -        a side letter in a form approved by ourselves from each of the
                  legal  advisers  referred  to in  Section  6 of the  Agreement
                  addressed to  ourselves  and giving us the full benefit of the
                  existing legal opinions;

and have found them to our satisfaction.

                  For  purposes  of the  Agreement,  our Notice  Details  are as
follows:

                     [Insert name, address, telephone, telex
                          (+ answerback) and attention]

                                                      -1-
                                                                           


<PAGE>




                  In  consideration  of your appointment of us as an Agent under
the  Agreement we hereby  undertake,  for the benefit of each of you and each of
the other  Agents,  that we will  perform  and  comply  with all the  duties and
obligations expressed to be assumed by an Agent under the Agreement.

                  We understand  that, in accordance  with the  Agreement,  with
effect from the date hereof,  we shall become a party to the  Agreement,  vested
with all the authority, rights, powers, duties and obligations of an Agent as if
originally named as an Agent under the Agreement.

                  This  letter  is  governed  by,  and  shall  be  construed  in
accordance with, New York law.

                  If the  foregoing is in  accordance  with your  understanding,
please  sign and  return to us a copy  hereof,  whereupon  this  letter  and the
acceptance by you thereof shall  constitute a binding  agreement  between us and
each of you in accordance with its terms.

                                                     Yours faithfully,


Acknowledged and Accepted:

INDIANA GAS COMPANY, INC.


By:
         Name:
         Title:

                                                      -2-
                                                                           


<PAGE>



                                                                         ANNEX I

                            INDIANA GAS COMPANY, INC.

                           Medium-Term Notes, Series F

                                 Terms Agreement


                                                              ____________, 19__











Ladies and Gentlemen:

                  Indiana Gas Company, Inc. (the "Company") proposes, subject to
the terms and conditions stated herein and in the Distribution Agreement,  dated
November 19, 1997 (the "Distribution Agreement"), between the Company on the one
hand and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
(the  "Agent")  on the  other,  to issue and sell to the  Agent  the  securities
specified  in the  Schedule  hereto (the  "Purchased  Securities").  Each of the
provisions  of  the  Distribution  Agreement  not  specifically  related  to the
solicitation  by the  Agent,  as agent of the  Company,  of offers  to  purchase
Securities is  incorporated  herein by reference in its  entirety,  and shall be
deemed  to be  part  of this  Terms  Agreement  to the  same  extent  as if such
provisions had been set forth in full herein. Nothing contained herein or in the
Distribution  Agreement  shall make any party  hereto an agent of the Company or
make such party subject to the provisions  therein  relating to the solicitation
of offers  to  purchase  Securities  from the  Company,  solely by virtue of its
execution of this Terms Agreement.  Each of the  representations  and warranties
set  forth  therein  shall be  deemed to have been made at and as of the date of
this Terms Agreement,  except that each representation and warranty in Section 1
of the  Distribution  Agreement which makes reference to the Prospectus shall be
deemed to be a  representation  and warranty as of the date of the  Distribution
Agreement  in  relation  to the  Prospectus  (as  therein  defined),  and also a
representation and warranty as of the date of this Terms Agreement in relation

                                                      -1-
                                                                           


<PAGE>



to the  Prospectus  as  amended  and  supplemented  to relate  to the  Purchased
Securities.

                  An amendment to the Registration Statement, or a supplement to
the Prospectus, as the case may be, relating to the Purchased Securities, in the
form  heretofore  delivered  to  you  is  now  proposed  to be  filed  with  the
Commission.

                  Subject to the terms and  conditions  set forth  herein and in
the Distribution Agreement incorporated herein by reference,  the Company agrees
to          issue           and           sell          to           ___________
________________________________________________ and ___________
- ----------------------------------------------------------------
agrees to purchase  from the Company the Purchased  Securities,  at the time and
place,  in the  principal  amount  and at the  purchase  price  set forth in the
Schedule hereto.

                  If the  foregoing is in  accordance  with your  understanding,
please  sign and  return to us ____  counterparts  hereof,  and upon  acceptance
hereof by you this letter and such acceptance hereof, including those provisions
of the Distribution Agreement incorporated herein by reference, shall constitute
a binding agreement between you and the Company.

                                                 INDIANA GAS COMPANY, INC.



                                                 By:
                                                    Name:
                                                    Title:
Accepted:







By:
   Name:
   Title:


                                                      -2-
                                                                           


<PAGE>



                                                             Schedule to Annex I


Title of Purchased Securities:

                  [  %] Medium-Term Notes [Series __]

Aggregate Principal Amount:

                  [$.................... or units of other Specified
Currency]

Purchasing Agent Commission and discount:

[Price to Public:]

Purchase Price by Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated

                  % of the principal amount of the Purchased  Securities[,  plus
accrued  interest  from   _______________  to   _______________]   [and  accrued
amortization, if any, from _________________ to ____________________]

Method of and Specified Funds for Payment of Purchase Price:

                  [By certified or official bank check or checks, payable to the
order of the Company,  in [[New York] Clearing  House]  [immediately  available]
funds]

                  [By wire  transfer to a bank account  specified by the Company
in [next day] [immediately available] funds]

Indenture:

                  Indenture, dated as of ____________, 19__, between the
Company and                                  , as Trustee

Time of Delivery:

Closing Location for Delivery of Securities:

Maturity:

Interest Rate:

                  [  %]

Interest Payment Dates:


                                                      -1-
                                                                           


<PAGE>



                  [months and dates]

Documents to be Delivered:

                  The  following  documents  referred  to  in  the  Distribution
Agreement shall be delivered as a condition to the Closing:

                  [(1) The opinion or opinions of counsel to the Agent  referred
to in Section 4(h).]

                  [(2) The  opinion  of counsel to the  Company  referred  to in
Section 4(i).]

                  [(3) The accountants' letter referred to in Section 4(j).]

                  [(4) The officers' certificate referred to in Section 4(k).]

Other Provisions (including Syndicate Provisions, if applicable):


                                                      -2-
                                                                           


<PAGE>



                                                                        ANNEX II


                            INDIANA GAS COMPANY, INC.

                            Administrative Procedure


                  This  Administrative   Procedure  relates  to  the  Securities
defined  in  the   Distribution   Agreement,   dated   November  19,  1997  (the
"Distribution Agreement"), between Indiana Gas Company, Inc. (the "Company") and
Merrill Lynch & Co., Merrill Lynch,  Pierce,  Fenner & Smith  Incorporated  (the
"Agent"),  to which  this  Administrative  Procedure  is  attached  as Annex II.
Defined terms used herein and not defined  herein shall have the meanings  given
such  terms  in  the  Distribution  Agreement,  the  Prospectus  as  amended  or
supplemented or the Indenture.

                  The  procedures to be followed with respect to the  settlement
of sales of Securities  directly by the Company to  purchasers  solicited by the
Agent, as agent, are set forth below.  The terms and settlement  details related
to a purchase of Securities by the Agent, as principal, from the Company will be
set forth in a Terms Agreement  pursuant to the Distribution  Agreement,  unless
the Company and such Agent  otherwise  agree as provided in Section  2(b) of the
Distribution  Agreement,  in which case the procedures to be followed in respect
of the  settlement  of such sale  will be as set  forth  below.  The  Agent,  in
relation to a purchase of a Security by a purchaser  solicited by such Agent, is
referred  to herein as the  "Selling  Agent" and, in relation to a purchase of a
Security by such Agent as principal other than pursuant to a Terms Agreement, as
the "Purchasing Agent".

                  The Company will advise the Agent in writing of those  persons
with whom such Agent is to communicate  regarding offers to purchase  Securities
and the related settlement details.

                  Each Security will be issued only in fully registered form and
will be represented by either a global security (a "Global Security")  delivered
to the Trustee, as agent for The Depository Trust Company (the "Depositary") and
recorded in the  book-entry  system  maintained by the Depositary (a "Book-Entry
Security")  or  a  certificate   issued  in  definitive  form  (a  "Certificated
Security")  delivered to a person  designated by the Agent,  as set forth in the
applicable  Pricing  Supplement.  An owner of a Book-Entry  Security will not be
entitled  to  receive a  certificate  representing  such a  Security,  except as
provided in the Indenture.


                                                      -1-
                                                                           


<PAGE>



                  Book-Entry  Securities  will be issued in accordance  with the
Administrative Procedure set forth in Part I hereof, and Certificated Securities
will be issued in accordance with the Administrative Procedure set forth in Part
II hereof.


PART I:  ADMINISTRATIVE PROCEDURE FOR BOOK-ENTRY SECURITIES

                  In  connection  with  the   qualification  of  the  Book-Entry
Securities  for  eligibility  in  the  book-entry   system   maintained  by  the
Depositary,  the  Trustee  will  perform  the  custodial,  document  control and
administrative  functions  described  below,  in accordance  with its respective
obligations under a Letter of Representation from the Company and the Trustee to
the  Depositary,  dated the date  hereof,  and a  Medium-Term  Note  Certificate
Agreement  between the Trustee and the Depositary,  dated as of January 31, 1991
(the  "Certificate  Agreement"),  and its  obligations  as a participant  in the
Depositary,   including  the  Depositary's   Same-Day  Funds  Settlement  System
("SDFS").

Posting Rates by the Company:

                  The Company and the Agent will  discuss  from time to time the
rates of  interest  per  annum to be borne  by and the  maturity  of  Book-Entry
Securities  that may be sold as a result  of the  solicitation  of offers by the
Agent.  The Company may establish a fixed set of interest  rates and  maturities
for an offering  period  ("posting").  If the Company  decides to change already
posted  rates,  it will  promptly  advise the Agent to suspend  solicitation  of
offers until the new posted rates have been established with the Agent.

Acceptance of Offers by the Company:

                  The Agent will  promptly  advise the Company by  telephone  or
other  appropriate  means  of  all  reasonable  offers  to  purchase  Book-Entry
Securities,  other than those  rejected  by such  Agent.  The Agent may,  in its
discretion reasonably exercised,  reject any offer received by it in whole or in
part.  The Agent  also may make  offers to the  Company to  purchase  Book-Entry
Securities as a Purchasing Agent. The Company will have the sole right to accept
offers to purchase Book-Entry  Securities and may reject any such offer in whole
or in part.

                  The  Company  will  promptly  notify  the Agent or  Purchasing
Agent,  as the  case  may be,  of its  acceptance  or  rejection  of an offer to
purchase  Book-Entry  Securities.  If the  Company  accepts an offer to purchase
Book-Entry Securities, it will confirm such acceptance in writing to the Selling
Agent or

                                                      -2-
                                                                           


<PAGE>



Purchasing  Agent,  as the case may be, and by  telephone  and in writing to the
Trustee.

                  Communication  of Sale Information to the Company by Agent and
Settlement Procedures:

                  A.  After  the  acceptance  of an  offer by the  Company,  the
Selling  Agent  or  Purchasing  Agent,  as the  case  may be,  will  communicate
promptly,  but in no event  later  than the time  set  forth  under  "Settlement
Procedure  Timetable"  below,  the following  details of the terms of such offer
(the "Sale  Information") to the Company by telephone  (confirmed in writing) or
by facsimile transmission or other acceptable written means:

                  (1)      Principal Amount of Book-Entry Securities to be
purchased;

                  (2)      If a Fixed Rate Book-Entry Security, the interest
rate and initial interest payment date;

                  (3)      Trade Date;

                  (4)      Settlement Date;

                  (5)      Maturity Date;

                  (6) Specified Currency and, if the Specified Currency is other
than U.S. dollars,  the applicable Exchange Rate for such Specified Currency (it
being  understood  that  currently  the  Depositary  accepts  deposits of Global
Securities denominated in U.S. dollars only);

                  (7)      Indexed Currency, the Base Rate and the Exchange
Rate Determination Date, if applicable;

                  (8)      Issue Price;

                  (9)      Selling Agent's commission or Purchasing Agent's
discount, as the case may be;

                  (10)     Net Proceeds to the Company;

                  (11)     If a redeemable Book-Entry Security, such of the
following as are applicable:

                           (i)      Redemption Commencement Date,

                           (ii)     Initial Redemption Price (% of par), and


                                                      -3-
                                                                           


<PAGE>



                  (iii)  Amount  (% of par)  that  the  Redemption  Price  shall
decline (but not below par) on each  anniversary of the Redemption  Commencement
Date;

                  (12)  If a  Floating  Rate  Book-Entry  Security,  such of the
following as are applicable:

                           (i)      Interest Rate Basis,

                           (ii)     Index Maturity,

                           (iii)    Spread and/or Spread Multiplier,

                           (iv)     Maximum Rate,

                           (v)      Minimum Rate,

                           (vi)     Initial Interest Rate,

                           (vii)    Interest Reset Dates,

                           (viii)   Calculation Dates,

                           (ix)     Interest Determination Dates,

                           (x)      Interest Payment Dates,

                           (xi)     Regular Record Dates, and

                           (xii)    Calculation Agent;

                  (13)     Name, address and taxpayer identification number
                           of the registered owner(s);

                  (14)     Denomination of certificates to be delivered at
                           settlement;

                  (15)     Book-Entry Security or Certificated Security; and

                  (16)     Selling Agent or Purchasing Agent.

                  B. After receiving the Sale Information from the Selling Agent
or Purchasing  Agent, as the case may be, the Company will communicate such Sale
Information to the Trustee by facsimile transmission or other acceptable written
means. The Trustee will assign a CUSIP number to the Global Security from a list
of CUSIP numbers previously delivered to the Trustee by the Company representing
such  Book-Entry  Security and then advise the Company and the Selling  Agent or
Purchasing Agent, as the case may be, of such CUSIP number.

                                                      -4-
                                                                           


<PAGE>




                  C. The Trustee will enter a pending  deposit  message  through
the Depositary's Participant Terminal System, providing the following settlement
information to the Depositary, and the Depositary shall forward such information
to such Agent and Standard & Poor's Corporation:

                  (1) The applicable Sale Information;

                  (2) CUSIP  number of the  Global  Security  representing  such
Book-Entry Security;

                  (3) Whether  such Global  Security  will  represent  any other
Book-Entry Security (to the extent known at such time);

                  (4)  Number  of  the  participant  account  maintained  by the
Depositary on behalf of the Selling Agent or Purchasing  Agent,  as the case may
be;

                  (5)      The interest payment period; and

                  (6)  Initial   Interest   Payment  Date  for  such  Book-Entry
Security,  number of days by which such date  succeeds  the record  date for the
Depositary's  purposes (or, in the case of Floating Rate Securities  which reset
daily  or  weekly,  the  date  five  calendar  days  immediately  preceding  the
applicable  Interest  Payment  Date  and,  in the case of all  other  Book-Entry
Securities,  the  Regular  Record  Date,  as defined in the  Security)  and,  if
calculable at that time, the amount of interest payable on such Interest Payment
Date.

                  D. The  Trustee  will  complete  and  authenticate  the Global
Security  previously  delivered  by the  Company  representing  such  Book-Entry
Security.

                  E. The Depositary will credit such Book-Entry  Security to the
Trustee's participant account at the Depositary.

                  F. The Trustee  will enter an SDFS deliver  order  through the
Depositary's Participant Terminal System instructing the Depositary to (i) debit
such Book-Entry  Security to the Trustee's  participant  account and credit such
Book-Entry  Security  to such  Agent's  participant  account and (ii) debit such
Agent's  settlement  account and credit the Trustee's  settlement account for an
amount  equal  to the  price  of such  Book-Entry  Security  less  such  Agent's
commission.  The entry of such a deliver order shall constitute a representation
and  warranty  by the  Trustee to the  Depositary  that (a) the Global  Security
representing such Book-Entry  Security has been issued and authenticated and (b)
the  Trustee  is  holding  such  Global  Security  pursuant  to the  Certificate
Agreement.

                                                      -5-
                                                                           


<PAGE>




                  G. Such Agent will enter an SDFS  deliver  order  through  the
Depositary's Participant Terminal System instructing the Depositary (i) to debit
such  Book-Entry  Security to such Agent's  participant  account and credit such
Book-Entry Security to the participant accounts of the Participants with respect
to such  Book-Entry  Security and (ii) to debit the settlement  accounts of such
Participants and credit the settlement account of such Agent for an amount equal
to the price of such Book-Entry Security.

                  H.  Transfers of funds in accordance  with SDFS deliver orders
described in  Settlement  Procedures  "F" and "G" will be settled in  accordance
with SDFS operating procedures in effect on the settlement date.

                  I. Upon  confirmation  of receipt of funds,  the Trustee  will
transfer to the account of the Company maintained at National City Bank Indiana,
Indianapolis,  Indiana, or such other account as the Company may have previously
specified to the Trustee,  in funds  available  for  immediate use in the amount
transferred to the Trustee in accordance with Settlement Procedure "F".

                  J.  Upon  request,  the  Trustee  will  send to the  Company a
statement   setting  forth  the  principal   amount  of  Book-Entry   Securities
outstanding as of that date under the Indenture.

                  K. Such Agent will  confirm the  purchase  of such  Book-Entry
Security  to the  purchaser  either by  transmitting  to the  Participants  with
respect to such Book-Entry  Security a confirmation  order or orders through the
Depositary's  institutional delivery system or by mailing a written confirmation
to such purchaser.

                  L. The  Depositary  will,  at any time,  upon  request  of the
Company or the Trustee, promptly furnish to the Company or the Trustee a list of
the names and addresses of the participants for whom the Depositary has credited
Book-Entry Securities.

Preparation of Pricing Supplement:

                  If the  Company  accepts  an offer to  purchase  a  Book-Entry
Security,  it will  prepare a Pricing  Supplement  reflecting  the terms of such
Book-Entry  Security  and  arrange to have  delivered  to the  Selling  Agent or
Purchasing  Agent,  as the case may be,  at least  ten  copies  of such  Pricing
Supplement,  not later than 5:00 p.m.,  New York City time,  on the Business Day
following the Trade Date (as defined below), or if the Company and the purchaser
agree to settlement on the Business Day following the date of acceptance of such
offer,  not later than noon,  New York City time, on such date. The Company will
arrange

                                                      -6-
                                                                           


<PAGE>



to have ten Pricing  Supplements  filed with the  Commission  not later than the
close of business of the Commission on the fifth Business Day following the date
on which such Pricing Supplement is first used.

Delivery of Confirmation and Prospectus to Purchaser by Selling
Agent:

                  The  Selling   Agent  will  deliver  to  the  purchaser  of  a
Book-Entry Security a written  confirmation of the sale and delivery and payment
instructions.  In addition,  the Selling Agent will deliver to such purchaser or
its agent the  Prospectus  as amended or  supplemented  (including  the  Pricing
Supplement)  in relation to such  Book-Entry  Security prior to or together with
the  earlier  of the  delivery  to  such  purchaser  or  its  agent  of (a)  the
confirmation of sale or (b) the Book-Entry Security.

Date of Settlement:

                  The receipt by the Company of immediately  available  funds in
payment for a  Book-Entry  Security and the  authentication  and issuance of the
Global  Security   representing   such  Book-Entry   Security  shall  constitute
"settlement" with respect to such Book-Entry Security.  All orders of Book-Entry
Securities  solicited  by a  Selling  Agent or made by a  Purchasing  Agent  and
accepted by the Company on a particular  date (the "Trade Date") will be settled
on a date (the  "Settlement  Date")  which is the third  Business  Day after the
Trade Date pursuant to the  "Settlement  Procedure  Timetable"  set forth below,
unless the Company and the purchaser agree to settlement on another Business Day
which shall be no earlier than the next Business Day after the Trade Date.

Settlement Procedure Timetable:

                  For orders of  Book-Entry  Securities  solicited  by a Selling
Agent and accepted by the Company for settlement on the third Business Day after
the Trade Date,  Settlement  Procedures "A" through "I" set forth above shall be
completed as soon as possible but not later than the respective  times (New York
City time) set forth below:


                                                      -7-
                                                                           


<PAGE>




Settlement      Time
Procedure

A            5:00 p.m.         on the Business Day following the Trade Date
                               or 10:00 a.m. on the Business Day prior to the
                               Settlement Date, whichever is earlier

B            12:00 noon        on the second Business Day immediately
                               preceding the Settlement Date

C            2:00 p.m.         on the second Business Day immediately
                               preceding the Settlement Date

D            9:00 a.m.         on the Settlement Date

E            10:00 a.m.        on the Settlement Date

F-G          2:00 p.m.         on the Settlement Date

H            4:45 p.m.         on the Settlement Date

I            5:00 p.m.         on the Settlement Date


                  If the initial  interest rate for a Floating  Rate  Book-Entry
Security has not been  determined at the time that  Settlement  Procedure "A" is
completed,  Settlement Procedures "B" and "C" shall be completed as soon as such
rate has been  determined but no later than 2:00 p.m. on the second Business Day
immediately  preceding the Settlement Date.  Settlement Procedure "H" is subject
to extension in accordance with any extension of Fedwire  closing  deadlines and
in the other events specified in the SDFS operating  procedures in effect on the
Settlement Date.

                  If  settlement  of a  Book-Entry  Security is  rescheduled  or
canceled,  the Trustee,  upon obtaining  knowledge thereof,  will deliver to the
Depositary, through the Depositary's Participant Terminal System, a cancellation
message  to  such  effect  by no  later  than  2:00  p.m.  on the  Business  Day
immediately preceding the scheduled Settlement Date.


Failure to Settle:

                  If the  Trustee  fails  to enter an SDFS  deliver  order  with
respect to a  Book-Entry  Security  pursuant to  Settlement  Procedure  "F", the
Trustee may deliver to the  Depositary,  through  the  Depositary's  Participant
Terminal  System,  as soon as practicable a withdrawal  message  instructing the
Depositary  to debit  such  Book-Entry  Security  to the  Trustee's  participant
account,  provided that the Trustee's  participant  account contains a principal
amount of the Global Security  representing such Book-Entry  Security that is at
least equal to the principal  amount to be debited.  If a withdrawal  message is
processed with

                                                      -8-
                                                                           


<PAGE>



respect to all the Book-Entry Securities  represented by a Global Security,  the
Trustee will mark such Global Security  "canceled",  make appropriate entries in
the Trustee's records and send such canceled Global Security to the Company. The
CUSIP number  assigned to such Global  Security  shall, in accordance with CUSIP
Service Bureau  procedures,  be canceled and not  immediately  reassigned.  If a
withdrawal message is processed with respect to one or more, but not all, of the
Book-Entry  Securities  represented  by a  Global  Security,  the  Trustee  will
exchange  such Global  Security  for two Global  Securities,  one of which shall
represent  such  Book-Entry   Security  or  Securities  and  shall  be  canceled
immediately  after issuance and the other of which shall represent the remaining
Book-Entry Securities previously  represented by the surrendered Global Security
and shall bear the CUSIP number of the surrendered Global Security.

                  If the  purchase  price  for any  Book-Entry  Security  is not
timely paid to the participants with respect to such Book-Entry  Security by the
beneficial purchaser thereof (or a person,  including an indirect participant in
the Depositary,  acting on behalf of such purchaser),  such participants and, in
turn,  the Agent for such  Book-Entry  Security may enter deliver orders through
the Depositary's  Participant  Terminal System debiting such Book-Entry Security
to such  participant's  account and crediting such  Book-Entry  Security to such
Agent's  account and then  debiting  such  Book-Entry  Security to such  Agent's
participant  account and  crediting  such  Book-Entry  Security to the Trustee's
participant  account  and shall  notify the  Company  and the  Trustee  thereof.
Thereafter,  the Trustee will (i)  immediately  notify the Company of such order
and the Company shall  transfer to such Agent funds  available for immediate use
in an amount equal to the price of such  Book-Entry  Security which was credited
to the  account of the Company  maintained  at the  Trustee in  accordance  with
Settlement  Procedure  I, and (ii) deliver the  withdrawal  message and take the
related actions described in the preceding paragraph. If such failure shall have
occurred for any reason other than  default by the  applicable  Agent to perform
its obligations hereunder or under the Distribution Agreement,  the Company will
reimburse  such  Agent on an  equitable  basis  for the loss of its use of funds
during the period when the funds were credited to the account of the Company.

                  Notwithstanding the foregoing, upon any failure to settle with
respect  to a  Book-Entry  Security,  the  Depositary  may take any  actions  in
accordance with its SDFS operating  procedures then in effect. In the event of a
failure to settle with  respect to one or more,  but not all, of the  Book-Entry
Securities  to have been  represented  by a Global  Security,  the Trustee  will
provide, in accordance with Settlement Procedure "D", for the

                                                      -9-
                                                                           


<PAGE>



authentication  and  issuance  of  a  Global  Security  representing  the  other
Book-Entry  Securities to have been represented by such Global Security and will
make  appropriate  entries in its records.  The Company will, from time to time,
furnish the Trustee with a sufficient quantity of Securities.


PART II:  ADMINISTRATIVE PROCEDURE FOR CERTIFICATED SECURITIES

Posting Rates by Company:

                  The Company and the Agent will  discuss  from time to time the
rates of  interest  per annum to be borne by and the  maturity  of  Certificated
Securities  that may be sold as a result  of the  solicitation  of offers by the
Agent.  The Company may establish a fixed set of interest  rates and  maturities
for an offering  period  ("posting").  If the Company  decides to change already
posted  rates,  it will  promptly  advise the Agent to suspend  solicitation  of
offers until the new posted rates have been established with the Agent.

Acceptance of Offers by Company:

                  The Agent will  promptly  advise the Company by  telephone  or
other  appropriate  means of all  reasonable  offers  to  purchase  Certificated
Securities,  other than those  rejected  by such  Agent.  The Agent may,  in its
discretion reasonably exercised,  reject any offer received by it in whole or in
part.  The Agent also may make offers to the  Company to  purchase  Certificated
Securities as a Purchasing Agent. The Company will have the sole right to accept
offers to  purchase  Certificated  Securities  and may  reject any such offer in
whole or in part.

                  The  Company  will  promptly   notify  the  Selling  Agent  or
Purchasing Agent, as the case may be, of its acceptance or rejection of an offer
to purchase Certificated Securities. If the Company accepts an offer to purchase
Certificated  Securities,  it will  confirm  such  acceptance  in writing to the
Selling Agent or Purchasing Agent, as the case may be, and the Trustee.

Communication of Sale Information to Company by Agent:

                  After the  acceptance of an offer by the Company,  the Selling
Agent or Purchasing  Agent,  as the case may be, will  communicate the following
details of the terms of such offer (the "Sale  Information")  to the  Company by
telephone  (confirmed  in  writing)  or  by  facsimile   transmission  or  other
acceptable written means:


                                                      -10-
                                                                           


<PAGE>



                  1.       Principal Amount of Certificated Securities to be
                           purchased;

                  2.       If a Fixed Rate Certificated Security, the
                           interest rate and initial interest payment date;

                  3.       Trade Date;

                  4.       Settlement Date;

                  5.       Maturity Date;

                  6.       Specified Currency and, if the Specified Currency
                           is other than U.S. dollars, the applicable Exchange 
                           Rate for such Specified Currency;

                  7.       Indexed Currency, the Base Rate and the Exchange
                           Rate Determination Date, if applicable;

                  8.       Issue Price;

                  9.       Selling Agent's commission or Purchasing Agent's
                           discount, as the case may be;

                 10.       Net Proceeds to the Company;

                 11.       If a redeemable Certificated Security, such of the
                           following as are applicable:

                           (i)      Redemption Commencement Date,

                           (ii)     Initial Redemption Price (% of par), and

                           (iii)    Amount (% of par) that the Redemption Price
shall decline (but not below par) on each anniversary of the
Redemption Commencement Date;

             12.           If a Floating Rate Certificated Security, such of
the following as are applicable:

                           (i)      Interest Rate Basis,

                           (ii)     Index Maturity,

                           (iii)    Spread and/or Spread Multiplier,

                           (iv)     Maximum Rate,

                           (v)      Minimum Rate,


                                                      -11-
                                                                           


<PAGE>



                           (vi)     Initial Interest Rate,

                           (vii)    Interest Reset Dates,

                           (viii)   Calculation Dates,

                           (ix)     Interest Determination Dates,

                           (x)      Interest Payment Dates,

                           (xi)     Regular Record Dates, and

                           (xii)    Calculation Agent;

             13.           Name, address and taxpayer identification number
                           of the registered owner(s);

             14.           Denomination of certificates to be delivered at
                           settlement;

             15.           Book-Entry Security or Certificated Security; and

             16.           Selling Agent or Purchasing Agent.

Preparation of Pricing Supplement by Company:

                  If the  Company  accepts an offer to  purchase a  Certificated
Security,  it will  prepare a Pricing  Supplement  reflecting  the terms of such
Certificated  Security  and arrange to have  delivered  to the Selling  Agent or
Purchasing  Agent,  as the case may be,  at least  ten  copies  of such  Pricing
Supplement,  not later than 5:00 p.m.,  New York City time,  on the Business Day
following  the  Trade  Date,  or if the  Company  and  the  purchaser  agree  to
settlement  on the date of acceptance  of such offer,  not later than noon,  New
York City time,  on such date.  The  Company  will  arrange to have ten  Pricing
Supplements  filed with the  Commission  not later than the close of business of
the  Commission  on the fifth  Business  Day  following  the date on which  such
Pricing Supplement is first used.

Delivery of Confirmation and Prospectus to Purchaser by Selling
Agent:

                  The  Selling   Agent  will  deliver  to  the  purchaser  of  a
Certificated  Security  a  written  confirmation  of the sale and  delivery  and
payment  instructions.  In  addition,  the  Selling  Agent will  deliver to such
purchaser or its agent the Prospectus as amended or supplemented  (including the
Pricing  Supplement)  in  relation  to such  Certificated  Security  prior to or
together with

                                                      -12-
                                                                           


<PAGE>



the  earlier  of the  delivery  to  such  purchaser  or  its  agent  of (a)  the
confirmation of sale or (b) the Certificated Security.

Date of Settlement:

                  All offers of Certificated  Securities  solicited by a Selling
Agent or made by a Purchasing  Agent and accepted by the Company will be settled
on a date (the "Settlement Date") which is the third Business Day after the date
of  acceptance  of such offer,  unless the Company  and the  purchaser  agree to
settlement (a) on another Business Day after the acceptance of such offer or (b)
with respect to an offer  accepted by the Company prior to 10:00 a.m.,  New York
City time, on the date of such acceptance.

Instruction from Company to Trustee for Preparation of
Certificated Securities:

                  After receiving the Sale Information from the Selling Agent or
Purchasing  Agent,  as the case may be, the Company will  communicate  such Sale
Information  to the Trustee by telephone  (confirmed in writing) or by facsimile
transmission or other acceptable written means.

                  The  Company   will   instruct   the   Trustee  by   facsimile
transmission or other  acceptable  written means to authenticate and deliver the
Certificated  Securities  no later  than 2:15 p.m.,  New York City time,  on the
Settlement  Date.  Such  instruction  will be given by the Company prior to 3:00
p.m.,  New York  City  time,  on the  Business  Day  immediately  preceding  the
Settlement  Date unless the  Settlement  Date is the date of  acceptance  by the
Company  of the offer to  purchase  Certificated  Securities  in which case such
instruction will be given by the Company by 11:00 a.m., New York City time.

Preparation and Delivery of Certificated Securities by Trustee
and Receipt of Payment Therefor:

                  The  Trustee  will  prepare  each  Certificated  Security  and
appropriate  receipts  that  will  serve  as  the  documentary  control  of  the
transaction.

                  In  the  case  of  a  sale  of  Certificated  Securities  to a
purchaser solicited by a Selling Agent, the Trustee will, by 2:15 p.m., New York
City time, on the Settlement Date,  deliver the  Certificated  Securities to the
Selling Agent for the benefit of the purchaser of such  Certificated  Securities
against delivery by the Selling Agent of a receipt  therefor.  On the Settlement
Date the Selling Agent will deliver payment for such Certificated  Securities in
immediately available funds to the Company in an amount equal to the issue price
of the Certificated Securities

                                                      -13-
                                                                           


<PAGE>



less the Selling  Agent's  commission;  provided that the Selling Agent reserves
the right to  withhold  payment  for which it has not  received  funds  from the
purchaser. The Company shall not use any proceeds advanced by a Selling Agent to
acquire securities.

                  In  the  case  of  a  sale  of  Certificated  Securities  to a
Purchasing  Agent,  the Trustee will,  by 2:15 p.m.,  New York City time, on the
Settlement  Date,  deliver the  Certificated  Securities to the Purchasing Agent
against  delivery of payment for such  Certificated  Securities  in  immediately
available  funds to the  Company  in an amount  equal to the issue  price of the
Certificated Securities less the Purchasing Agent's discount.

Failure of Purchaser to Pay Selling Agent:

                  If a purchaser  (other than a Purchasing  Agent) fails to make
payment to the Selling Agent for a Certificated Security, the Selling Agent will
promptly notify the Trustee and the Company  thereof by telephone  (confirmed in
writing) or by facsimile  transmission or other  acceptable  written means.  The
Selling Agent will immediately return the Certificated  Security to the Trustee.
Immediately  upon  receipt of such  Certificated  Security by the  Trustee,  the
Company  will  return  to the  Selling  Agent  an  amount  equal  to the  amount
previously  paid to the Company in respect of such  Certificated  Security.  The
Company will  reimburse the Selling Agent on an equitable  basis for its loss of
the use of funds during the period when they were credited to the account of the
Company.

                  The Trustee will cancel the  Certificated  Security in respect
of which the failure  occurred,  make  appropriate  entries in its records  and,
unless otherwise instructed by the Company, destroy the Certificated Security.

                                                      -14-
                                                                           


<PAGE>



                                                                       ANNEX III


                               Accountants' Letter


                  Pursuant to Sections 4(j) and 6(d), as the case may be, of the
Distribution  Agreement,  the Company's independent certified public accountants
shall furnish letters to the effect that:

                           (i)      They are independent certified public
accountants with respect to the Company and its subsidiaries
within the meaning of the Act and the applicable published rules
and regulations thereunder;

                           (ii)     In their opinion, the consolidated financial
statements and any  supplementary  financial  information and schedules (and, if
applicable,  financial forecasts and/or pro forma financial information) 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 Exchange Act, as  applicable,  and the related  published  rules and
regulations  thereunder;  and,  if  applicable,  they  have  made  a  review  in
accordance  with standards  established  by the American  Institute of Certified
Public Accountants of the consolidated  interim financial  statements,  selected
financial  data, pro forma financial  information,  financial  forecasts  and/or
condensed financial  statements derived from audited financial statements of the
Company for the periods  specified in such letter, as indicated in their reports
thereon, copies of which are attached;

                           (iii)    They have made a review in accordance with
standards  established by the American Institute of Certified Public Accountants
of the  unaudited  condensed  consolidated  statements  of income,  consolidated
balance  sheets  and  consolidated  statements  of cash  flows  included  in the
Company's  quarterly  report on Form 10-Q  incorporated  by  reference  into the
Prospectus as indicated in their reports  thereon  copies of which are attached;
and on the basis of specified procedures including inquiries of officials of the
Company who have  responsibility  for financial and accounting matters regarding
whether the unaudited condensed consolidated financial statements referred to in
paragraph  (v)(A)(i)  below comply as to form in all material  respects with the
applicable  accounting  requirements  of the Act and  the  Exchange  Act and the
related  published rules and  regulations,  nothing came to their attention that
caused  them to believe  that the  unaudited  condensed  consolidated  financial
statements do not comply as to form in all material respects with

                                                      -1-
                                                                           


<PAGE>



the applicable  accounting  requirements of the Act and the Exchange Act and the
related published rules and regulations;

                           (iv)     The unaudited selected financial information
with respect to the consolidated results of operations and financial position of
the Company for the five most recent  fiscal  years  included in the  Prospectus
agrees with the  corresponding  amounts (after  restatement where applicable) in
the audited  consolidated  financial statements for such fiscal years which were
included or  incorporated  by reference in the Company's  Annual Reports on Form
10-K for such fiscal years;

                           (v)      On the basis of limited procedures, not
constituting  an examination  in accordance  with  generally  accepted  auditing
standards,  consisting of a reading of the unaudited  financial  statements  and
other  information  referred to below, a reading of the latest available interim
financial  statements  of the Company and its  subsidiaries,  inspection  of the
minute  books of the Company and its  subsidiaries  since the date of the latest
audited  financial  statements  incorporated  by  reference  in the  Prospectus,
inquiries  of  officials  of the Company and its  subsidiaries  responsible  for
financial and accounting  matters and such other inquiries and procedures as may
be specified in such letter, nothing came to their attention that caused them to
believe that:

                           (A)(i)   the   unaudited    condensed    consolidated
         statements  of income,  consolidated  balance  sheets and  consolidated
         statements of cash flows included in the Prospectus  and/or included or
         incorporated  by reference in the Company's  Quarterly  Reports on Form
         10-Q  incorporated  by reference in the  Prospectus do not comply as to
         form  in  all  material   respects  with  the   applicable   accounting
         requirements  of the Exchange Act and the related  published  rules and
         regulations,  or (ii) any material  modifications should be made to the
         unaudited  condensed  consolidated  statements of income,  consolidated
         balance  sheets and  consolidated  statements of cash flows included in
         the Company's  Quarterly Reports on Form 10-Q incorporated by reference
         in the Prospectus for them to be in conformity with generally  accepted
         accounting principles;

                           (B) any other  unaudited  income  statement  data and
         balance  sheet items  included in the  Prospectus do not agree with the
         corresponding items in the unaudited  consolidated financial statements
         from which such data and items were derived;

                           (C)      as of a specified date not more than five
         days prior to the date of such letter, there have been any

                                                      -2-
                                                                           


<PAGE>



         changes in the  consolidated  capital  stock  (other than  issuances of
         capital stock upon exercise of options and stock  appreciation  rights,
         upon   earn-outs  of  performance   shares  and  upon   conversions  of
         convertible securities, in each case which were outstanding on the date
         of the latest  balance sheet included or  incorporated  by reference in
         the Prospectus) or any increase in the  consolidated  long-term debt of
         the Company and its subsidiaries,  or any decreases in consolidated net
         current assets or stockholders'  equity or other items specified by the
         Agent,  or any increases in any items  specified by the Agent,  in each
         case as  compared  with  amounts  shown  in the  latest  balance  sheet
         incorporated  by reference in the  Prospectus,  except in each case for
         changes,  increases or decreases  which the  Prospectus  discloses have
         occurred or may occur or which are described in such letter; and

                           (D) for  the  period  from  the  date  of the  latest
         financial statements incorporated by reference in the Prospectus to the
         specified  date  referred to in Clause (E) there were any  decreases in
         consolidated net revenues or operating profit or the total or per share
         amounts of  consolidated  net income or other  items  specified  by the
         Agent,  or any increases in any items  specified by the Agent,  in each
         case as compared with the  comparable  period of the preceding year and
         with any other period of  corresponding  length specified by the Agent,
         except in each case for  increases  or decreases  which the  Prospectus
         discloses  have  occurred or may occur or which are  described  in such
         letter.

                           (vii)   In addition to the audit referred to in their
report(s)  included or  incorporated  by  reference  in the  Prospectus  and the
limited procedures,  inspection of minute books,  inquiries and other procedures
referred to in  paragraphs  (iii) and (vi) above,  they have carried out certain
specified  procedures,  not  constituting  an audit in accordance with generally
accepted auditing  standards,  with respect to certain amounts,  percentages and
financial  information specified by the Agent which are derived from the general
accounting  records of the Company  and its  subsidiaries,  which  appear in the
Prospectus (excluding documents incorporated by reference), or in Part II of, or
in exhibits and schedules to, the Registration  Statement specified by the Agent
or in documents  incorporated  by reference in the  Prospectus  specified by the
Agent,  and have  compared  certain of such amounts,  percentages  and financial
information with the accounting  records of the Company and its subsidiaries and
have found them to be in agreement.

                  All  references in this Annex III to the  Prospectus  shall be
deemed to refer to the Prospectus (including the

                                                      -3-
                                                                           


<PAGE>


documents  incorporated  by  reference  therein) as defined in the  Distribution
Agreement as of the Commencement Date referred to in Section 6(d) thereof and to
the Prospectus as amended or supplemented  (including the documents incorporated
by reference therein) as of the date of the amendment, supplement, incorporation
or the Time of Delivery  relating to the Terms Agreement  requiring the delivery
of such letter under Section 4(j) thereof.

                                                      -4-
                                                                           



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