FILED PURSUANT TO RULE 424(b)(5)
COMMISSION FILE NO. 333-82111
PROSPECTUS SUPPLEMENT
- ---------------------
(TO PROSPECTUS DATED JULY 28, 1999)
$100,000,000
Indiana Gas Company, Inc.
Medium-Term Notes, Series G
Due Nine Months or More From Date of Issue
The notes:
o We will offer notes from time to time and specify the terms and conditions
of each issue of notes in a pricing supplement.
o The notes will be senior unsecured debt securities of Indiana Gas.
o The notes will have stated maturities of nine months or more from the date
they are originally issued.
o We will pay amounts due on the notes in U.S. dollars.
o The notes may bear interest at fixed or floating rates or may not bear any
interest. If the notes bear interest at a floating rate, the floating rate
may be based on one or more indices or formulas.
o We will specify whether the notes can be redeemed or repaid before their
maturity and whether they are subject to mandatory redemption, redemption
at the option of Indiana Gas or repayment at the option of the holder of
the notes.
Investing in the notes involves certain risks.
See "Risk Factors" on page S-3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement, the accompanying prospectus or any pricing supplement is
truthful or complete. Any representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
Public Agent's Proceeds, before
Offering Discounts expenses, to
Price and Commissions Indiana Gas Company, Inc.
<S> <C> <C> <C>
Per note.............. 100% .125%-.750% 99.875%-99.250%
Total................. $100,000,000 $125,000--$750,000 $99,875,000--$99,250,000
</TABLE>
We may sell notes to the agent referred to below as principal for resale at
varying or fixed offering prices or through the agent as agent using its
reasonable efforts on our behalf. We may also sell notes without the assistance
of the agent, whether acting as principal or as agent. If we sell other debt
securities referred to in the accompanying prospectus, the amount of the notes
that we may offer and sell under this prospectus supplement may be reduced.
Merrill Lynch & Co.
The date of this prospectus supplement is August 13, 1999.
<PAGE>
TABLE OF CONTENTS
Page
PROSPECTUS SUPPLEMENT
Risk Factors........................................................... S-3
Description of the Notes............................................... S-4
Certain United States Federal Income Tax Considerations................ S-28
Plan of Distribution................................................... S-36
Validity of the Notes.................................................. S-37
PROSPECTUS
Indiana Gas Company, Inc............................................... 2
Recent Developments.................................................... 3
Use of Proceeds........................................................ 4
Ratio of Earnings to Fixed Charges..................................... 4
Description of the Debt Securities..................................... 5
Plan of Distribution................................................... 9
Where You Can Find More Information.................................... 10
Incorporation of Information We File With the SEC...................... 10
Experts ............................................................. 11
You should rely only on the information contained or incorporated by
reference in this prospectus supplement, the accompanying prospectus and any
pricing supplement. Neither we nor any agent has authorized any other person to
provide you with different or additional information. If anyone provides you
with different or additional information, you should not rely on it. Neither we
nor any agent is making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information
contained or incorporated by reference in this prospectus supplement, the
accompanying prospectus and any pricing supplement is accurate only as of the
date on the front cover of the applicable pricing supplement.
References in this prospectus supplement to "Indiana Gas," "we," "us"
and "our" are to Indiana Gas Company, Inc.
References in this prospectus supplement to "agent" are to Merrill
Lynch & Co. or any other agent appointed by us.
S - 2
<PAGE>
RISK FACTORS
Your investment in the notes involves certain risks. In consultation
with your own financial and legal advisers, you should carefully consider, among
other matters, the following discussion of risks before deciding whether an
investment in the notes is suitable for you. The notes are not an appropriate
investment for you if you are unsophisticated with respect to their significant
components.
Structure Risks of Notes Indexed to Interest Rate, Currency or Other Indices or
Formulas
If you invest in notes indexed to one or more interest rates or other
indices or formulas, there will be significant risks not associated with a
conventional fixed rate or floating rate debt security. These risks include
fluctuation of the indices or formulas and the possibility that you will receive
a lower, or no, amount of principal, premium or interest and at different times
than you expected. We have no control over a number of matters, including
economic, financial and political events, that are important in determining the
existence, magnitude and longevity of these risks and their results. In
addition, if an index or formula used to determine any amounts payable in
respect of the notes contains a multiplier or leverage factor, the effect of any
change in that index or formula will be magnified. In recent years, values of
certain indices and formulas have been volatile and volatility in those and
other indices and formulas may be expected in the future. However, past
experience is not necessarily indicative of what may occur in the future.
Redemption May Adversely Affect Your Return on the Notes
If your notes are redeemable at our option or are otherwise subject to
mandatory redemption, we may, in the case of optional redemption, or must, in
the case of mandatory redemption, choose to redeem your notes at times when
prevailing interest rates may be relatively low. Accordingly, you generally will
not be able to reinvest the redemption proceeds in a comparable security at an
effective interest rate as high as that of the notes.
There May Be an Uncertain Trading Market for Your Notes; Many Factors Affect the
Trading Value of Your Notes
We cannot assure you a trading market for your notes will ever develop
or be maintained. Many factors independent of our creditworthiness may affect
the trading market of your notes. These factors include:
o the complexity and volatility of the index or formula
applicable to the notes,
o the method of calculating the principal, premium and interest
in respect of the notes,
o the time remaining to the maturity of the notes,
o the outstanding amount of the notes,
o the redemption features of the notes,
o the amount of other securities linked to the index or formula
applicable to the notes, and
o the level, direction and volatility of market interest rates
generally.
S - 3
<PAGE>
In addition, because some notes were designed for specific investment
objectives or strategies, these notes will have a more limited trading market
and experience more price volatility. There may be a limited number of buyers
for these notes. This may affect the price you receive for these notes or your
ability to sell these notes at all. You should not purchase notes unless you
understand and know you can bear the related investment risks.
Our Credit Ratings May Not Reflect All Risks of an Investment in the Notes
Our credit ratings are an assessment of our ability to pay our
obligations. Consequently, real or anticipated changes in our credit ratings
will generally affect the market value of your notes. Our credit ratings,
however, may not reflect the potential impact of risks related to structure,
market or other factors discussed above on the value of your notes.
DESCRIPTION OF THE NOTES
The notes will be issued as a new series of debt securities under an
indenture, dated as of February 1, 1991, as amended, between Indiana Gas and
U.S. Bank Trust National Association (formerly Continental Bank, National
Association), as trustee. The following summary of the material provisions of
the notes and of the indenture is not complete and is qualified in its entirety
by reference to the indenture, a copy of which has been filed as an exhibit to
the registration statement of which this prospectus supplement and the
accompanying prospectus are a part.
The following description of notes will apply unless otherwise
specified in an applicable pricing supplement.
Terms of the Notes
The notes will be issued as a new series of debt securities under the
indenture. All notes issued under the indenture will be unsecured general
obligations of Indiana Gas and will rank equally with all other unsecured and
unsubordinated indebtedness of Indiana Gas from time to time outstanding.
The indenture does not limit the amount of debt which Indiana Gas may
issue. Indiana Gas may issue its debt from time to time as a single series or in
two or more separate series up to the aggregate principal amount from time to
time authorized by Indiana Gas for each series. As of June 30, 1999, Indiana Gas
had $191,854,000 of outstanding long term debt, none of which is secured.
The notes will be offered on a continuing basis and will mature on a
day nine months or more from the date of issue, as selected by the purchaser and
agreed to by Indiana Gas. Interest-bearing notes will bear interest at either
fixed or floating rates as specified in the applicable pricing supplement. Notes
may be issued at significant discounts from their principal amount payable at
stated maturity, or on any date before the stated maturity date on which the
principal or an installment of principal of a note becomes due and payable,
whether by the declaration of acceleration, call for redemption at the option of
Indiana Gas, repayment at the option of the holder or otherwise (the stated
maturity date or such prior date, as the case may be, is referred to as the
"Maturity Date" with respect to the principal repayable on such date). Some
notes may not bear interest.
S - 4
<PAGE>
The notes will be denominated in United States dollars and Indiana Gas
will make payments of principal of, and premium, if any, and interest on, the
notes in United States dollars.
Each Note will be issued in fully registered form only, without
coupons. Each note will be issued initially in book-entry form or in
certificated form. Each book-entry note will be represented by one or more fully
registered global notes registered in the name of a nominee of The Depository
Trust Company, as depository. Except as set forth under "Book-Entry Notes" or in
any applicable pricing supplement, the notes will not be issued as certificated
notes. The notes will be issued in denominations of $1,000 and integral
multiples of $1,000. Interest rates may differ depending upon, among other
things, the aggregate principal amount of the notes purchased in any single
transaction.
The pricing supplement relating to a note will describe the following
terms:
o whether the note will bear interest at a fixed rate or at a
floating rate, or will not bear any interest;
o the price (expressed as a percentage of the aggregate
principal amount) at which the note will be issued;
o the date on which the note will be issued;
o the date on which the note will mature;
o if the note is a fixed rate note, the rate per annum at which
the note will bear interest and the interest payment dates;
o if the note is a floating rate note, the terms relating to the
determination and payment of the variable interest rate and
the interest payment dates;
o if the note may be redeemed at the option of Indiana Gas, or
repaid at the option of the holder, prior to stated maturity,
a description of the provisions relating to the redemption or
repayment;
o any sinking fund or other mandatory redemption provisions
applicable to the note;
o if the note will be issued as a certificated note, a statement
to that effect;
o any other terms of the note not inconsistent with the
provisions of the indenture;
o the identity of any additional agent through or to whom the
note is sold; and
o the amount of discounts or commissions to be paid to an agent
if different from those specifically set forth in the
distribution agreement which is filed as an exhibit to the
registration statement of which this prospectus supplement and
the accompanying prospectus are a part.
Interest rates offered by Indiana Gas with respect to the notes may
differ depending upon, among other things, the aggregate principal amount of
notes purchased in any single transaction. Interest rates or formulas and other
terms of the notes are subject to change by Indiana Gas from time to time, but
no change will affect any note already issued or as to which Indiana Gas has
accepted an offer to purchase. Indiana Gas may offer notes with similar variable
terms other than interest rates concurrently at any time. Indiana Gas may also
concurrently offer notes having different variable terms to different investors.
S - 5
<PAGE>
Unless otherwise specified in the applicable pricing supplement,
"interest payment date," in the case of fixed rate notes, means each March 15
and September 15 and, in the case of floating rate notes, has the meaning
specified under "Interest -- Floating Rate Notes."
Payment of Principal and Interest
Indiana Gas will make interest payments on the book-entry notes by wire
transfer in immediately available funds through the trustee to the depository or
its nominee.
Payments of principal of, and premium, if any, and interest, if any, on
book-entry notes will be made by Indiana Gas through the trustee to the
depository or its nominee. See "Book-Entry Notes." In the case of certificated
notes, payment of principal and premium, if any, due on the Maturity Date will
be made in immediately available funds upon presentation and surrender of the
certificated notes (and, in the case of any repayment on an optional repayment
date, upon submission of a duly completed election form if and as required by
the provisions described below) at the office or agency maintained by Indiana
Gas for such purpose in the Borough of Manhattan, The City of New York,
currently the corporate trust office of the trustee located at 100 Wall Street,
Suite 2000, New York, New York 10005. Payment of interest, if any, due on the
Maturity Date of a certificated note will be made to the person to whom payment
of the principal and premium, if any, shall be made. Payment of interest, if
any, due on a certificated note on any interest payment date other than the
Maturity Date will be made by check mailed to the address of the holder as such
address shall appear in the security register. Notwithstanding the foregoing, a
holder of $10,000,000 or more in aggregate principal amount of certificated
notes (whether having identical or different terms and provisions) will be
entitled to receive interest payments, if any, on any interest payment date
other than the Maturity Date by wire transfer in immediately available funds if
such holder delivers appropriate wire transfer instructions in writing to the
trustee not less than 15 days prior to the relevant interest payment date. Any
such wire transfer instructions received by the trustee will remain in effect
until revoked by such holder.
Redemption at the Option of Indiana Gas
Indiana Gas may redeem the notes at its option prior to their stated
maturity date only if specified in the applicable notes and in the applicable
pricing supplement. If so indicated in the applicable pricing supplement,
Indiana Gas may redeem the notes at its option on any date on or after the
applicable initial redemption date specified in the applicable pricing
supplement. On or after the initial redemption date, if any, Indiana Gas may
redeem the related note at any time in whole or in part at its option at the
applicable redemption price referred to below together with interest on the
principal of the applicable note payable to the redemption date, on notice
given, not more than 60 nor less than 30 days before the redemption date.
Indiana Gas will redeem the notes in increments of $1,000, provided that any
remaining principal amount will be an authorized denomination of the applicable
note. Unless otherwise specified in the applicable pricing supplement, the
redemption price with respect to a note will initially mean a percentage (i.e.
the initial redemption percentage) of the principal amount of the note to be
redeemed specified in the applicable pricing supplement and shall decline at
each anniversary of the initial redemption date by a percentage specified in the
applicable pricing supplement (i.e. the annual redemption percentage reduction)
of the principal amount to be redeemed until the redemption price is 100% of the
principal amount.
S - 6
<PAGE>
The pricing supplement with respect to a note will specify any
applicable mandatory redemption or sinking fund provisions.
Repayment at the Option of the Holder
If so indicated in an applicable pricing supplement, Indiana Gas will
repay the notes in whole or in part at the option of the holders of the notes on
any optional repayment date specified in the applicable pricing supplement. If
no optional repayment date is indicated with respect to a note, it will not be
repayable at the option of the holder before its stated maturity date. Any
repayment in part will be in an amount equal to $1,000 or integral multiples of
$1,000, provided that any remaining principal amount will be an authorized
denomination of the applicable note. The repurchase price for any note so
repurchased will be 100% of the principal amount to be repaid, together with
unpaid interest on the principal of the applicable note payable to the date of
repayment. For any note to be repaid, the trustee must receive, at its office in
Chicago, Illinois (or such other address as Indiana Gas shall from time to time
designate), not more than 60 nor less than 30 days before the optional repayment
date:
o in the case of a note in certificated form, the note and the
form entitled "Option to Elect Repayment" duly completed, or
o in the case of a note in book-entry form, instructions to that
effect from the applicable beneficial owner of the global
security representing the notes to the depository and
forwarded by the depository.
Notices of elections from a holder to exercise the repayment option must be
received by the trustee by 5:00 p.m., New York City time, on the last day for
giving such notice. Exercise of the repayment option by the holder of a note
will be irrevocable.
Only the depository may exercise the repayment option in respect of
global securities representing notes in book-entry form. Accordingly, beneficial
owners of global securities that desire to have all or any portion of the notes
in book-entry form represented by global securities repaid must instruct the
participant through which they own their interest to direct the depository to
exercise the repayment option on their behalf by forwarding the repayment
instructions to the trustee as discussed above. In order to ensure that the
instructions are received by the trustee on a particular day, the applicable
beneficial owner must so instruct the participant through which it owns its
interest before that participant's deadline for accepting instructions for that
day. Different firms may have different deadlines for accepting instructions
from their customers. Accordingly, beneficial owners of notes in book-entry form
should consult the participants through which they own their interest for the
respective deadlines. All instructions given to participants from beneficial
owners of notes in book-entry form relating to the option to elect repayment
will be irrevocable. In addition, at the time instructions are given, each
beneficial owner will cause the participant through which it owns its interest
to transfer its interest in the global security or securities representing the
related notes in book-entry form, on the depository's records, to the trustee.
See "Book-Entry Notes."
If applicable, Indiana Gas will comply with the requirements of Section
14(e) of the Securities Exchange Act of 1934 and the rules promulgated
thereunder and any other securities laws or regulations in connection with any
repayment at the option of the holder.
S - 7
<PAGE>
Indiana Gas may at any time purchase notes at any price or prices in
the open market or otherwise. Notes so purchased by Indiana Gas may, at the
discretion of Indiana Gas, be held, resold or surrendered to the trustee for
cancellation.
Interest
Each interest-bearing note will bear interest from the date of issue at
the rate per annum or, in the case of a floating rate note, pursuant to the
interest rate formula stated in the applicable note and in the applicable
pricing supplement until the principal of the note is paid or made available for
payment. Interest payments on fixed rate notes and floating rate notes will
equal the amount of interest accrued from and including the immediately
preceding interest payment date in respect of which interest has been paid or
made available for payment or from and including the date of issue, if no
interest has been paid or made available for payment with respect to the note,
to, but excluding, the related interest payment date or the Maturity Date, as
the case may be.
Interest will be payable in arrears on each interest payment date
specified in the applicable pricing supplement on which an installment of
interest is due and payable and on the Maturity Date. The first payment of
interest on any note originally issued between a regular record date and the
related interest payment date will be made on the interest payment date
immediately following the next succeeding regular record date to the registered
holder on the next succeeding regular record date. The regular record date will
be the fifteenth calendar day, whether or not a Business Day, immediately
preceding the related interest payment date.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which commercial banks are
authorized or required by law, regulation or executive order to close in The
City of New York; provided, however, with respect to Notes as to which LIBOR is
an applicable interest rate basis, that day is also a London Business Day.
"London Business Day" means a day on which commercial banks are open for
business (including dealings in the Designated LIBOR Currency (as defined
below)) in London.
Fixed Rate Notes
Unless otherwise specified in the applicable pricing supplement, each
fixed rate note will bear interest from the date of issue at the rate per annum
stated on the face of the note until the principal amount of the note is paid or
made available for payment. Unless otherwise specified in the applicable pricing
supplement, interest on fixed rate notes will be computed on the basis of a
360-day year of twelve 30-day months.
If any interest payment date or the Maturity Date of a fixed rate note
falls on a day that is not a Business Day, the related payment of principal,
premium, if any, or interest will be made on the next succeeding Business Day as
if made on the date the applicable payment was due and no interest will accrue
on the amount payable from and after the interest payment date or the Maturity
Date, as the case may be, to the date of such payment on the next succeeding
Business Day.
Floating Rate Notes
Interest on floating rate notes will be determined by reference to the
applicable Interest Rate Basis or Interest Rate Bases, which may be one or more
of the following:
o the CD Rate,
S - 8
<PAGE>
o the CMT Rate,
o the Commercial Paper Rate,
o the Eleventh District Cost of Funds Rate,
o the Federal Funds Rate,
o LIBOR,
o the Prime Rate,
o the Treasury Rate, or
o any other Interest Rate Basis or interest rate formula that is
specified in the applicable pricing supplement.
A floating rate note may bear interest with respect to two or more
Interest Rate Bases.
Terms. Each applicable pricing supplement will specify the terms of the
floating rate note being delivered, including the following:
o whether the floating rate note is:
o a "Regular Floating Rate Note,"
o an "Inverse Floating Rate Note" or
o a "Floating Rate/Fixed Rate Note,"
o the Interest Rate Basis or Bases,
o the Initial Interest Rate,
o the Interest Reset Dates,
o the interest payment dates,
o the period to maturity of the instrument or obligation with
respect to which the Interest Rate Basis or Bases will be
calculated (the "Index Maturity"),
o the Maximum Interest Rate and Minimum Interest Rate, if any,
o the number of basis points to be added to or subtracted from the
related Interest Rate Basis or Bases (the "Spread"),
o the percentage of the related Interest Rate Basis or Bases by
which the Interest Rate Basis or Bases will be multiplied to
determine the applicable interest rate (the "Spread
Multiplier"),
o if one or more of the specified Interest Rate Bases is LIBOR,
the Designated LIBOR Currency and the Designated LIBOR Page, and
o if one or more of the specified Interest Rate Bases is the CMT
Rate, the Designated CMT Telerate Page and Designated CMT
Maturity Index.
S - 9
<PAGE>
The interest rate borne by the floating rate notes will be determined
as follows:
Regular Floating Rate Notes
Unless a floating rate note is designated as a Floating Rate/Fixed Rate
Note, an Inverse Floating Rate Note or as having an addendum attached or as
having "other provisions" apply relating to a different interest rate formula,
it will be a Regular Floating Rate Note and, except as described in an
applicable pricing supplement, will bear interest at the rate determined by
reference to the applicable Interest Rate Basis or Bases:
o plus or minus the applicable Spread, if any, and/or
o multiplied by the applicable Spread Multiplier, if any.
Floating Rate/Fixed Rate Notes
If a floating rate note is designated as a "Floating Rate/Fixed Rate
Note," it will bear interest at the rate determined by reference to the
applicable Interest Rate Basis or Bases:
o plus or minus the applicable Spread, if any, and/or
o multiplied by the applicable Spread Multiplier, if any.
Commencing on the first Interest Reset Date, the rate at which interest on the
applicable Floating Rate/Fixed Rate Note will be payable will be reset as of
each Interest Reset Date; provided, however, that:
o the interest rate in effect for the period from the date of
issue to the first Interest Reset Date will be the Initial
Interest Rate, and
o the interest rate in effect commencing on, and including, the
date on which interest begins to accrue on a fixed rate basis to
maturity will be the Fixed Interest Rate, if the rate is
specified in the applicable pricing supplement, or if no Fixed
Interest Rate is specified, the interest rate in effect on the
Floating Rate/Fixed Rate Note on the day immediately preceding
the date on which interest begins to accrue on a fixed rate
basis.
Inverse Floating Rate Notes
If a floating rate note is designated as an "Inverse Floating Rate
Note," except as described below, it will bear interest equal to the Fixed
Interest Rate specified in the related pricing supplement minus the rate
determined by reference to the applicable Interest Rate Basis or Bases:
o plus or minus the applicable Spread, if any, and/or
o multiplied by the applicable Spread Multiplier, if any;
provided, however, that unless otherwise specified in the applicable pricing
supplement, the interest rate on the applicable Inverse Floating Rate Note will
not be less than zero percent. Commencing on the first Interest Reset Date, the
rate at which interest on the applicable Inverse Floating Rate Note is payable
will be Reset as of each Interest Reset Date; provided, however, that the
interest rate in effect for the period from the date of issue to the first
Interest Reset Date will be the Initial Interest Rate.
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<PAGE>
Unless otherwise specified in the applicable pricing supplement, the
interest rate with respect to each interest rate basis will be determined in
accordance with the applicable provisions below. Except as set forth above or in
the applicable pricing supplement, the interest rate in effect on each day shall
be (i) if that day is an Interest Reset Date (as defined below), the interest
rate determined as of the Interest Determination Date (as defined below)
immediately preceding such Interest Reset Date or (ii) if that day is not an
Interest Reset Date, the interest rate determined as of the Interest
Determination Date immediately preceding the most recent Interest Reset Date;
provided, however, that the interest rate in effect for the period from the date
of issue to the first Interest Reset Date will be the Initial Interest Rate
specified in the applicable pricing supplement.
Interest Reset Dates. The applicable pricing supplement will specify
the dates on which the interest rate on the related floating rate note will be
reset (each, an "Interest Reset Date"). Unless otherwise specified in the
applicable pricing supplement, the Interest Reset Dates will be, in the case of
floating rate notes which reset:
o daily -- each Business Day;
o weekly -- the Wednesday of each week, with the exception of
weekly reset floating rate notes as to which the Treasury Rate
is an applicable Interest Rate Basis, which will reset the
Tuesday of each week, except as described below;
o monthly -- the third Wednesday of each month, with the exception
of monthly reset floating rate notes as to which the Eleventh
District Cost of Funds Rate is an applicable Interest Rate
Basis, which will reset on the first calendar day of the month;
o quarterly -- the third Wednesday of March, June, September and
December of each year;
o semiannually -- the third Wednesday of the two months specified
in the applicable pricing supplement; and
o annually -- the third Wednesday of the month specified in the
applicable pricing supplement.
If any Interest Reset Date for any floating rate note would otherwise
be a day that is not a Business Day, the applicable Interest Reset Date will be
postponed to the next succeeding day that is a Business Day, except that in the
case of a floating rate note as to which LIBOR is an applicable Interest Rate
Basis, if the Business Day falls in the next succeeding calendar month, then the
Interest Reset Date will be the immediately preceding Business Day. In addition,
in the case of a floating rate note for which the Treasury Rate is an applicable
Interest Rate Basis, if the Interest Determination Date would otherwise fall on
an Interest Reset Date, then the applicable Interest Reset Date will be
postponed to the next succeeding Business Day.
Maximum and Minimum Interest Rates. A floating rate note may also have
either or both of the following:
o a maximum numerical limitation, or ceiling, on the rate at which
interest may accrue during any interest period (a "Maximum
Interest Rate"), and
o a minimum numerical limitation, or floor, on the rate at which
interest may accrue during any period (a "Minimum Interest
Rate").
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<PAGE>
Interest Payments. Each floating rate note will bear interest from the
date of issue at the rates specified in the applicable floating rate note until
the principal of the applicable note is paid or made available for payment.
Except as provided below or in the applicable pricing supplement, the interest
payment dates with respect to floating rate notes will be, in the case of
floating rate notes which reset:
o daily, weekly or monthly -- the third Wednesday of each month or
on the third Wednesday of March, June, September and December of
each year, as specified in the applicable pricing supplement;
o quarterly -- the third Wednesday of March, June, September and
December of each year;
o semiannually -- the third Wednesday of the two months of each
year specified in the applicable pricing supplement;
o annually -- the third Wednesday of the month of each year
specified in the applicable pricing supplement; and
o the Maturity Date.
If any interest payment date for any floating rate note other than the
Maturity Date, would otherwise be a day that is not a Business Day, the interest
payment date will be postponed to the next succeeding day that is a Business Day
except that in the case of a floating rate note as to which LIBOR is an
applicable Interest Rate Basis, if the Business Day falls in the next succeeding
calendar month, the applicable interest payment date will be the immediately
preceding Business Day. If the Maturity Date of a floating rate note falls on a
day that is not a Business Day, the payment of principal, premium, if any, and
interest will be made on the next succeeding Business Day, and no interest on
that payment will accrue for the period from and after the Maturity Date to the
date of that payment on the next succeeding Business Day.
All percentages resulting from any calculation on floating rate notes
will be rounded to the nearest one hundred-thousandth of a percentage point,
with five one-millionths of a percentage point rounded upwards. For example,
9.876545%, or .09876545, would be rounded to 9.87655%, or .0987655. All dollar
amounts used in or resulting from any calculation on floating rate notes will be
rounded to the nearest cent with one-half cent being rounded upward.
With respect to each floating rate note, accrued interest is calculated
by multiplying its principal amount by an accrued interest factor. Unless
otherwise specified in the applicable pricing supplement, the accrued interest
factor is computed by adding the interest factor calculated for each day in the
period for which accrued interest is being calculated.
o In the case of notes for which an applicable Interest Rate Basis
is the CD Rate, the Commercial Paper Rate, the Eleventh District
Cost of Funds Rate, the Federal Funds Rate, LIBOR or the Prime
Rate, the interest factor for each day will be computed by
dividing the interest rate applicable to each day by 360.
o In the case of notes for which an applicable Interest Rate Basis
is the CMT Rate or the Treasury Rate, the interest factor for
each day will be computed by dividing the interest rate
applicable to each day by the actual number of days in the year.
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<PAGE>
o The interest factor for floating rate notes for which the
interest rate is calculated with reference to two or more
Interest Rate Bases will be calculated in each period in the
same manner as if only one of the applicable Interest Rate Bases
applied.
Interest Determination Dates. The interest rate applicable to each
interest reset period commencing on the Interest Reset Date with respect to that
interest reset period will be the rate determined as of the applicable "Interest
Determination Date" and calculated on or prior to the calculation date referred
to below.
o The Interest Determination Date with respect to the CD Rate, the
CMT Rate, the Commercial Paper Rate, the Federal Funds Rate and
the Prime Rate will be the second Business Day preceding each
Interest Reset Date for the related note.
o The Interest Determination Date with respect to the Eleventh
District Cost of Funds Rate will be the last working day of the
month immediately preceding each Interest Reset Date on which
the Federal Home Loan Bank of San Francisco publishes the Index,
as defined below.
o The Interest Determination Date with respect to LIBOR will be
the second London Business Day preceding each Interest Reset
Date; unless the Designated LIBOR Currency is British pounds
sterling, in which case the Interest Determination Date will be
the applicable Interest Reset Date.
o The Interest Determination Date with respect to the Treasury
Rate will be the day in the week in which the related Interest
Reset Date falls on which day Treasury Bills, as defined below,
are normally auctioned. Treasury Bills are normally sold at
auction on Monday of each week, unless Monday is a legal
holiday, in which case the auction is normally held on the
immediately following Tuesday, except that the auction may be
held on the preceding Friday; provided, however, that if an
auction is held on the Friday of the week preceding the
applicable Interest Reset Date, the related Interest
Determination Date will be the preceding Friday; and provided,
further, that if an auction falls on any Interest Reset Date,
then the related Interest Reset Date will instead be the first
business day following the auction.
o The Interest Determination Date pertaining to a floating rate
note the interest rate of which is determined with reference to
two or more Interest Rate Bases will be the latest business day
which is at least two business days before the applicable
Interest Reset Date for the applicable floating rate note on
which each Interest Reset Basis is determinable. Each Interest
Rate Basis will be determined as of the Interest Determination
Date, and the applicable interest rate will take effect on the
related Interest Reset Date.
Calculation Date. Unless otherwise provided in the applicable pricing
supplement, the trustee under the indenture will be the calculation agent. Upon
the request of the holder of any floating rate note, the calculation agent will
provide the interest rate then in effect and, if determined, the interest rate
that will become effective as a result of a determination made for the next
succeeding Interest Reset Date with respect to that floating rate note. Unless
otherwise specified in the applicable pricing supplement, the calculation date,
if applicable, pertaining to any Interest Determination Date will be the earlier
of:
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o the tenth calendar day after the applicable Interest
Determination Date, or, if the tenth calendar day is not a
Business Day, the next succeeding Business Day; or
o the Business Day immediately preceding the applicable Interest
Payment Date or the Maturity Date, as the case may be.
CD Rate. CD Rate Notes will bear interest at the rates, calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any,
specified in the applicable CD Rate Notes and in any applicable pricing
supplement.
"CD Rate" means
(1) the rate on the applicable Interest Determination Date for
negotiable United States dollar certificates of deposit having
the Index Maturity specified in the applicable pricing
supplement as published in H.15(519) under the heading "CDs
(secondary market)," or
(2) if the rate referred to in clause (1) above is not so
published by 3:00 P.M., New York City time, on the related
calculation date, the rate on the applicable Interest
Determination Date for negotiable United States dollar
certificates of deposit of the Index Maturity specified in the
applicable pricing supplement as published in H.15 Daily
Update, or other recognized electronic source used for the
purpose of displaying the applicable rate, under the caption
"CDs (secondary market)," or
(3) if the rate referred to in clause (2) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the rate on the applicable Interest Determination Date
calculated by the calculation agent as the arithmetic mean of
the secondary market offered rates as of 10:00 A.M., New York
City time, on the applicable Interest Determination Date, of
three leading non-bank dealers in negotiable United States
dollar certificates of deposit in The City of New York (which
may include an agent or its affiliates) selected by the
calculation agent for negotiable United States dollar
certificates of deposit of major United States money market
banks for negotiable certificates of deposit with a remaining
maturity closest to the Index Maturity specified in the
applicable pricing supplement in an amount that is
representative for a single transaction in that market at that
time, or
(4) if the dealers selected by the calculation agent are not
quoting as mentioned in clause (3) above, the CD Rate in
effect on the applicable Interest Determination Date.
"H.15(519)" means the weekly statistical release designated as
H.15(519), or any successor publication, published by the Board of Governors of
the Federal Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available
through the world-wide-web site of the Board of Governors of the Federal Reserve
System at http://www.bog.frb.fed.us/releases/h15/update, or any successor site
or publication.
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CMT Rate. CMT Rate Notes will bear interest at the rates, calculated
with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any,
specified in the applicable CMT Rate Notes and in any applicable pricing
supplement.
"CMT Rate" means
(1) the rate displayed on the Designated CMT Telerate Page under the
caption "...Treasury Constant Maturities... Federal Reserve
Board Release H.15... Mondays Approximately 3:45 P.M.," under
the column for the Designated CMT Maturity Index for
(a) if the Designated CMT Telerate Page is 7051 or any
other page as may replace that specified page on that
service, the applicable Interest Determination Date,
and
(b) if the Designated CMT Telerate Page is 7052 or any
other page as may replace that specified page on that
service, the weekly or the monthly average, as
specified in the applicable pricing supplement, for
the week or the month, as applicable, ended
immediately preceding the week or the month, as
applicable, in which the related Interest
Determination Date falls, or
(2) if the rate referred to in clause (1) is no longer displayed
on the relevant page or is not so displayed by 3:00 P.M., New
York City time, on the related calculation date, the treasury
constant maturity rate for the Designated CMT Maturity Index
published in H.15(519), or
(3) if the rate referred to in clause (2) is no longer published
or is not published by 3:00 P.M., New York City time, on the
related calculation date, the treasury constant maturity rate
for the Designated CMT Maturity Index, or other United States
Treasury rate for the Designated CMT Maturity Index, for the
applicable Interest Determination Date with respect to the
applicable Interest Reset Date as may then be published by
either the Board of Governors of the Federal Reserve System or
the United States Department of the Treasury that the
calculation agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and
published in H.15(519), or
(4) if the rate referred to in clause (3) is not so published by
3:00 P.M., New York City time, on the applicable calculation
date, the rate on the applicable Interest Determination Date
calculated by the calculation agent as a yield to maturity,
based on the arithmetic mean of the secondary market offered
rates as of approximately 3:30 P.M., New York City time, on
the applicable Interest Determination Date reported, according
to their written records, by three leading primary United
States government securities dealers in The City of New York,
which may include an agent or its affiliates (each, a
"Reference Dealer"), selected by the calculation agent from
five Reference Dealers selected by the calculation agent after
eliminating the highest quotation, or, in the event of
equality, one of the highest, and the lowest quotation or, in
the event of equality, one of the lowest, for the most
recently issued direct noncallable fixed rate obligations of
the United States ("Treasury Notes") with an original maturity
of approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated
CMT Maturity Index minus one year, or
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(5) if the calculation agent is unable to obtain three applicable
Treasury Note quotations as referred to in clause (4), the
rate on the applicable Interest Determination Date calculated
by the calculation agent as a yield to maturity based on the
arithmetic mean of the secondary market offered rates as of
approximately 3:30 P.M., New York City time, on the applicable
Interest Determination Date of three Reference Dealers in The
City of New York selected by the calculation agent from five
Reference Dealers selected by the calculation agent after
eliminating the highest quotation or, in the event of
equality, one of the highest and the lowest quotation or, in
the event of equality, one of the lowest, for Treasury Notes
with an original maturity of the number of years that is the
next highest to the Designated CMT Maturity Index and a
remaining term to maturity closest to the Designated CMT
Maturity Index and in an amount of at least $100 million, or
(6) if three or four and not five of the Reference Dealers are
quoting as referred to in clause (5) above, the rate will be
calculated by the calculation agent as the arithmetic mean of
the offered rates obtained and neither the highest nor the
lowest of quotes will be eliminated, or
(7) if fewer than three Reference Dealers selected by the
calculation agent are quoting as mentioned in clause (6), the
CMT Rate in effect on the applicable Interest Determination
Date.
If two Treasury Notes with an original maturity as described in clause
(5) have remaining terms to maturity equally close to the Designated CMT
Maturity Index, the calculation agent will obtain from five Reference Dealers
quotations for the Treasury Notes with the shorter remaining term to maturity.
"Designated CMT Telerate Page" means the display on Bridge Telerate,
Inc. or any successor service on the page specified in the applicable pricing
supplement, or any other page as may replace that specified page on that
service, for the purpose of displaying Treasury Constant Maturities as reported
in H.15(519), or, if no page is specified in the applicable pricing supplement,
page 7052.
"Designated CMT Maturity Index" means the original period to maturity
of the U.S. Treasury securities, either 1, 2, 3, 5, 7, 10, 20 or 30 years,
specified in the applicable pricing supplement with respect to which the CMT
Rate will be calculated or, if no maturity is specified in the applicable
pricing supplement, 2 years.
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Commercial Paper Rate. Commercial Paper Rate Notes will bear interest
at the rates, calculated with reference to the Commercial Paper Rate and the
Spread and/or Spread Multiplier, if any, specified in the applicable Commercial
Paper Rate Notes and in any applicable pricing supplement.
"Commercial Paper Rate" means
(1) the Money Market Yield on the applicable Interest
Determination Date of the rate for commercial paper having the
Index Maturity specified in the applicable pricing supplement
published in H.15(519) under the caption "Commercial
Paper-Nonfinancial," or
(2) if the rate described in clause (1) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the Money Market Yield of the rate on the applicable
Interest Determination Date for commercial paper having the
Index Maturity specified in the applicable pricing supplement
published in H.15 Daily Update, or other recognized electronic
source used for the purpose of displaying the applicable rate,
under the caption "Commercial Paper-Nonfinancial," or
(3) if the rate referred to in clause (2) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the rate on the applicable Interest Determination Date
calculated by the calculation agent as the Money Market Yield
of the arithmetic mean of the offered rates at approximately
11:00 A.M., New York City time, on the applicable Interest
Determination Date of three leading dealers of United States
dollar commercial paper in The City of New York, which may
include an agent and its affiliates, selected by the
calculation agent for commercial paper having the Index
Maturity specified in the applicable pricing supplement placed
for industrial issuers whose bond rating is "Aa," or the
equivalent, from a nationally recognized statistical rating
organization, or
(4) if the dealers selected by the calculation agent are not
quoting as mentioned in clause (3), the Commercial Paper Rate
in effect on the applicable Interest Determination Date.
"Money Market Yield" means a yield calculated in accordance with the
following formula and expressed as a percentage:
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Money Market = D x 360
---------------- x 100
360 - ( D x M )
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the applicable interest reset period.
Eleventh District Cost of Funds Rate. Eleventh District Cost of Funds
Rate Notes will bear interest at the rates, calculated with reference to the
Eleventh District Cost of Funds Rate and the Spread and/or Spread Multiplier, if
any, specified in the applicable Eleventh District Cost of Funds Rate Notes and
in any applicable pricing supplement.
"Eleventh District Cost of Funds Rate" means
(1) the rate equal to the monthly weighted average cost of funds
for the calendar month immediately preceding the month in
which the applicable Interest Determination Date falls as set
forth under the caption "11th District" on the display on
Bridge Telerate, Inc. or any successor service on page 7058 or
any other page as may replace that specified page on that
service ("Telerate Page 7058"), as of 11:00 A.M., San
Francisco time, on the applicable Interest Determination Date,
or
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(2) if the rate referred to in clause (1) does not appear on
Telerate Page 7058 on the related Interest Determination Date,
the monthly weighted average cost of funds paid by member
institutions of the Eleventh Federal Home Loan Bank District
that was most recently announced (the "Index") by the Federal
Home Loan Bank of San Francisco as the cost of funds for the
calendar month immediately preceding the applicable Interest
Determination Date, or
(3) if the Federal Home Loan Bank of San Francisco fails to
announce the Index on or before the applicable Interest
Determination Date for the calendar month immediately
preceding the applicable Interest Determination Date, the
Eleventh District Cost of Funds Rate in effect on the
applicable Interest Determination Date.
Federal Funds Rate. Federal Funds Rate Notes will bear interest at the
rates, calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any, specified in the applicable Federal Funds Rate Notes
and in any applicable pricing supplement.
"Federal Funds Rate" means
(1) the rate on the applicable Interest Determination Date for
United States dollar federal funds as published in H.15(519)
under the heading "Federal Funds (Effective)," as displayed on
Bridge Telerate, Inc. or any successor service on page 120 or
any other page as may replace that specified page on that
service ("Telerate Page 120"), or
(2) if the rate referred to in clause (1) does not appear on
Telerate Page 120 or is not so published by 3:00 P.M., New
York City time, on the related calculation date, the rate on
the applicable Interest Determination Date for United States
dollar federal funds published in H.15 Daily Update, or other
recognized electronic source used for the purpose of
displaying the applicable rate, under the caption "Federal
Funds (Effective)," or
(3) if the rate referred to in clause (2) does not appear on
Telerate Page 120 or is not so published by 3:00 P.M., New
York City time, on the related calculation date, the rate on
the applicable Interest Determination Date calculated by the
calculation agent as the arithmetic mean of the rates for the
last transaction in overnight United States dollar federal
funds arranged by three leading brokers of United States
dollar federal funds transactions in The City of New York,
which may include the agent or its affiliates, selected by the
calculation agent before 9:00 A.M., New York City time, on the
applicable Interest Determination Date, or
(4) if the brokers selected by the calculation agent are not
quoting as mentioned in clause (3), the Federal Funds Rate in
effect on the applicable Interest Determination Date.
LIBOR. LIBOR Notes will bear interest at the rates, calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any, specified in
the applicable LIBOR Notes and in any applicable pricing supplement.
"LIBOR" means
(1) if "LIBOR Telerate" is specified in the applicable pricing
supplement or if neither "LIBOR Reuters" nor "LIBOR Telerate"
is specified in the applicable pricing supplement as the
method for calculating LIBOR, the rate for deposits in the
Designated LIBOR Currency having the Index Maturity specified
in the applicable pricing supplement, commencing on the
applicable Interest Reset Date that appears on the Designated
LIBOR Page as of 11:00 A.M., London time, on the applicable
Interest Determination Date, or
(2) if "LIBOR Reuters" is specified in the applicable pricing
supplement, the arithmetic mean of the offered rates for
deposits in the Designated LIBOR Currency having the Index
Maturity specified in the applicable pricing supplement,
commencing on the applicable Interest Reset Date, that appear
on the Designated LIBOR Page specified in the applicable
pricing supplement as of 11:00 A.M., London time, on the
applicable Interest Determination Date; provided, that, if the
Designated LIBOR Page by its terms provides only for a single
rate, then the single rate will be used, or
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(3) with respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear, or no rate appears, as
the case may be, on the designated LIBOR Page as specified in
clauses (1) and (2), respectively, the rate calculated by the
calculation agent as the arithmetic mean of at least two
quotations obtained by the calculation agent after requesting
the principal London offices of each of four major reference
banks, which may include affiliates of an agent, in the London
interbank market to provide the calculation agent with its
offered quotation for deposits in the Designated LIBOR
Currency for the period of the Index Maturity specified in the
applicable pricing supplement, commencing on the applicable
Interest Reset Date, to prime banks in the London interbank
market at approximately 11:00 A.M., London time, on the
applicable Interest Determination Date and in a principal
amount that is representative for a single transaction in the
Designated LIBOR Currency in that market at that time, or
(4) if fewer than two quotations referred to in clause (3) are so
provided, the rate on the applicable Interest Determination
Date calculated by the calculation agent as the arithmetic
mean of the rates quoted at approximately 11:00 A.M., in the
applicable Principal Financial Center on the applicable
Interest Determination Date by three major banks in such
Principal Financial Center selected by the calculation agent,
which may include affiliates of an agent, for loans in the
Designated LIBOR Currency to leading European banks, having
the Index Maturity designated in the applicable pricing
supplement and in a principal amount that is representative
for a single transaction in that market at that time, or
(5) if the banks so selected by the calculation agent are not
quoting as mentioned in clause (4), LIBOR in effect on the
applicable Interest Determination Date.
"Designated LIBOR Currency" means the currency specified in the
applicable pricing supplement as to which LIBOR shall be calculated or, if no
such currency is specified in the applicable pricing supplement, United States
dollars.
"Designated LIBOR Page" means either:
o if "LIBOR Telerate" is designated in the applicable pricing
supplement or neither "LIBOR Reuters" nor "LIBOR Telerate" is
specified in the applicable pricing supplement as the method
for calculating LIBOR, the display on Bridge Telerate, Inc. or
any successor service on the page specified in such pricing
supplement or any page as may replace the specified page on
that service for the purpose of displaying the London
interbank rates of major banks for the Designated LIBOR
Currency, or
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o if "LIBOR Reuters" is specified in the applicable pricing
supplement, the display on the Reuter Monitor Money Rates
Service or any successor service on the page specified in the
applicable pricing supplement or any other page as may replace
the specified page on that service for the purpose of
displaying the London interbank rates of major banks for the
Designated LIBOR Currency.
"Principal Financial Center" means the capital city of the country to
which the Designated LIBOR Currency relates, except that with respect to United
States dollars, Australian dollars, Canadian dollars, Deutsche marks, Dutch
guilders, Italian lire, Portuguese escudos, South African rand and Swiss francs,
the "Principal Financial Center" shall be The City of New York, Sydney, Toronto,
Frankfurt, Amsterdam, Milan, London, Johannesburg and Zurich, respectively.
Prime Rate. Prime Rate Notes will bear interest at the rates,
calculated with reference to the Prime Rate and the Spread and/or Spread
Multiplier, if any, specified in the applicable Prime Rate Notes and any
applicable pricing supplement.
"Prime Rate" means
(1) the rate on the applicable Interest Determination Date as
published in H.15(519) under the heading "Bank Prime Loan," or
(2) if the rate referred to in clause (1) is not so published by
3:00 P.M., New York City time, on the related calculation date,
the rate on the applicable Interest Determination Date published
in H.15 Daily Update, or such other recognized electronic source
used for the purpose of displaying the applicable rate under the
caption "Bank Prime Loan," or
(3) if the rate referred to in clause (2) is not so published by
3:00 P.M., New York City time, on the related calculation date,
the rate calculated by the calculation agent as the arithmetic
mean of the rates of interest publicly announced by at least
four banks that appear on the Reuters Screen US PRIME 1 Page as
the particular bank's prime rate or base lending rate as of
11:00 A.M., New York City time, on the applicable Interest
Determination Date, or
(4) if fewer than four rates referred to in clause (3) so appear on
the Reuters Screen US PRIME 1 Page, the rate on the applicable
Interest Determination Date calculated by the calculation agent
as the arithmetic mean of the prime rates or base lending rates
quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on the
applicable Interest Determination Date by three major banks,
which may include affiliates of an agent, in The City of New
York selected by the calculation agent, or
(5) if the banks selected by the calculation agent are not quoting
as mentioned in clause (4), the Prime Rate in effect on the
applicable Interest Determination Date.
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"Reuters Screen US PRIME 1 Page" means the display on the Reuter
Monitor Money Rates Service or any successor service on the "US PRIME 1" page,
or other page as may replace the US PRIME 1 Page on such service, for the
purpose of displaying prime rates or base lending rates of major United States
banks.
Treasury Rate. Treasury Rate Notes will bear interest at the rates,
calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any, specified in the applicable Treasury Rate Notes and in any
applicable pricing supplement.
"Treasury Rate" means
(1) the rate from the auction held on the applicable Interest
Determination Date (the "Auction") of direct obligations of
the United States ("Treasury Bills") having the Index Maturity
specified in the applicable pricing supplement under the
caption "INVESTMENT RATE" on the display on Bridge Telerate,
Inc. or any successor service on page 56 or any other page as
may replace that specified page on that service ("Telerate
Page 56") or page 57 or any other page as may replace that
specified page on that service ("Telerate Page 57"), or
(2) if the rate described in clause (1) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the Bond Equivalent Yield (as defined below) of the rate
for the applicable Treasury Bills as published in H.15 Daily
Update, or other recognized electronic source used for the
purpose of displaying the applicable rate, under the caption
"U.S. Government Securities/Treasury Bills/Auction High," or
(3) if the rate described in clause (2) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the Bond Equivalent Yield of the auction rate of the
applicable Treasury Bills as announced by the United States
Department of the Treasury, or
(4) in the event that the rate referred to in clause (3) is not
announced by the United States Department of the Treasury, or
if the Auction is not held, the Bond Equivalent Yield of the
rate on the applicable Interest Determination Date of Treasury
Bills having the Index Maturity specified in the applicable
pricing supplement published in H.15(519) under the caption
"U.S. Government Securities/Treasury Bills/Secondary Market,"
or
(5) if the rate referred to in clause (4) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the rate on the applicable Interest Determination Date
of the applicable Treasury Bills as published in H.15 Daily
Update, or other recognized electronic source used for the
purpose of displaying the applicable rate, under the caption
"U.S. Government Securities/Treasury Bills/Secondary Market,"
or
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(6) if the rate referred to in clause (5) is not so published by
3:00 P.M., New York City time, on the related calculation
date, the rate calculated by the calculation agent as the Bond
Equivalent Yield of the arithmetic mean of the secondary
market bid rates, as of approximately 3:30 P.M., New York City
time, on the applicable Interest Determination Date, of three
primary United States government securities dealers, which may
include an agent or its affiliates, selected by the
calculation agent, for the issue of Treasury Bills with a
remaining maturity closest to the Index Maturity specified in
the applicable pricing supplement, or
(7) if the dealers selected by the calculation agent are not
quoting as mentioned in clause (6), the Treasury Rate in
effect on the applicable Interest Determination Date.
"Bond Equivalent Yield" means a yield calculated in accordance with the
following formula and expressed as a percentage:
Bond Equivalent Yield = D x N
---------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the applicable interest reset period.
Other Provisions; Addenda
Any provisions with respect to an issue of notes, including the
determination of one or more Interest Rate Bases, the specification of one or
more Interest Rate Bases, the calculation of the interest rate applicable to a
floating rate note, the applicable interest payment dates, the stated maturity
date, any redemption or repayment provisions or any other matters relating to
the applicable notes may be modified by the terms as specified under "Other
Provisions" on the face of the applicable notes or in an Addendum relating to
the applicable notes, if so specified on the face of the applicable notes and in
the applicable pricing supplement.
Discount Notes
Indiana Gas may from time to time offer notes at a price that is less
than 100% of the principal amount of the note ("Discount Notes"). Discount Notes
may not bear any interest currently or may bear interest at a rate that is below
market rates at the time of issuance. The difference between the issue price of
a Discount Note and 100% of the principal amount is referred to as the
"discount." On the Maturity Date, the amount payable to the holder will be equal
to the sum of (i) the issue price (increased by any accruals of discount) and,
in the event of any redemption of a Discount Note (if applicable), multiplied by
the initial redemption percentage (as adjusted by the annual redemption
percentage reduction, if applicable) and (ii) any unpaid interest accrued
thereon to the Maturity Date.
Unless otherwise specified in the applicable pricing supplement, for
purposes of determining the amount of discount that has accrued as of any
Maturity Date, the discount will be accrued using a constant yield method. The
constant yield will be calculated using a 30-day month, 360-day year convention,
a compounding period that, except for the Initial Period (as defined below),
corresponds to the shortest period between interest payment dates for the
applicable Discount Note (with ratable accruals within a compounding period), a
coupon rate equal to the initial coupon rate applicable to the Discount Note and
an assumption that the maturity of such Discount Note will not be accelerated.
If the period from the date of issue to the initial interest payment date for a
Discount Note (the "Initial Period") is shorter than the compounding period for
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the Discount Note, a proportionate amount of the yield for an entire compounding
period will be accrued. If the Initial Period is longer than the compounding
period, then the period will be divided into a regular compounding period and a
short period with the short period being treated as provided in the preceding
sentence. The accrual of the applicable discount may differ from the accrual of
original issue discount for purposes of the Internal Revenue Code of 1986, as
amended (the "Code"). Certain Discount Notes may not be treated as having
original issue discount within the meaning of the Code and notes other than
Discount Notes may be treated as issued with original issue discount for federal
income tax purposes. See "Certain United States Federal Income Tax
Considerations."
Amortizing Notes
Indiana Gas may from time to time offer notes ("Amortizing Notes"),
with amounts of principal and interest payable in installments over the term of
the notes. Unless otherwise specified in the applicable pricing supplement,
interest on each Amortizing Note will be computed on the basis of a 360-day year
of twelve 30-day months. Payments with respect to Amortizing Notes will be
applied first to interest due and payable on the Amortizing Notes and then to
the reduction of the unpaid principal amount of the Amortizing Notes. Further
information concerning additional terms and conditions of any issue of
Amortizing Notes will be provided in the applicable pricing supplement. A table
setting forth repayment information in respect of each Amortizing Note will be
included in the applicable note and the applicable pricing supplement.
Book-Entry Notes
Description of the Global Securities
Upon issuance, all notes in book-entry form having the same date of
issue, interest rate or formula, stated maturity date and redemption and/or
repayment provisions, if any, and otherwise having identical terms and
provisions will be represented by one or more fully registered global notes (the
"Global Notes"). Each Global Note will be deposited with, or on behalf of, The
Depository Trust Company, as depository, registered in the name of the
depository or a nominee of the depository. Unless and until it is exchanged in
whole or in part for notes in certificated form, no Global Note may be
transferred except as a whole by the depository to a nominee of the depository
or by a nominee of the depository to the depository or another nominee of the
depository or by the depository or any such nominee to a successor of the
depository or a nominee of the successor.
DTC Procedures
The following is based on information furnished by the depository:
The depository will act as securities depository for the notes in
book-entry form. The notes in book-entry form will be issued as fully registered
securities registered in the name of Cede & Co., the depository's partnership
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nominee. One fully registered Global Note will be issued for each issue of notes
in book-entry form, each in the aggregate principal amount of the issue, and
will be deposited with the depository.
The depository is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. The depository holds securities that its
participants deposit with the depository. The depository also facilitates the
settlement among participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants of the depository
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. The depository is owned by a
number of its direct participants and by the New York Stock Exchange, Inc., the
American Stock Exchange LLC, and the National Association of Securities Dealers,
Inc. Access to the depository's system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a direct participant, either directly or
indirectly. The rules applicable to the depository and its participants are on
file with the Securities and Exchange Commission.
Purchasers of notes in book-entry form under the depository's system
must be made by or through direct participants, which will receive a credit for
those notes in book-entry form on the depository's records. The ownership
interest of each actual purchaser of each note in book-entry form represented by
a Global Note is, in turn, to be recorded on the records of direct participants
and indirect participants. Beneficial owners in book-entry form will not receive
written confirmation from the depository of their purchase, but beneficial
owners are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the direct
participants or indirect participants through which the beneficial owner entered
into the transaction. Transfers of ownership interests in a Global Note
representing notes in book-entry form are to be accomplished by entries made on
the books of participants acting on behalf of beneficial owners. Beneficial
owners of a Global Note representing notes in book-entry form will not receive
notes in certificated form representing their ownership interests therein,
except in the event that use of the book-entry system for such notes in
book-entry form is discontinued.
To facilitate subsequent transfers, all Global Notes representing notes
in book-entry form which are deposited with, or on behalf of, the depository are
registered in the name of the depository's nominee, Cede & Co. The deposit of
Global Notes with, or on behalf of, the depository and their registration in the
name of Cede & Co. effect no change in beneficial ownership. The depository has
no knowledge of the actual beneficial owners of the Global Notes representing
the notes in book-entry form; the depository's records reflect only the identity
of the direct participants to whose accounts such notes in book-entry form are
credited, which may or may not be the beneficial owners. The participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
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Conveyance of notices and other communications by the depository to
direct participants, by direct participants to indirect participants, and by
direct participants and indirect participants to beneficial owners, will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither the depository nor Cede & Co. will consent or vote with respect
to the Global Notes representing the notes in book-entry form. Under its usual
procedures, the depository mails an omnibus proxy to Indiana Gas as soon as
possible after the applicable record date. The omnibus proxy assigns Cede &
Co.'s consenting or voting rights to those direct participants, identified in a
listing attached to the omnibus proxy, to whose accounts the notes in book-entry
form are credited on the applicable record date.
Indiana Gas will make principal, premium, if any, and/or interest, if
any, payments on the Global Notes representing the notes in book-entry form in
immediately available funds to the depository. The depository's practice is to
credit direct participants' accounts on the applicable payment date in
accordance with their respective holdings shown on the depository's records
unless the depository has reason to believe that it will not receive payment on
the applicable payment date. Payments by participants to beneficial owners will
be governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of the applicable participant
and not of the depository, the trustee or Indiana Gas, subject to any statutory
or regulatory requirements as may be in effect from time to time. Payment of
principal, premium, if any, and/or interest, if any, to the depository is the
responsibility of Indiana Gas and the trustee, disbursement of payments to
direct participants will be the responsibility of the depository, and
disbursement of payments to the beneficial owners will be the responsibility of
direct participants and indirect participants.
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the notes in book-entry form of like tenor and terms are being
redeemed, the depository's practice is to determine by lot the amount of the
interest of each direct participant in the issue to be redeemed.
A beneficial owner will give notice of any option to elect to have its
notes in book-entry form repaid by Indiana Gas, through its participant, to the
trustee, and will effect delivery of the applicable notes in book-entry form by
causing the direct participant to transfer the participant's interest in the
Global Note notes in book-entry form, on the depository's records, to the
trustee.
Management of the depository is aware that some computer applications,
systems and the like for processing data ("Systems") that are dependent upon
calendar dates, including dates before, on, and after January 1, 2000, may
encounter "Year 2000 problems." The depository has informed direct participants
and indirect participants and other members of the financial community (the
"Industry") that it has developed and is implementing a program so that its
Systems, as the same relate to the timely payment of distributions (including
principal and interest payments) to securityholders, book-entry deliveries, and
settlement of trades within the depository ("Depository Services"), continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, the depository's plan
incudes a testing phase, which is expected to be completed within appropriate
time frames.
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However, the depository's ability to perform properly its services is
also dependent upon other parties, including, but not limited to, issuers and
their agents, as well as the depositary's direct participants and indirect
participants, third party vendors from whom the depository licenses software and
hardware, and third party vendors on whom the depository relies for information
or the provision of services, including telecommunication and electrical utility
service providers, among others. The depository has informed the Industry that
it is contacting (and will continue to contact) third party vendors from whom
the depository acquires services to: (i) impress upon them the importance of
such services being Year 2000 compliant; and (ii) determine the extent of their
efforts for Year 2000 remediation (and, as appropriate, testing) of their
services. In addition, the depository is in the process of developing such
contingency plans as it deems appropriate.
According to the depository, the information in the preceding two
paragraphs with respect to the depository has been provided to the Industry for
informational purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.
The depository may discontinue providing its services as securities
depository with respect to the notes in book-entry form at any time by giving
reasonable notice to Indiana Gas or the trustee. In the event that a successor
securities depository is not obtained, notes in certificated form are required
to be printed and delivered.
Indiana Gas may decide to discontinue use of the system of book-entry
transfers through the depository or a successor securities depository. In that
event, notes in certificated form will be printed and delivered.
The laws of some states may require that certain purchasers of
securities take physical delivery of securities in definitive form. Such limits
and such laws may impair the ability to own, transfer or pledge beneficial
interests in Global Notes.
So long as the depository, or its nominee, is the registered owner of a
Global Note, the depository or its nominee, as the case may be, will be
considered the sole owner or holder of the notes represented by such Global Note
for all purposes under the indenture. Except as provided below, beneficial
owners of a Global Note will not be entitled to have the notes represented by a
Global Note registered in their names, will not receive or be entitled to
receive physical delivery of the notes in definitive form and will not be
considered the owners or holders thereof under the indenture. Accordingly, each
person owning a beneficial interest in a Global Note must rely on the procedures
of the depository and, if that person is not a participant, on the procedures of
the participant through which that person owns its interest, to exercise any
rights of a holder under the indenture. Indiana Gas understands that under
existing industry practices, in the event that Indiana Gas requests any action
of holders or that an owner of a beneficial interest in a Global Note desires to
give or take any action which a holder is entitled to give or take under the
indenture, the depository would authorize the participants holding the relevant
beneficial interests to give or take the desired action, and the participants
would authorize beneficial owners owning through the participants to give or
take the desired action or would otherwise act upon the instructions of
beneficial owners.
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Exchange for Notes in Certificated Form
If:
(a) the depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by
Indiana Gas within 60 days,
(b) Indiana Gas executes and delivers to the trustee a company order
to the effect that the Global Notes shall be exchangeable, or
(c) a default or an event of default has occurred and is continuing
with respect to the notes,
the Global Note or Global Notes will be exchangeable for notes in certificated
form of like tenor and of an equal aggregate principal amount, in denominations
of $1,000 and integral multiples of $1,000. The certificated notes will be
registered in the name or names as the depository instructs the trustee. It is
expected that instructions may be based upon directions received by the
depository from participants with respect to ownership of beneficial interests
in Global Notes.
The information in this section concerning the depository and the
depository's system has been obtained from sources that Indiana Gas believes to
be reliable, but Indiana Gas takes no responsibility for the accuracy of the
information.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States federal income tax
consequences of the purchase, ownership and disposition of the notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, persons holding notes as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the United States dollar. It also does not deal with
holders other than original purchasers (except where otherwise specifically
noted). Persons considering the purchase of the notes should consult their own
tax advisors concerning the application of United States federal income tax laws
to their particular situations as well as any consequences of the purchase,
ownership and disposition of the notes arising under the laws of any other
taxing jurisdiction.
As used in this discussion, the term "U.S. Holder" means a beneficial
owner of a note that is for United States federal income tax purposes: (i) a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity (treated as a corporation or a partnership for federal income tax
purposes) created or organized in or under the laws of the United States, any
state of the United States or the District of Columbia (other than a partnership
that is not treated as a United States person under any applicable treasury
regulations), (iii) an estate whose income is subject to United States federal
income tax regardless of its source or (iv) a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust.
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Notwithstanding the preceding sentence, to the extent provided in treasury
regulations, certain trusts in existence on August 20, 1996, and treated as
United States persons under the Code and applicable treasury regulations
thereunder prior to such date, that elect to continue to be treated as United
States persons under the Code or applicable treasury regulations thereunder also
will be a U.S. Holder. As used in this discussion, the term "non-U.S. Holder"
means a beneficial owner of a note that is not a U.S. Holder.
U.S. Holders
Payments of Interest
Payments of interest on a note generally will be taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting).
Original Issue Discount
The following summary is a general discussion of the United States
federal income tax consequences to U.S. Holders of the purchase, ownership and
disposition of Discount Notes. The following summary is based upon final
treasury regulations (the "OID Regulations") released by the Internal Revenue
Service ("IRS") on January 27, 1994, as amended on June 11, 1996, under the
original issue discount provisions of the Code.
For United States federal income tax purposes, original issue discount
is the excess of the stated redemption price at maturity of a note over its
issue price, if such excess equals or exceeds a de minimis amount (generally 1/4
of 1% of the note's stated redemption price at maturity multiplied by the number
of complete years to its maturity from its issue date or, in the case of a note
providing for the payment of any amount other than qualified stated interest (as
defined below) prior to maturity, multiplied by the weighted average maturity of
such note). The issue price of each note in an issue of notes equals the first
price at which a substantial amount of such notes has been sold (ignoring sales
to bond houses, brokers, or similar persons or organizations acting in the
capacity of underwriters, placement agents, or wholesalers). The stated
redemption price at maturity of a note is the sum of all payments provided by
the note other than "qualified stated interest" payments. The term "qualified
stated interest" generally means stated interest that is unconditionally payable
in cash or property (other than debt instruments of the issuer) at least
annually at a single fixed rate. In addition, under the OID Regulations, if a
note bears interest for one or more accrual periods at a rate below the rate
applicable for the remaining term of such note (e.g., notes with teaser rates or
interest holidays), and if the greater of either the resulting foregone interest
on such note or any "true" discount on such note (i.e., the excess of the note's
stated principal amount over its issue price) equals or exceeds a specified de
minimis amount, then the stated interest on the note would be treated as
original issue discount rather than qualified stated interest.
Payments of qualified stated interest on a note are taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Discount Note must include original issue
discount in income as ordinary interest for United States federal income tax
purposes as it accrues under a constant yield method in advance of receipt of
the cash payments attributable to such income, regardless of such U.S. Holder's
regular method of tax accounting. In general, the amount of original issue
discount included in income by the initial U.S. Holder of a Discount Note is the
sum of the daily portions of original issue discount with respect to the
Discount Note for each day during the taxable year (or portion of the taxable
year) on which the U.S. Holder held the Discount Note. The "daily portion" of
original issue discount on any Discount Note is determined by allocating to each
day in any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An "accrual period" may be of any length and
the accrual periods may vary in length over the term of the Discount Note,
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provided that each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the final day of an accrual
period or on the first day of an accrual period. The amount of original issue
discount allocable to each accrual period is generally equal to the difference
between (i) the product of the Discount Note's adjusted issue price at the
beginning of such accrual period and its yield to maturity (determined on the
basis of compounding at the close of each accrual period and appropriately
adjusted to take into account the length of the particular accrual period) and
(ii) the amount of any qualified stated interest payments allocable to such
accrual period. The "adjusted issue price" of a Discount Note at the beginning
of any accrual period is the sum of the issue price of the Discount Note plus
the amount of original issue discount allocable to all prior accrual periods
minus the amount of any prior payments on the Discount Note that were not
qualified stated interest payments. Under these rules, U.S. Holders generally
will have to include in income increasingly greater amounts of original issue
discount in successive accrual periods.
A U.S. Holder who purchases a Discount Note for an amount that is
greater than its adjusted issue price as of the purchase date and less than or
equal to the sum of all amounts payable on the Discount Note after the purchase
date other than payments of qualified stated interest, will be considered to
have purchased the Discount Note at an "acquisition premium." Under the
acquisition premium rules, the amount of original issue discount which such U.S.
Holder must include in its gross income with respect to such Discount Note for
any taxable year (or portion thereof in which the U.S. Holder holds the Discount
Note) will be reduced (but not below zero) by the portion of the acquisition
premium properly allocable to the period.
Under the OID Regulations, floating rate notes are subject to special
rules whereby a floating rate note will qualify as a "variable rate debt
instrument" if (a) its issue price does not exceed the total noncontingent
principal payments due under the floating rate note by more than a specified de
minimis amount and (b) it provides for stated interest, paid or compounded at
least annually, at current values of (i) one or more qualified floating rates,
(ii) a single fixed rate and one or more qualified floating rates, (iii) a
single objective rate, or (iv) a single fixed rate and a single objective rate
that is a qualified inverse floating rate.
A "qualified floating rate" is any variable rate where variations in
the value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
floating rate note is denominated. Although a multiple of a qualified floating
rate will generally not itself constitute a qualified floating rate, a variable
rate equal to the product of a qualified floating rate and a fixed multiple that
is greater than 0.65 but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than 0.65 but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, under the OID Regulations, two or more qualified floating rates that
can reasonably be expected to have approximately the same values throughout the
term of the floating rate note (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the floating rate
note's issue date) will be treated as a single qualified floating rate.
Notwithstanding the foregoing, a variable rate that would otherwise constitute a
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qualified floating rate but which is subject to one or more restrictions such as
a maximum numerical limitation (i.e., a cap) or a minimum numerical limitation
(i.e., a floor) may, under certain circumstances, fail to be treated as a
qualified floating rate under the OID Regulations unless such cap or floor is
fixed throughout the term of the note. An "objective rate" is a rate that is not
itself a qualified floating rate but which is determined using a single fixed
formula and that is based on objective financial or economic information. A rate
will not qualify as an objective rate if it is based on information that is
within the control of the issuer (or a related party) or that is unique to the
circumstances of the issuer (or a related party), such as dividends, profits, or
the value of the issuer's stock (although a rate does not fail to be an
objective rate merely because it is based on the credit quality of the issuer).
A "qualified inverse floating rate" is any objective rate where such rate is
equal to a fixed rate minus a qualified floating rate, as long as variations in
the rate can reasonably be expected to inversely reflect contemporaneous
variations in the qualified floating rate. The OID Regulations also provide that
if a floating rate note provides for stated interest at a fixed rate for an
initial period of one year or less followed by a variable rate that is either a
qualified floating rate or an objective rate and if the variable rate on the
floating rate note's issue date is intended to approximate the fixed rate (e.g.,
the value of the variable rate on the issue date does not differ from the value
of the fixed rate by more than 25 basis points), then the fixed rate and the
variable rate together will constitute either a single qualified floating rate
or objective rate, as the case may be.
If a floating rate note that provides for stated interest at either a
single qualified floating rate or a single objective rate throughout the term
thereof qualifies as a "variable rate debt instrument" under the OID Regulations
and if the interest on such note is unconditionally payable in cash or property
(other than debt instruments of the issuer) at least annually, then all stated
interest on the note will constitute qualified stated interest and will be taxed
accordingly. Thus, a floating rate note that provides for stated interest at
either a single qualified floating rate or a single objective rate throughout
the term thereof and that qualifies as a "variable rate debt instrument" under
the OID Regulations will generally not be treated as having been issued with
original issue discount unless the floating rate note is issued at a "true"
discount (i.e., at a price below the note's stated principal amount) in excess
of a specified de minimis amount. The amount of qualified stated interest and
the amount of original issue discount, if any, that accrues during an accrual
period on such a floating rate note is determined under the rules applicable to
fixed rate debt instruments by assuming that the variable rate is a fixed rate
equal to (i) in the case of a qualified floating rate or qualified inverse
floating rate, the value, as of the issue date, of the qualified floating rate
or qualified inverse floating rate, or (ii) in the case of an objective rate
(other than a qualified inverse floating rate), a fixed rate that reflects the
yield that is reasonably expected for the floating rate note. The qualified
stated interest allocable to an accrual period is increased (or decreased) if
the interest actually paid during an accrual period exceeds (or is less than)
the interest assumed to be paid during the accrual period pursuant to the
foregoing rules.
In general, any other floating rate note that qualifies as a "variable
rate debt instrument" will be converted into an "equivalent" fixed rate debt
instrument for purposes of determining the amount and accrual of original issue
discount and qualified stated interest on the floating rate note. The OID
Regulations generally require that such a floating rate note be converted into
an "equivalent" fixed rate debt instrument by substituting any qualified
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floating rate or qualified inverse floating rate provided for under the terms of
the floating rate note with a fixed rate equal to the value of the qualified
floating rate or qualified inverse floating rate, as the case may be, as of the
floating rate note's issue date. Any objective rate (other than a qualified
inverse floating rate) provided for under the terms of the floating rate note is
converted into a fixed rate that reflects the yield that is reasonably expected
for the floating rate note. In the case of a floating rate note that qualifies
as a "variable rate debt instrument" and provides for stated interest at a fixed
rate in addition to either one or more qualified floating rates or a qualified
inverse floating rate, the fixed rate is initially converted into a qualified
floating rate (or a qualified inverse floating rate, if the floating rate note
provides for a qualified inverse floating rate). Under such circumstances, the
qualified floating rate or qualified inverse floating rate that replaces the
fixed rate must be such that the fair market value of the floating rate note as
of the floating rate note's issue date is approximately the same as the fair
market value of an otherwise identical debt instrument that provides for either
the qualified floating rate or qualified inverse floating rate rather than the
fixed rate. Subsequent to converting the fixed rate into either a qualified
floating rate or a qualified inverse floating rate, the floating rate note is
then converted into an "equivalent" fixed rate debt instrument in the manner
described above.
Once the floating rate note is converted into an "equivalent" fixed
rate debt instrument pursuant to the foregoing rules, the amount of original
issue discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. Holder
of the floating rate note will account for such original issue discount and
qualified stated interest as if the U.S. Holder held the "equivalent" fixed rate
debt instrument. In each accrual period appropriate adjustments will be made to
the amount of qualified stated interest or original issue discount assumed to
have been accrued or paid with respect to the "equivalent" fixed rate debt
instrument in the event that such amounts differ from the actual amount of
interest accrued or paid on the floating rate note during the accrual period.
If a floating rate note does not qualify as a "variable rate debt
instrument" under the OID Regulations, then the floating rate note would be
treated as a contingent payment debt obligation. U.S. Holders should be aware
that on June 11, 1996, the United States Treasury Department issued final
regulations (the "CPDI Regulations") concerning the proper United States federal
income tax treatment of contingent payment debt instruments. In general, the
CPDI Regulations would cause the timing and character of income, gain or loss
reported on a contingent payment debt instrument to substantially differ from
the timing and character of income, gain or loss reported on a contingent
payment debt instrument under general principles of current United States
federal income tax law. Specifically, the CPDI Regulations generally require a
U.S. Holder of such an instrument to include future contingent and noncontingent
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interest payments in income as such interest accrues based upon a projected
payment schedule. Moreover, in general, under the CPDI Regulations, any gain
recognized by a U.S. Holder on the sale, exchange, or retirement of a contingent
payment debt instrument will be treated as ordinary income and all or a portion
of any loss realized could be treated as ordinary loss as opposed to capital
loss (depending upon the circumstances). The CPDI Regulations apply to debt
instruments issued on or after August 13, 1996. The proper United States federal
income tax treatment of floating rate notes that are treated as contingent
payment debt obligations will be more fully described in the applicable Pricing
Supplement. Furthermore, any other special United States federal income tax
considerations, not otherwise discussed herein, which are applicable to any
particular issue of notes will be discussed in the applicable Pricing
Supplement.
Certain of the notes (i) may be redeemable at the option of Indiana Gas
prior to their stated maturity (a "call option") and/or (ii) may be repayable at
the option of the holder prior to their stated maturity (a "put option"). Notes
containing such features may be subject to rules that differ from the general
rules discussed above. Investors intending to purchase notes with such features
should consult their own tax advisors, since the original issue discount
consequences will depend, in part, on the particular terms and features of the
purchased notes.
U.S. Holders may generally, upon election, include in income all
interest (including stated interest, acquisition discount, original issue
discount, de minimis original issue discount, market discount, de minimis market
discount, and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
Short-Term Notes
Notes that have a fixed maturity of one year or less ("Short-Term
Notes") will be treated as having been issued with original issue discount. In
general, an individual or other cash method U.S. Holder is not required to
accrue such original issue discount unless the U.S. Holder elects to do so. If
such an election is not made, any gain recognized by the U.S. Holder on the
sale, exchange or maturity of the Short-Term Note will be ordinary income to the
extent of the original issue discount accrued on a straight-line basis, or upon
election under the constant yield method (based on daily compounding), through
the date of sale or maturity, and a portion of the deductions otherwise
allowable to the U.S. Holder for interest on borrowings allocable to the
Short-Term Note will be deferred until a corresponding amount of income is
realized. U.S. Holders who report income for United States federal income tax
purposes under the accrual method, and certain other holders including banks and
dealers in securities, are required to accrue original issue discount on a
Short-Term Note on a straight-line basis unless an election is made to accrue
the original issue discount under a constant yield method (based on daily
compounding).
Market Discount
If a U.S. Holder purchases a note, other than a Discount Note, for an
amount that is less than its issue price (or, in the case of a subsequent
purchaser, its stated redemption price at maturity) or, in the case of a
Discount Note, for an amount that is less than its adjusted issue price as of
the purchase date, such U.S. Holder will be treated as having purchased such
note at a "market discount," unless such market discount is less than a
specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to
treat any partial principal payment (or, in the case of a Discount Note, any
payment that does not constitute qualified stated interest) on, or any gain
realized on the sale, exchange, retirement or other disposition of, a note as
ordinary income to the extent of the lesser of (i) the amount of such payment or
realized gain or (ii) the market discount which has not previously been included
in income and is treated as having accrued on such note at the time of such
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payment or disposition. Market discount will be considered to accrue ratably
during the period from the date of acquisition to the maturity date of the note,
unless the U.S. Holder elects to accrue market discount on the basis of
semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a
portion of the interest paid or accrued on any indebtedness incurred or
maintained to purchase or carry a note with market discount until the maturity
of the note or certain earlier dispositions, because a current deduction is only
allowed to the extent the interest expense exceeds an allocable portion of
market discount. A U.S. Holder may elect to include market discount in income
currently as it accrues (on either a ratable or semiannual compounding basis),
in which case the rules described above regarding the treatment as ordinary
income of gain upon the disposition of the note and upon the receipt of certain
cash payments and regarding the deferral of interest deductions will not apply.
Generally, such currently included market discount is treated as ordinary
interest for United States federal income tax purposes. Such an election will
apply to all debt instruments acquired by the U.S. Holder on or after the first
day of the first taxable year to which such election applies and may be revoked
only with the consent of the IRS.
Premium
If a U.S. Holder purchases a note for an amount that is greater than
the sum of all amounts payable on the note after the purchase date other than
payments of qualified stated interest, such U.S. Holder will be considered to
have purchased the note with "amortizable bond premium" equal in amount to such
excess. A U.S. Holder may elect to amortize such premium using a constant yield
method over the remaining term of the note and may offset interest otherwise
required to be included in respect of the note during any taxable year by the
amortized amount of such excess for the taxable year. However, if the note may
be optionally redeemed after the U.S. Holder acquires it at a price in excess of
its stated redemption price at maturity, special rules would apply which could
result in a deferral of the amortization of some bond premium until later in the
term of the note. Any election to amortize bond premium applies to all taxable
debt instruments held by the U.S. Holder at the beginning of the first taxable
year to which the election applies and to all taxable debt instruments acquired
on or after such date. The election may be revoked only with the consent of the
IRS.
Disposition of a Note
Except as discussed above, upon the sale, exchange or retirement of a
note, a U.S. Holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or retirement
(other than amounts representing accrued and unpaid interest) and such U.S.
Holder's adjusted tax basis in the note. A U.S. Holder's adjusted tax basis in a
note generally will equal such U.S. Holder's initial investment in the note
increased by any original issue discount included in income (and accrued market
discount, if any, if the U.S. Holder has included such market discount in
income) and decreased by the amount of any payments, other than qualified stated
interest payments, received and amortizable bond premium taken with respect to
such note. Such gain or loss generally will be long-term capital gain or loss if
the note were held for more than one year. The deductibility of capital losses
is subject to limitations. Prospective investors should consult their own tax
advisors concerning these tax law provisions.
S - 34
<PAGE>
Non-U.S. Holders
A non-U.S. Holder will not be subject to United States federal income
taxes on payments of principal, premium (if any) or interest (including original
issue discount, if any) on a note, unless such non-U.S. Holder is a direct or
indirect 10% or greater shareholder of Indiana Gas, a controlled foreign
corporation related to Indiana Gas or a bank receiving interest described in
section 881(c)(3)(A) of the Code. To qualify for the exemption from taxation,
the last United States payor in the chain of payment prior to payment to a
non-U.S. Holder (the "Withholding Agent") must have received in the year in
which a payment of interest or principal occurs, or in either of the two
preceding calendar years, a statement that (i) is signed by the beneficial owner
of the note under penalties of perjury, (ii) certifies that such owner is not a
U.S. Holder and (iii) provides the name and address of the beneficial owner. The
statement may be made on an IRS Form W-8 or a substantially similar form, and
the beneficial owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a note is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the Withholding Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form provided by the
beneficial owner to the organization or institution. The United States Treasury
Department is considering implementation of further certification requirements
aimed at determining whether the issuer of a debt obligation is related to
holders thereof.
Generally, a non-U.S. Holder will not be subject to federal income
taxes on any amount which constitutes capital gain upon retirement or
disposition of a note, provided the gain is not attributable to an office or
other fixed place of business maintained by the non-U.S. Holder in the United
States. Certain other exceptions may be applicable, and a non-U.S. Holder should
consult its tax advisor in this regard.
The notes will not be includible in the estate of a non-U.S. Holder
unless the individual is a direct or indirect 10% or greater shareholder of
Indiana Gas or, at the time of such individual's death, payments in respect of
the notes would have been effectively connected with the conduct by such
individual of a trade or business in the United States.
Backup Withholding
Backup withholding of United States federal income tax at a rate of 31%
may apply to payments made in respect of the notes to registered owners who are
not "exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
exempt recipients.
In addition, upon the sale of a note to (or through) a broker, the
broker must withhold 31% of the entire purchase price, unless either (i) the
broker determines that the seller is a corporation or other exempt recipient or
(ii) the seller provides, in the required manner, certain identifying
information and, in the case of a non-U.S. Holder, certifies that such seller is
a non-U.S. Holder (and certain other conditions are met). Such a sale must also
be reported by the broker to the IRS, unless either (i) the broker determines
S - 35
<PAGE>
that the seller is an exempt recipient or (ii) the seller certifies its non-U.S.
status (and certain other conditions are met). Certification of the registered
owner's non-U.S. status would be made normally on an IRS Form W-8 or Form W-8
BEN under penalties of perjury, although in certain cases it may be possible to
submit other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment
to a beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States federal income tax provided the required
information is furnished to the IRS.
New Withholding Regulations
Final regulations dealing with withholding tax on income paid to
foreign persons, backup withholding and related matters (the "New Withholding
Regulations") were issued by the Treasury Department on October 6, 1997. The New
Withholding Regulations generally attempt to unify certification requirements
and modify reliance standards. The New Withholding Regulations generally will be
effective for payments made after December 31, 2000, subject to certain
transition rules.
Prospective investors are strongly urged to consult their own tax
advisors with respect to the New Withholding Regulations.
PLAN OF DISTRIBUTION
Indiana Gas is offering the notes for sale on a continuing basis to
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") as principal or, if agreed to at the particular time, through
Merrill Lynch as agent, in which case Merrill Lynch will use reasonable efforts
to solicit purchase of the notes. Indiana Gas may also utilize the services of
other agents identified in the applicable pricing supplement. Unless otherwise
specified in the applicable pricing supplement, Indiana Gas will pay a
commission to the agent, ranging from .125% to .750% of the principal amount of
a note, depending upon its stated maturity or, with respect to a note for which
the stated maturity is in excess of 30 years, a commission as agreed upon by
Indiana Gas and the agent at the time of sale.
Indiana Gas reserves the right to withdraw, cancel or modify the offer
made by this prospectus supplement without notice and may reject orders, in
whole or in part, whether placed directly with Indiana Gas or through the
agents. The agents will have the right, in their discretion reasonably
exercised, to reject in whole or in part any offer to purchase notes received by
them.
Unless specified in the applicable pricing supplement, any note sold to
an agent as principal will be purchased at a price equal to 100% of the
principal amount of the note less a percentage equal to the commission
applicable to an agency sale of a note of identical maturity. The agents may
resell these notes at varying prices related to prevailing market prices at the
time of sale or, if agreed to with Indiana Gas, at a fixed public offering
price. Indiana Gas may also sell notes directly and would not pay any commission
on these sales.
The agents may resell any notes purchased as principal to other dealers
and, unless otherwise specified in the applicable pricing supplement, may allow
all or any portion of the discount received in connection with purchases from
S - 36
<PAGE>
Indiana Gas to such dealers. After the initial public offering of notes, the
public offering price, in the case of notes to be resold at a fixed public
offering price, the concession and the discount allowed to dealers may be
changed.
The agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933. Indiana Gas has agreed to indemnify the agents against
certain liabilities, including liabilities under the Securities Act of 1933, or
to contribute to payments the agents may be required to make in respect thereof.
Indiana Gas has agreed to reimburse the agents for certain expenses.
The agents may sell to or through dealers who may resell to investors,
and the agents may pay all or part of their discount or commission to such
dealers. Such dealers may be deemed to be "underwriters" within the meaning of
the Securities Act of 1933.
Unless otherwise indicated in the applicable pricing supplement,
payment of the purchase price of notes will be required to be made in
immediately available funds in The City of New York.
The agents may be customers of, engage in transactions with, and
perform services for Indiana Gas in the ordinary course of business.
Upon issuance, the notes will not have an established trading market.
The notes will not be listed on any securities exchange. The agents may from
time to time purchase and sell notes in the secondary market, but the agents are
not obligated to do so, and there can be no assurance that there will be a
secondary market for the notes or that there will be liquidity in the secondary
market if one develops. From time to time, the agents may make a market in the
notes, but the agents are not obligated to do so and may discontinue any
market-making activity at any time.
In connection with the offering of notes purchased by the agents as
principal on a fixed price basis, the agents are permitted to engage in certain
transactions that stabilize the price of the notes. These transactions may
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the notes. If an agent creates a short position in the notes in
connection with the offering, i.e., it sells notes in an aggregate principal
amount exceeding that set forth in the applicable pricing supplement, then the
agent may reduce that short position by purchasing notes in the open market. In
general, purchases of notes for the purpose of stabilization or to reduce a
short position could cause the price of the notes to be higher than in the
absence of these purchases.
Neither Indiana Gas nor any agent makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the notes. In addition, neither Indiana
Gas nor any agent makes any representation that an agent will engage in any such
transactions or that such transactions, once commenced, will not be discontinued
without notice.
VALIDITY OF THE NOTES
The validity of the notes will be passed upon for Indiana Gas by Barnes
& Thornburg, Indianapolis, Indiana and for the agents by Brown & Wood LLP, New
York, New York.
S - 37
<PAGE>
[THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.)
<PAGE>
PROSPECTUS
$100,000,000
[INDIANA GAS LOGO]
An Indiana Energy Affiliate
Indiana Gas Company, Inc.
Debt Securities
o By this prospectus, we may offer from time to time up to $100,000,000
of our debt securities.
o When we offer debt securities, we will provide you with a prospectus
supplement describing the terms of the specific issue of securities
including the offering price of the securities.
o You should read this prospectus and the prospectus supplement relating
to the specific offering of securities carefully before you invest.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
--------------------------
The date of this prospectus is July 28, 1999.
<PAGE>
INDIANA GAS COMPANY, INC.
We are an operating pubic utility providing gas utility service in
Indiana. We supply gas to approximately 494,000 customers in 311 communities in
48 of the 92 counties in Indiana. The largest communities which we serve include
Muncie, Anderson, Lafayette, West Lafayette, Bloomington, Terre Haute, Marion,
New Albany, Columbus, Jeffersonville, New Castle and Richmond. We do not provide
service in Indianapolis, although our general office is located there.
Our service area has a population of approximately 2 million and
contains diversified manufacturing and agricultural enterprises. The principal
industries which we serve include:
o automotive parts and accessories;
o feed, flour and grain processing;
o metal castings;
o aluminum products;
o gypsum products;
o electrical equipment;
o metal processing; and
o glass.
Our principal executive office is located at 1630 North Meridian
Street, Indianapolis, Indiana 46202; our telephone number is 317-926-3351.
If you want to find more information about us, please see the sections
entitled "Where You Can Find More Information" and "Incorporation of Information
We File with the SEC" in this prospectus.
<PAGE>
RECENT DEVELOPMENTS
On June 14, 1999, Indiana Energy, Inc. (the parent of Indiana Gas) and
SIGCORP Inc. announced that they have signed a definitive agreement to combine
into a new holding company, to be named Vectren Corporation. SIGCORP is an
investor owned energy and telecommunications company that provides gas and
electric service to southwest Indiana and telecommunication products throughout
the Midwest and elsewhere. Under the agreement, SIGCORP shareholders will
receive one and one-third shares of the new company's common stock for each
share of SIGCORP they currently hold. Indiana Energy shareholders will receive
one share of the new company's common stock for each share of Indiana Energy
they currently hold.
Through its utility subsidiaries, Vectren will offer gas and/or
electricity to more than 650,000 customers in adjoining service areas that cover
nearly two-thirds of Indiana. Vectren's non-utility subsidiaries will offer
energy-related products and services, fiber-optic based telecommunication
services, materials management, locating and trenching services and energy
marketing to customers throughout the surrounding region.
Indiana Energy's and SIGCORP's utility companies will remain separate
subsidiaries of Vectren and will continue to operate under the names Indiana Gas
Company, Inc. and Southern Indiana Gas and Electric Company (SIGECO),
respectively. Under the merger agreement, the corporate headquarters of Vectren
and of SIGECO will be in Evansville, Indiana. Indiana Gas will continue to be
headquartered in Indianapolis, where it has been for over 50 years.
The merger is conditioned, among other things, upon the approvals of
the shareholders of Indiana Energy and SIGCORP and customary regulatory
approvals.
- 3 -
<PAGE>
USE OF PROCEEDS
We will use the net proceeds from the sale of the notes for general
corporate purposes, including repayment of long term debt and financing of our
continuing construction program. The following table sets forth information
relating to our capital expenditures for the periods indicated.
<TABLE>
<CAPTION>
Fiscal Year Ended September 30
(In thousands)
------------------------------------------------------------
2000 1999 1998 1997
<S> <C> <C> <C> <C>
Amount of Capital Expenditures (1) $60,000 $61,000 $57,000 $72,000
Percentage of Capital Expenditures
Provided by Internal Funds 64% 58%
</TABLE>
(1) Amounts for 2000 and 1999 are estimated
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our historical ratios of earning to
fixed charges for the periods indicated.
<TABLE>
<CAPTION>
Twelve Months Fiscal Years Ended
Ended March 31, September 30
-------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
4.0 3.9 2.2 4.6 4.1 4.1
</TABLE>
For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of net income plus income taxes, investment tax credits and
fixed charges. "Fixed charges" consist of interest charges, amortization of debt
discount and expenses and the estimated interest component of rents. The ratio
of earnings to fixed charges for fiscal 1997 before the restructuring charge
relating to the restructuring of operations of Indiana Gas to reduce costs and
remain competitive was 4.4.
- 4 -
<PAGE>
DESCRIPTION OF THE DEBT SECURITIES
General
The debt securities will be issued under an indenture dated as of
February 1, 1991, between Indiana Gas and U.S. Bank Trust National Association
(formerly Continental Bank, National Association), as trustee, as supplemented,
a copy of which is filed as an exhibit to the registration statement of which
this prospectus is a part.
The following summaries of certain provisions of the indenture are not
complete and are subject to, and are qualified in their entirety by reference
to, all of the provisions of the indenture, including the definitions of terms.
The Indenture does not limit the amount of debt, secured or unsecured,
which may be issued by Indiana Gas. The debt securities offered by this
Prospectus are unsecured and rank equally with the other unsecured and
unsubordinated indebtedness of Indiana Gas.
Unless otherwise indicated in the applicable prospectus supplement,
Indiana Gas will issue the debt securities only in fully registered form,
without coupons, in denominations of $1,000 or any multiple thereof. Unless
otherwise specified in the applicable prospectus supplement, the debt securities
will be registered for transfer and exchange, and principal, premium, if any,
and interest, if any, will be payable at the corporate trust offices of the
trustee in Chicago, Illinois and New York, New York. No service charge will be
made for any transfer or exchange of the debt securities, but Indiana Gas may
require payment of a sum sufficient to cover any tax or other government charge
payable in connection with any registration or exchange other than certain
exchanges not involving any transfer.
Terms of the Debt Securities
Indiana Gas may issue the debt securities from time to time, without
limitation as to aggregate principal amount and in one or more series. Indiana
Gas may issue debt securities upon the satisfaction of conditions, including the
delivery to the trustee of a supplemental indenture or a resolution of the Board
of Directors of Indiana Gas, or a committee of the Board of Directors, or a
certificate of an officer of Indiana Gas who has been authorized by the Board of
Directors to take that kind of action, which fixes or establishes the terms of
the debt securities being issued. Any resolution or officer's certificate
approving the issuance of any issue of debt securities will include the
following terms of that issue of debt securities:
o the title of the debt securities;
o any limit on the aggregate principal amount of the debt
securities;
o the date or dates on which the principal will be payable;
o the rate or rates (or manner of calculating the rate or rates)
at which the debt securities will bear interest, if any, and the
date or dates from which any interest will accrue;
o the interest payment dates and the regular record date for any
interest payable;
o the place or places where the principal (and premium, if any)
and interest, if any, will be payable and where the securities
may be surrendered for registration, transfer, or exchange;
- 5 -
<PAGE>
o the period or periods within which, the price or prices at
which, and the terms and conditions upon which, the debt
securities may be redeemed or purchased, in whole or in part;
o any mandatory redemption or sinking fund or analogous
provisions;
o the denominations in which any debt securities will be issuable
if other than denominations of $1,000 and any integral multiple
thereof;
o the currency or currencies of payment of principal (and premium,
if any) and interest (if other than U.S. dollars);
o if the amount of payments of principal (and premium, if any) or
interest may be determined with reference to an index, the
manner in which such amounts will be determined;
o if other than the full principal amount, the portion of the
principal amount which will be payable upon declaration of
acceleration of maturity;
o any additional events of default or covenants of Indiana Gas;
and
o any other terms of the debt securities.
The applicable prospectus supplement will also describe any special
provisions for the payment of additional amounts with respect to the debt
securities.
Limitations on Liens
Indiana Gas may not create or permit to be created or to exist any
mortgage on, pledge of, or other lien on or security interest in, any property
or assets of Indiana Gas securing any indebtedness for money borrowed, unless
Indiana Gas offers to each holder of the debt securities by written notice an
undertaking by Indiana Gas to provide that the debt securities will be equally
and ratably secured with that indebtedness and any other indebtedness which is
entitled to be equally and ratably secured. Any holder of a debt security may
accept this offer in writing delivered to Indiana Gas on or prior to the 30th
day following the date of the notice given by Indiana Gas. However, these
restrictions on liens do not apply to:
o certain governmental charges and similar liens, assessments,
pledges and deposits described in the indenture;
o leases made, or existing on property acquired, in the ordinary
course of business (including leases made in sale and lease-back
transactions);
o zoning restrictions, easements, licenses or restrictions on the
use of real property or minor irregularities in the title, which
do not, in the opinion of Indiana Gas, materially impair the use
of such property in the operation of the business of Indiana Gas
or the value of such property for the purpose of that business;
o liens on any property acquired, constructed or improved by
Indiana Gas after the date of the indenture which are created or
assumed at the time of, or within 120 days after, the
acquisition or completion of the construction or improvement, or
within six months after the acquisition or completion pursuant
to a firm commitment for financing arranged with a lender or
investor within such 120-day period, to secure or provide for
the payment of all or any part of the purchase price of the
property or the cost of the construction or improvement incurred
after the date of the indenture;
- 6 -
<PAGE>
o liens on any property already existing at the time of
acquisition, so long as the liens do not apply to any other
property owned by Indiana Gas other than unimproved real
property on which the property constructed or the improvement is
located;
o existing liens on any property or indebtedness of a corporation
which is merged or consolidated with Indiana Gas;
o liens in favor of the United States, any state, or any
department, agency or instrumentality or political subdivision
of the United States or any state, to secure partial, progress,
advance or other payments pursuant to any contract or statute or
to secure any indebtedness incurred for the purpose of financing
all or any part of the purchase price of or the cost of
constructing or improving the property subject to such liens,
including, without limitation, liens to secure debt of the
pollution control or industrial revenue bond type;
o liens to secure loans to Indiana Gas maturing within 12 months
from their creation and made in the ordinary course of business;
o liens on any property (including any natural gas, oil or other
mineral property) to secure all or part of the cost of
exploration, drilling or development of the property or to
secure debt incurred to provide funds for that purpose; or
o liens for the sole purpose of extending, renewing or replacing
in whole or in part debt secured by any lien referred to above
or in this bullet point, so long as the principal amount of debt
secured does not exceed the principal amount of debt secured at
the time of that extension, renewal or replacement, and that the
extension, renewal or replacement is limited to all or a part of
the property or indebtedness which secured the lien so extended,
renewed or replaced (plus improvements on such property).
Other than the restrictions on the issuance of additional secured debt
described above, there are no provisions of the indenture which afford holders
of the debt securities protection in the event of a highly leveraged or similar
transaction involving Indiana Gas. However, such a transaction would require
regulatory approval and management of Indiana Gas believes that such approval
would be unlikely in a highly leveraged or similar context.
Events of Default
The following constitute events of default under the indenture with
respect to debt securities of any series:
o default in the payment of principal of (or premium, if any, on)
any debt security when due and continuing for three business
days;
o default in the payment of interest on any debt security when due
and continuing for 30 days;
o default in the payment of any sinking fund payment when due and
continuing for three business days;
o default in the performance or breach of any covenant or warranty
of Indiana Gas in the indenture for the benefit of such series
and continuing for 60 days after written notice to Indiana Gas
as provided in the indenture;
o default in the payment of principal, premium, if any, or
interest on (after any applicable period of grace), or
acceleration of, indebtedness evidenced by any other series
issued under the indenture or any other mortgage, indenture or
instrument, or other evidence of indebtedness of Indiana Gas for
borrowed money, in an aggregate amount exceeding $10,000,000,
which default is not rescinded, or indebtedness not discharged,
within 90 days after written notice to Indiana Gas as provided
in the indenture;
- 7 -
<PAGE>
o certain events of bankruptcy, insolvency or reorganization; and
o any other event of default provided with respect to debt
securities of that series.
If an event of default occurs and is continuing, either the trustee or
the holders of at least 33% in aggregate principal amount of the outstanding
debt securities may declare the principal amount of all debt securities to be
due and payable immediately. At any time after the declaration of acceleration
with respect to the debt securities has been made, but before a judgment or
decree based on acceleration has been obtained, the holders of a majority in
principal amount of the outstanding debt securities may, under certain
circumstances, rescind and annul such acceleration.
Subject to the provisions of the Indenture relating to the duties of
the trustee, before proceeding to exercise any right under the indenture at the
direction of the holders, the trustee is entitled to receive reasonable security
or indemnity from the holders. The holders of a majority in principal amount of
the outstanding debt securities may direct the time, method and place of
conducting any proceeding for any remedy available to the trustee, or exercising
any trust or power conferred on the trustee, with respect to the debt
securities. The holder of debt securities has an absolute right to receive
payment of principal, premium, if any, and interest when due and may institute
suit for the enforcement of any such payment. The trustee must, within 90 days
after a default occurs notify the holders of the default, unless cured or
waived. The trustee may withhold notice of default (except default in payment of
principal or interest) if it determines that it is in the interest of the
holders to do so. The trustee must withhold such notice for 45 days in the event
of a default relating to breaches of covenants or representations contained in
the indenture.
Indiana Gas is required to furnish annually to the trustee a statement
as to the performance by Indiana Gas of certain of its obligations under the
indenture and as to any default in that performance.
Consolidation, Merger, Sale or Conveyance
Indiana Gas may not merge or consolidate with another corporation or
sell or convey its property or assets as an entirety or substantially as an
entity unless:
o Indiana Gas is the continuing corporation or the successor
corporation expressly assumes the obligations of Indiana Gas
under the indenture, and
o Indiana Gas or the successor corporation immediately after the
transaction is not in default under the indenture.
- 8 -
<PAGE>
Modification of the Indenture
The indenture may be modified and amended by Indiana Gas and the
trustee with the consent of holders of a majority in principal amount of each
series of debt securities affected. However, without the consent of each holder
of any debt security affected, no amendment or modification to any indenture
may:
o change the maturity of any debt security;
o reduce the principal amount of any debt security;
o change the currency of payment of principal or interest;
o reduce the interest rate or extend the time for payment of
interest;
o reduce the overdue rate;
o reduce any amount payable upon redemption;
o reduce the percentage in principal amount of the outstanding
debt securities of any series, the consent of whose holders is
required to modify or amend the indenture or waive default;
o change any obligation of Indiana Gas to maintain an office or
agency in the place of payment for the debt securities;
o change the method of calculating the rate of interest of any
debt security;
o change any obligation of Indiana Gas to pay additional amounts
as provided in the indenture;
o change the place of payment; or
o impair the right to institute suit for the enforcement of
payments on any debt security on or after the stated maturity
date or date of redemption or repayment.
The indenture permits Indiana Gas and the trustee to amend the
indenture without the consent of holders of any debt securities to evidence the
succession of another entity to Indiana Gas or the replacement of the trustee
and for certain other purposes.
PLAN OF DISTRIBUTION
Indiana Gas may sell securities:
o to the public through underwriters which may include Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
o through agents or dealers which may include Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
o directly to purchasers.
In connection with the sale of the debt securities, underwriters may
receive compensation from Indiana Gas or from purchasers of the debt securities
for whom they may act as agents in the form of discounts, concessions or
commissions. Underwriters may sell the debt securities to or through dealers,
and such dealers may receive compensation in the form of discounts, concessions
or commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers and agents that participate
- 9 -
<PAGE>
in the distribution of the debt securities may be deemed to be underwriters, and
any discounts or commissions received by them from Indiana Gas and any profit on
the resale of the debt securities by them may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933. Any such
underwriter, dealer or agent will be identified, and any such compensation
received from Indiana Gas will be described, in a prospectus supplement or
pricing supplement.
If so indicated in the prospectus supplement, Indiana Gas will
authorize underwriters to solicit offers by certain institutions to purchase
debt securities from Indiana Gas pursuant to delayed delivery contracts
providing for payment and delivery on the date stated in the prospectus
supplement. Each contract will be for an amount not less than, and, unless
Indiana Gas otherwise agrees, the aggregate principal amount of debt securities
sold pursuant to the contracts shall not be more than, the respective amounts
stated in the prospectus supplement. Institutions with whom the contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions, but shall in all cases be subject to the
approval of Indiana Gas. Delayed delivery contracts will not be subject to any
conditions except that the purchase by an institution of the debt securities
covered under that contract shall not at the time of delivery be prohibited
under the laws of any jurisdiction in the United States to which that
institution is subject.
Indiana Gas will indemnify the agents and the underwriters against
certain civil liabilities, including liabilities under the Securities Act of
1933, or contribute to payments the agents or the underwriters may be required
to make.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC.
Our SEC filings are also available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file by visiting
the SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
about the public reference rooms.
We have filed a registration statement on Form S-3 with the SEC
covering the debt securities. For further information on Indiana Gas and the
securities, you should refer to our registration statement and its exhibits.
This prospectus summarizes material provisions of contracts and other documents
that we refer you to. Because the prospectus may not contain all the information
that you may find important, you should review the full text of these documents.
We have included copies of these documents as exhibits to our registration
statement of which this prospectus is a part.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we file
with them, which means:
o incorporated documents are considered part of this prospectus;
o we can disclose important information to you by referring you to
those documents; and
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<PAGE>
o information that we file with the SEC will automatically update
and, to the extent inconsistent, supersede this prospectus and
previously incorporated information.
We incorporate by reference the documents listed below which were filed
with the SEC under the Securities Exchange Act of 1934:
o annual report of Indiana Gas on Form 10-K for the year ended
September 30, 1998;
o quarterly reports of Indiana Gas on Form 10-Q for the quarters
ended December 31, 1998 and March 31, 1999;
o current reports of Indiana Gas on Form 8-K filed October 9,
1998, October 30, 1998, January 27, 1999, April 22, 1999 and
April 30, 1999; and
o current report of Indiana Energy, Inc. on Form 8-K filed June
15, 1999. This filing describes the proposed merger between our
parent, Indiana Energy, and SIGCORP Inc.
We also incorporate by reference each of the following documents that
we will file with the SEC after the date of this prospectus until this offering
is completed:
o all documents filed under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act; and
o any reports filed under Section 15(d) of the Exchange Act.
You should rely only on information contained or incorporated by
reference in this prospectus. We have not authorized any other person to provide
you with different or additional information. If anyone provides you with
different or additional information, you should not rely on it. We are not
making an offer to sell these securities in any jurisdiction where the offer or
sale is not permitted.
You should assume that the information appearing in this prospectus is
accurate as of the date of this prospectus only. Our business, financial
condition and results of operations may have changed since that date.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address: Vice President
and Treasurer, Indiana Gas Company, Inc., 1630 North Meridian Street,
Indianapolis, Indiana 46202-1496, telephone (317) 926-3351.
EXPERTS
The financial statements and schedules included (incorporated by
reference) in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
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<PAGE>
$100,000,000
[INDIANA GAS LOGO]
An Indiana Energy Affiliate
Indiana Gas Company, Inc.
Medium-Term Notes,
Series G
Due Nine Months or More From Date of Issue
--------------------------------
PROSPECTUS SUPPLEMENT
--------------------------------
Merrill Lynch & Co.
August 13, 1999
