<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 9, 1997
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
NORTHERN INDIANA PUBLIC SERVICE COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
INDIANA 35-0552990
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION)
5265 HOHMAN AVENUE
HAMMOND, INDIANA 46320
219-853-5200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
JERRY M. SPRINGER
NORTHERN INDIANA PUBLIC SERVICE COMPANY
5265 HOHMAN AVENUE
HAMMOND, INDIANA 46320
219-853-5353
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
ANDREW A. KLING MITCHELL L. HOLLINS
SCHIFF HARDIN & WAITE SONNENSCHEIN NATH & ROSENTHAL
7200 SEARS TOWER 8000 SEARS TOWER
CHICAGO, ILLINOIS 60606 CHICAGO, ILLINOIS 60606
(312) 258-5551 (312) 876-8144
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: From time to time after the effective date of this Registration
Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
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<S> <C> <C> <C> <C>
Medium-Term Notes, Series E............... $217,692,000 100% $217,692,000 $65,968
</TABLE>
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- -------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the amount of the
registration fee.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE +
+WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES +
+LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 9, 1997
$217,692,000
NORTHERN INDIANA PUBLIC SERVICE COMPANY
MEDIUM-TERM NOTES, SERIES E
DUE FROM 1 YEAR TO 30 YEARS FROM DATE OF ISSUE
----------
Northern Indiana Public Service Company (the "Company") may offer from time
to time up to $217,692,000 aggregate principal amount of its Medium-Term Notes,
Series E (collectively, the "Notes" and, individually, a "Note"), on terms
determined at the time of sale. Each Note will mature one year to 30 years from
the issue date as specified in the applicable Pricing Supplement. The Notes
will bear interest at a fixed or floating rate as set forth in the applicable
Pricing Supplement. The specific principal amounts, interest rates, initial
public offering price, maturity, any redemption terms or other specific terms
of any Notes offered, in respect of which this Prospectus is being delivered,
will be set forth in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, the Notes will be denominated
in United States dollars and issued in minimum denominations of $1,000 or any
amount in excess thereof that is an integral multiple of $1,000. See
"Description of Notes."
Unless otherwise specified in the applicable Pricing Supplement, interest on
each Fixed Rate Note will be payable semiannually on each March 15 and
September 15, and at maturity or upon earlier redemption, if any. Interest on
each Floating Rate Note will be payable monthly, quarterly, semiannually or
annually as specified in the applicable Pricing Supplement, or as otherwise
specified in the applicable Pricing Supplement, and at maturity or upon earlier
redemption, if any. Unless otherwise specified in the applicable Pricing
Supplement, the Notes will not be subject to any sinking fund.
Each Note will be issued in fully registered certificated form (a
"Certificated Note") or in book-entry form (a "Book-Entry Note"), as set forth
in the applicable Pricing Supplement. Beneficial interests in Book-Entry Notes
will be shown on, and transfers thereof will be effected only through, records
maintained by the Depositary or its participants. Except in the limited
circumstances described under "Description of Notes--Book-Entry Notes," owners
of beneficial interests in a Book-Entry Note will not be entitled to receive
physical delivery of Certificated Notes representing interests therein and will
not be considered the Holders thereof.
----------
SEE "RISK FACTORS" COMMENCING ON PAGE 4 FOR A DISCUSSION OF CERTAIN RISKS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES OFFERED
HEREBY.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
<TABLE>
<CAPTION>
AGENTS' DISCOUNTS
PRICE TO AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(1)(2) COMPANY(1)(3)
------------ ------------------- -------------------------
<S> <C> <C> <C>
Per Note............ 100% .150%-.750% 99.850%-99.250%
Total(4)............ $217,692,000 $326,538-$1,632,690 $217,365,462-$216,059,310
</TABLE>
- -----
(1) Notes will be issued at 100% of their principal amount, unless otherwise
specified in the applicable Pricing Supplement.
(2) The Company will pay the Agents a commission of from .150% to .750%,
depending on maturity, of the principal amount of any Notes sold through
them as agents (or sold to such Agents as principal in circumstances where
no other discount is agreed). The Company has agreed to indemnify the
Agents against certain liabilities, including liabilities under the
Securities Act of 1933. See "Plan of Distribution."
(3) Before deducting expenses payable by the Company estimated at $231,468.
(4) Or the equivalent thereof in one or more foreign or composite currencies.
----------
Offers to purchase Notes may be solicited, on a reasonable efforts basis,
from time to time by the Agents on behalf of the Company. Notes may be sold to
the Agents as principal on their own behalf at negotiated discounts. The
Company reserves the right to sell Notes directly on its own behalf. The
Company also reserves the right to withdraw, cancel or modify the offering
contemplated hereby without notice. No termination date for the offering of the
Notes has been established. The Company or the Agents may reject any order as a
whole or in part. See "Plan of Distribution."
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
----------
The date of this Prospectus is , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form S-3 (including any amendments thereto,
the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Notes. This Prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain portions of which have been omitted
pursuant to the rules of the SEC. Statements made in this Prospectus as to the
content of any contract, agreement or other document are not necessarily
complete. With respect to each such contract, agreement or other document
filed or incorporated by reference as an exhibit to the Registration
Statement, reference is made to such exhibit for a more complete description
of the matter involved, and each such statement is qualified in its entirety
by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the SEC.
Reports, proxy statements and other information filed by the Company with the
SEC may be inspected and copied at the public reference facilities maintained
by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the SEC's Regional Offices located at Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661 and at Seven World Trade Center, 13th Floor, New York,
New York 10048. Copies of such materials may be obtained from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. Such material may also be accessed electronically by
means of the SEC's home page on the Internet at http://www.sec.gov. Certain of
the Company's securities are traded on the New York Stock Exchange ("NYSE")
and the American Stock Exchange ("ASE"), and such reports, proxy statements
and other information can also be inspected at the offices of the NYSE, 20
Broad Street, New York, New York 10005 and at the offices of the ASE, 89
Trinity Place, New York, New York 10006.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the SEC (File No.1-4125) by the Company
pursuant to the Exchange Act are hereby incorporated by reference and made a
part of this Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1996; and
2. All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Notes.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference, other than exhibits to
such information (unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to Nina M. Rausch,
Secretary, Northern Indiana Public Service Company, 5265 Hohman Avenue,
Hammond, Indiana 46320 (telephone (219) 853-5199).
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any other subsequently filed document that
also is or is deemed to be incorporated by reference in this Prospectus
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
----------------
CERTAIN PERSONS PARTICIPATING IN OFFERINGS OF NOTES MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
NOTES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS
IN SUCH NOTES, AND THE IMPOSITION OF PENALTY BIDS, DURING AND AFTER SUCH
OFFERINGS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION."
2
<PAGE>
THE COMPANY
The Company, an Indiana corporation organized on August 2,1912, is a public
utility operating company engaged in supplying electrical energy and natural
gas to the public in 30 counties in the northern part of Indiana, serving an
area of about 12,000 square miles with a population of approximately
2,188,000. At December 31, 1996, the Company supplied approximately 411,500
customers with electricity and approximately 653,000 customers with natural
gas. For the fiscal year ended December 31, 1996, approximately 58% of its
revenues were derived from the sale of electricity and approximately 42% from
the sale and transportation of natural gas. The principal executive offices of
the Company are located at 5265 Hohman Avenue, Hammond, Indiana 46320, and its
telephone number is (219) 853-5200.
The Company is a subsidiary of NIPSCO Industries, Inc. ("Industries"), an
Indiana corporation incorporated on September 22, 1987. The holding company
structure was established in order to separate utility from non-utility
investments and activities, and to improve capital allocation and managerial
accountability and provide flexibility to diversify. The Notes are not
obligations of, or guaranteed by, Industries.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges.......... 3.87x 3.75x 3.45x 3.37x 2.85x
</TABLE>
For the purpose of calculating the ratios of earnings to fixed charges,
"earnings" consist of income from continuing operations before income taxes,
and "fixed charges" consist of interest on all indebtedness, amortization of
debt expense, and the percentage of rental expense on operating leases deemed
representative of the interest factor.
A statement setting forth the computation of ratio of earnings to fixed
charges is filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
USE OF PROCEEDS
The Company will use $102,436,000 of the net proceeds to repay short-term
debt incurred, and to reimburse its treasury for cash used, to pay the
following securities at maturity:
$22,436,000 First Mortgage Bonds, Series N, 4 5/8%, due May 15, 1995;
$25,000,000 Medium-Term Note, Series D, Variable Rate, due July 25, 1996;
$25,000,000 Medium-Term Note, Series D, Variable Rate, due July 26, 1996;
and
$30,000,000 Medium-Term Note, Series D, Variable Rate, due July 26, 1996.
The remaining $115,256,000 of the net proceeds will be added to working
capital and used to pay at maturity the following debt securities:
$25,747,000 First Mortgage Bonds, Series O, 6 3/8%, due September 1, 1997;
$15,000,000 Medium-Term Noted, Series D, Variable Rate, due July 25, 1997;
$15,000,000 Medium-Term Note, Series D, Variable Rate, due July 28, 1997;
$10,000,000 Medium-Term Note, Series D, Variable Rate, due July 28, 1997;
$14,508,000 First Mortgage Bonds, Series P, 6 7/8%, due October 1, 1998;
$20,000,000 Medium-Term Note, Series B, 5.83%, due April 6, 1998;
$10,000,000 Medium-Term Note, Series B, 5.88%, due April 6, 1998; and
$5,000,000 Medium-Term Note, Series B, 5.95%, due April 13, 1998.
3
<PAGE>
RISK FACTORS
This Prospectus does not describe all of the risks of an investment in the
Notes, whether resulting from Notes being denominated or payable in or
determined by reference to a currency or composite currency other than United
States dollars or to one or more interest rate, currency or other indices or
formulas, or otherwise. The Company and the Agents disclaim any responsibility
to advise prospective investors of such risks as they exist at the date of this
Prospectus or as they change from time to time. Prospective investors should
consult their own financial and legal advisors as to the risks entailed by an
investment in the Notes and the suitability of investing in the Notes in light
of their particular circumstances. Foreign Currency Notes (as defined under
"Description of Notes--General") are not an appropriate investment for
investors who are unsophisticated with respect to foreign currency transactions
or transactions involving the applicable interest rate or currency index or
other indices or formulas. Prospective investors should carefully consider,
among other factors, the matters described below.
STRUCTURE RISKS
An investment in Notes that are indexed, as to principal, premium, if any,
and/or interest, if any, to one or more interest rate, currency (including
exchange rates and swap indices between currencies or composite currencies) or
other indices or formulas, either directly or inversely, entails significant
risks that are not associated with similar investments in a conventional fixed
rate or floating rate debt security. Such risks include, without limitation,
the possibility that such indices or formulas may be subject to significant
changes, that no interest will be payable in respect of such Notes or will be
payable at a rate lower than one applicable to a conventional fixed rate or
floating rate debt security issued by the Company at the same time, that
repayment of the principal and/or premium, if any, in respect of such Notes may
occur at times other than those expected by the holders of the Notes
("Holders"), and that the Holders could lose all or a substantial portion of
principal and/or premium, if any, payable with respect to such Notes on the
Maturity Date (as defined under "Description of Notes--General"). Such risks
depend on a number of interrelated factors, including economic, financial and
political events, over which the Company has no control. Additionally, if the
formula used to determine the amount of principal, premium, if any, and/or
interest, if any, payable with respect to such Notes contains a multiplier or
leverage factor, the effect of any change in the applicable index or indices or
formula or formulas will be magnified. In recent years, values of certain
indices and formulas have been highly volatile and such volatility may be
expected to continue in the future. Fluctuations in the value of any particular
index or formula that have occurred in the past are not necessarily indicative,
however, of fluctuations that may occur in the future.
Any optional redemption feature of the Notes might affect the market value of
such Notes. Since the Company may be expected to redeem such Notes when
prevailing interest rates are relatively low, Holders generally will not be
able to reinvest the redemption proceeds in a comparable security at an
effective interest rate as high as the current interest rate on such Notes.
The Notes will not have an established trading market when issued, and there
can be no assurance of a secondary market for the Notes or the liquidity of the
secondary market if one develops. See "Plan of Distribution."
The secondary market, if any, for the Notes will be affected by a number of
factors independent of the creditworthiness of the Company and the value of the
applicable index or indices or formula or formulas, including the complexity
and volatility of each such index or formula, the method of calculating the
principal, premium, if any, and/or interest, if any, in respect of such Notes,
the time remaining to the maturity of such Notes, the outstanding amount of
such Notes, any redemption features of such Notes, the amount of other debt
securities linked to such index or formula and the level, direction and
volatility of market interest rates generally. Such factors also will affect
the market
4
<PAGE>
value of such Notes. In addition, certain Notes may be designed for specific
investment objectives or strategies and, therefore, may have a more limited
secondary market and experience more price volatility than conventional debt
securities. Holders may not be able to sell such Notes readily or at prices
that will enable them to realize their anticipated yield. No investor should
purchase Notes unless such investor understands and is able to bear the risk
that such Notes may not be readily saleable, that the value of such Notes will
fluctuate over time and that such fluctuations may be significant.
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Foreign Currency Notes entails significant risks that are
not associated with a similar investment in a debt security denominated and
payable in United States dollars. Such risks include, without limitation, the
possibility of significant changes in the rate of exchange between the United
States dollar and the Specified Currency (as defined under "Description of
Notes--General") and the possibility of the imposition or modification of
exchange controls by the applicable governments or monetary authorities. Such
risks generally depend on factors over which the Company has no control, such
as economic, financial and political events and the supply and demand for the
applicable currencies or composite currencies. In addition, if the formula used
to determine the amount of principal, premium, if any, and/or interest, if any,
payable with respect to Foreign Currency Notes contains a multiplier or
leverage factor, the effect of any change in the applicable currencies or
composite currencies will be magnified. In recent years, rates of exchange
between the United States dollar and foreign or composite currencies have been
highly volatile and such volatility may be expected to continue in the future.
Fluctuations in any particular exchange rate that have occurred in the past are
not necessarily indicative, however, of fluctuations that may occur in the
future. Depreciation of the Specified Currency applicable to a Foreign Currency
Note against the United States dollar would result in a decrease in the United
States dollar-equivalent yield of such Foreign Currency Note, in the United
States dollar-equivalent value of the principal and premium, if any, payable on
the Maturity Date of such Foreign Currency Note, and, generally, in the United
States dollar-equivalent market value of such Foreign Currency Note.
Governments or monetary authorities have imposed from time to time, and may
in the future impose or revise, exchange controls at or prior to the date on
which any payment of principal of, or premium, if any, or interest, if any, on,
a Foreign Currency Note is due, which could affect exchange rates as well as
the availability of the Specified Currency on such date. Even if there are no
exchange controls, it is possible that the Specified Currency would not be
available on the applicable payment date due to other circumstances beyond the
control of the Company. In such cases, the Company will be entitled to satisfy
its obligations in respect of such Foreign Currency Note in United States
dollars. See "Special Provisions Relating to Foreign Currency Notes--
Availability of Specified Currency."
CREDIT RATINGS
The credit ratings assigned to the Company's medium-term note program may not
reflect the potential impact of all risks related to structure and other
factors on the value of the Notes. Accordingly, prospective investors should
consult their own financial and legal advisors as to the risks entailed by an
investment in the Notes and the suitability of investing in such Notes in light
of their particular circumstances.
5
<PAGE>
DESCRIPTION OF NOTES
The Notes will be issued under an Indenture dated as of March 1, 1988
between the Company and Manufacturers Hanover Trust Company, as Trustee,
supplemented by a First Supplemental Indenture dated as of December 1, 1991
(the "Indenture"), under which The Chase Manhattan Bank, as successor to
Manufacturers Hanover Trust Company, is currently serving as Trustee (the
"Trustee"). The statements under this heading do not purport to be complete
and are subject to the detailed provisions of the Indenture, a copy of which
is filed as an exhibit to the Registration Statement of which this Prospectus
is a part. Wherever particular provisions of the Indenture or terms defined
therein are referred to, such provisions or definitions are incorporated by
reference as a part of the statements made and the statements are qualified in
their entirety by such reference.
GENERAL
The following description of the Notes sets forth certain general terms and
provisions of the Notes and such description will apply to the Notes unless
otherwise provided in the applicable Pricing Supplement. The particular terms
of the Notes offered by this Prospectus and each Pricing Supplement, including
the specific principal amounts, interest rates or interest rate formula,
purchase price, initial public offering price, maturity and any other specific
terms of any Notes in respect of which this Prospectus is being delivered will
be set forth in the applicable Pricing Supplement.
All Notes issued and to be issued under the Indenture will be unsecured
general obligations of the Company and will rank pari passu with all other
unsecured and unsubordinated indebtedness of the Company from time to time
outstanding. The Indenture does not limit the aggregate principal amount of
indebtedness that may be issued thereunder and indebtedness may be issued
thereunder from time to time in one or more series up to the aggregate
principal amount from time to time authorized by the Company for each series.
The Company may, from time to time, without the consent of the Holders,
provide for the issuance of other indebtedness under the Indenture in addition
to the $217,692,000 aggregate principal amount of Notes offered hereby.
The Notes are limited to up to $217,692,000 aggregate principal amount, or
the equivalent thereof in one or more foreign or composite currencies. Each
Note will mature on a day one year to 30 years from its date of issue (the
"Stated Maturity Date"), as specified in the applicable Pricing Supplement,
unless the principal thereof (or any installment of principal thereof) becomes
due and payable prior to the Stated Maturity Date, whether by the declaration
of acceleration of maturity, notice of redemption at the option of the
Company, notice of the Holder's option to elect repayment or otherwise (the
Stated Maturity Date or such prior date, as the case may be, is herein
referred to as the "Maturity Date" with respect to the principal of such Note
repayable on such date). Unless otherwise specified in the applicable Pricing
Supplement , interest-bearing Notes will either be Fixed Rate Notes or
Floating Rate Notes, as specified in the applicable Pricing Supplement. The
Company may also issue Discount Notes, Indexed Notes and Amortizing Notes (as
such terms are hereinafter defined).
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be denominated in, and payments of principal, premium, if any, and/or
interest, if any, in respect thereof will be made in, United States dollars.
The Notes also may be denominated in, and payments of principal, premium, if
any, and/or interest, if any, in respect thereof may be made in, one or more
foreign or composite currencies ("Foreign Currency Notes"). See "Special
Provisions Relating to Foreign Currency Notes--Payment of Principal, Premium
and Interest". The currency or composite currency in which a particular Note
is denominated (or, if such currency or composite currency is no longer legal
tender for the payment of public and private debts, such other currency or
composite currency of the relevant country which is then legal tender for the
payment of such debts) is herein referred to as the "Specified Currency" with
respect to such Note. References herein to "United States dollars", "U.S.
dollars" or "$" are to the lawful currency of the United States of America
(the "United States").
6
<PAGE>
Unless otherwise specified in the applicable Pricing Supplement, purchasers
are required to pay for the Notes in the applicable Specified Currencies. At
the present time, there are limited facilities in the United States for the
conversion of United States dollars into foreign or composite currencies and
vice versa, and commercial banks do not generally offer non-United States
dollar checking or savings account facilities in the United States. The Company
believes that, unless otherwise specified in the applicable Pricing Supplement,
the Agent from or through which a Foreign Currency Note is purchased may be
prepared to arrange for the conversion of United States dollars into the
Specified Currency in order to enable the purchaser to pay for such Foreign
Currency Note, provided that a request is made to such Agent on or prior to the
fifth Business Day (as hereinafter defined) preceding the date of delivery of
such Foreign Currency Note, or by such other day as determined by such Agent.
Each such conversion will be made by such Agent on such terms and subject to
such conditions, limitations and charges as such Agent may from time to time
establish in accordance with its regular foreign exchange practices. All costs
of exchange will be borne by the purchaser of each such Foreign Currency Note.
See "Special Provisions Relating to Foreign Currency Notes."
Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other factors, the aggregate principal amount of Notes
purchased in any single transaction. Notes with different variable terms other
than interest rates may also be offered concurrently to different investors.
Interest rates or formulas and other terms of the Notes are subject to change
by the Company from time to time, but no such change will affect any Note
previously issued or as to which an offer to purchase has been accepted by the
Company.
Each Note will be issued as a Book-Entry Note represented by one or more
fully registered Global Notes or as a fully registered Certificated Note. The
minimum denominations of each Note other than a Foreign Currency Note will be
$1,000 and integral multiples thereof, unless otherwise specified in the
applicable Pricing Supplement, while the minimum denominations of each Foreign
Currency Note will be specified in the applicable Pricing Supplement.
Payments of principal of, and premium, if any, and interest, if any, on,
Book-Entry Notes will be made by the Company through the Trustee to the
Depositary. 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 thereof (and, in
the case of any repayment on an Optional Repayment Date, upon submission of a
duly completed election form in accordance with the provisions described below)
at the office or agency maintained by the Company for such purpose in the
Borough of Manhattan, The City of New York, currently the corporate trust
office of the Trustee. 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
thereof and premium, if any, thereon shall be made. Payment of interest, if
any, due on a Certificated Note on any Interest Payment Date (as hereinafter
defined) other than the Maturity Date will be made by check mailed to the
address of the Holder entitled thereto as such address shall appear in the
Security Register of the Company. Notwithstanding the foregoing, a Holder of
$10,000,000 (or, if the Specified Currency is other than United States dollars,
the equivalent thereof in such Specified Currency) 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 of
immediately available funds if appropriate wire transfer instructions have been
received in writing by the Trustee not less than 15 days prior to such Interest
Payment Date. Any such wire transfer instructions received by the Trustee shall
remain in effect until revoked by such Holder. For special payment terms
applicable to Foreign Currency Notes, see "Special Provisions Relating to
Foreign Currency Notes--Payment of Principal, Premium, if any, and Interest, if
any."
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 banking institutions
are authorized or required by law, regulation or executive order to close in
The City of New York; provided, however, that, with respect to Foreign Currency
Notes, such day is also not a day on which banking institutions are authorized
or required by law, regulation or executive order to close in the Principal
Financial Center (as hereinafter defined) of the country issuing the Specified
Currency (unless the Specified Currency is European Currency Units
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("ECU"), in which case such day is also not a day that appears as an ECU non-
settlement day on the display designated as "ISDE" on the Reuter Monitor Money
Rates Service (or is not a day designated as an ECU non-settlement day by the
ECU Banking Association) or, if ECU non-settlement days do not appear on that
page (and are not so designated), a day that is not a day on which payments in
ECU cannot be settled in the international interbank market); provided,
further, that, with respect to Notes as to which LIBOR is an applicable
Interest Rate Basis, such day is also a London Business Day (as hereinafter
defined). "London Business Day" means a day on which dealings in the Designated
LIBOR Currency (as hereinafter defined) are transacted in the London interbank
market.
"Principal Financial Center" means (i) the capital city of the country
issuing the Specified Currency (except as described in the immediately
preceding paragraph with respect to ECU) or (ii) the capital city of the
country to which the Designated LIBOR Currency, if applicable, relates (or, in
the case of ECU, Luxembourg), except, in each case, that with respect to United
States dollars, Australian dollars, Canadian dollars, Deutsche marks, Dutch
guilders, Italian lire and Swiss francs, the "Principal Financial Center" shall
be The City of New York, Sydney, Toronto, Frankfurt, Amsterdam, Milan (solely
in the case of clause (i) above) and Zurich, respectively, unless otherwise
specified in the applicable Pricing Supplement.
Book-Entry Notes may be transferred or exchanged only through the Depositary.
See "--Book-Entry Notes." Registration of transfer or exchange of Certificated
Notes will be made at the office or agency maintained by the Company for such
purpose in the Borough of Manhattan, The City of New York, currently the
corporate trust office of the Trustee. No service charge will be made by the
Company or the Trustee for any such registration of transfer or exchange of the
Notes, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection therewith (other
than exchanges pursuant to the Indenture not involving any transfer).
The indenture provides that the Notes may be issued at various times, may
have differing maturity dates and other terms and may bear interest at
differing rates.
INTEREST
GENERAL
Unless otherwise specified in the applicable Pricing Supplement, each
interest-bearing Note will bear interest from its date of issue at the rate per
annum, in the case of a Fixed Rate Note, or pursuant to the interest rate
formula, in the case of a Floating Rate Note, in each case as specified in the
applicable Pricing Supplement, until the principal thereof is paid or duly made
available for payment. Unless otherwise specified in the applicable Pricing
Supplement, interest payments in respect of Fixed Rate Notes and Floating Rate
Notes will be made in an amount equal to the interest accrued from and
including the immediately preceding Interest Payment Date in respect of which
interest has been paid or duly made available for payment (or from and
including the date of issue, if no interest has been paid or duly made
available for payment) to but excluding the applicable Interest Payment Date or
the Maturity Date, as the case may be (each, an "Interest Period").
Interest on Fixed Rate Notes and Floating Rate Notes will be payable in
arrears on each Interest Payment Date and on the Maturity Date. Unless
otherwise specified in the applicable Pricing Supplement, the first payment of
interest on any such Note originally issued between a Record Date (as
hereinafter defined) and the related Interest Payment Date will be made on the
Interest Payment Date immediately following the next succeeding Record Date to
the Holder on such next succeeding Record Date. Unless otherwise specified in
the applicable Pricing Supplement, a "Record Date" shall be the fifteenth
calendar day (whether or not a Business Day) immediately preceding the related
Interest Payment Date.
FIXED RATE NOTES
Interest on Fixed Rate Notes will be payable on March 15 and September 15 of
each year or on such other date(s) specified in the applicable Pricing
Supplement (each, an "Interest Payment Date"
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with respect to Fixed Rate Notes) and on the Maturity Date. 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 required payment of principal,
premium, if any, and/or interest will be made on the next succeeding Business
Day as if made on the date such payment was due, and no interest will accrue on
such payment for the period from and after such 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, as described
below, include (i) the CD Rate, (ii) the CMT Rate, (iii) the Commercial Paper
Rate, (iv) the Eleventh District Cost of Funds Rate, (v) the Federal Funds
Rate, (vi) LIBOR, (vii) the Prime Rate, (viii) the Treasury Rate, or (ix) such
other Interest Rate Basis or interest rate formula as may be specified in the
applicable Pricing Supplement. The applicable Pricing Supplement will specify
certain terms with respect to which each Floating Rate Note is being delivered,
including: whether such Floating Rate Note is a "Regular Floating Rate Note," a
"Floating Rate/Fixed Rate Note" or an "Inverse Floating Rate Note," the Fixed
Rate Commencement Date, if applicable, Fixed Interest Rate, if applicable,
Interest Rate Basis or Bases, Initial Interest Rate, if any, Initial Interest
Reset Date, Interest Reset Dates, Interest Payment Dates, Index Maturity,
Maximum Interest Rate and/or Minimum Interest Rate, if any, and Spread and/or
Spread Multiplier, if any, as such terms are defined below. If one or more of
the applicable Interest Rate Bases is LIBOR or the CMT Rate, the applicable
Pricing Supplement will also specify the Designated LIBOR Currency and
Designated LIBOR Page or the Designated CMT Maturity Index and Designated CMT
Telerate Page, respectively, as such terms are defined below.
The interest rate borne by the Floating Rate Notes will be determined as
follows:
(i) Unless such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note" or an "Inverse Floating Rate Note", or as having an
Addendum attached or having "Other/Additional Provisions" apply, in each
case relating to a different interest rate formula, such Floating Rate Note
will be designated as a "Regular Floating Rate Note" and, except as
described below or in the applicable Pricing Supplement, will bear interest
at the rate determined by reference to the applicable Interest Rate Basis
or Bases (a) plus or minus the applicable Spread, if any, and/or (b)
multiplied by the applicable Spread Multiplier, if any. Commencing on the
Initial Interest Reset Date, the rate at which interest on such Regular
Floating Rate Note shall be payable shall be reset as of each Interest
Reset Date; provided, however, that the interest rate in effect for the
period, if any, from the date of issue to the Initial Interest Reset Date
will be the Initial Interest Rate.
(ii) If such Floating Rate Note is designated as a "Floating Rate/Fixed
Rate Note," then, except as described below or in the applicable Pricing
Supplement, such Floating Rate Note will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases (a)
plus or minus the applicable Spread, if any, and/or (b) multiplied by the
applicable Spread Multiplier, if any. Commencing on the Initial Interest
Reset Date, the rate at which interest on such Floating Rate/Fixed Rate
Note shall be payable shall be reset as of each Interest Reset Date;
provided, however, that (y) the interest rate in effect for the period, if
any, from the date of issue to the Initial Interest Reset Date will be the
Initial Interest Rate and (z) the interest rate in effect for the period
commencing on the Fixed Rate Commencement Date to the Maturity Date shall
be the Fixed Interest Rate, if such rate is specified in the applicable
Pricing Supplement or, if no such
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<PAGE>
Fixed Interest Rate is specified, the interest rate in effect thereon on
the day immediately preceding the Fixed Rate Commencement Date.
(iii) If such Floating Rate Note is designated as an "Inverse Floating
Rate Note," then, except as described below or in the applicable Pricing
Supplement, such Floating Rate Note will bear interest at the Fixed
Interest Rate minus the rate determined by reference to the applicable
Interest Rate Basis or Bases (a) plus or minus the applicable Spread, if
any, and/or (b) multiplied by the applicable Spread Multiplier, if any;
provided, however, that, unless otherwise specified in the applicable
Pricing Supplement, the interest rate thereon will not be less than zero.
Commencing on the Initial Interest Reset Date, the rate at which interest
on such Inverse Floating Rate Note shall be payable shall be reset as of
each Interest Reset Date; provided, however, that the interest rate in
effect for the period, if any, from the date of issue to the Initial
Interest Reset Date will be the Initial Interest Rate.
The "Spread" is the number of basis points to be added to or subtracted from
the related Interest Rate Basis or Interest Rate Bases applicable to such
Floating Rate Note. The "Spread Multiplier" is the percentage of the related
Interest Rate Basis or Bases applicable to such Floating Rate Note by which
such Interest Rate Basis or Interest Rate Bases will be multiplied to determine
the applicable interest rate on such Floating Rate Note. The "Index Maturity"
is the period to maturity of the instrument or obligation with respect to which
the related Interest Rate Basis or Bases will be calculated.
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 such day is an Interest Reset Date, the interest rate determined as of
the Interest Determination Date (as hereinafter defined) immediately preceding
such Interest Reset Date or (ii) if such 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.
The applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually or on such other specified basis (each, an
"Interest Reset Period") and the dates on which such rate of interest 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: (i) daily, each Business Day; (ii) 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); (iii) 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); (iv) quarterly, the third Wednesday of March, June, September and
December of each year; (v) semiannually, the third Wednesday of the two months
specified in the applicable Pricing Supplement; and (vi) annually, the third
Wednesday of the month specified in the applicable Pricing Supplement;
provided, however, that, with respect to Floating Rate/Fixed Rate Notes, the
rate of interest thereon will not reset after the applicable Fixed Rate
Commencement Date. If any Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Reset Date will be
postponed to the next succeeding Business Day, except that in the case of a
Floating Rate Note as to which LIBOR is an applicable Interest Rate Basis and
such Business Day falls in the next succeeding calendar month, such Interest
Reset Date will be the immediately preceding Business Day.
The interest rate applicable to each Interest Reset Period commencing on the
related Interest Reset Date will be the rate determined by the Calculation
Agent as of the applicable Interest
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Determination Date and calculated on or prior to the Calculation Date (as
hereinafter defined), except with respect to LIBOR and the Eleventh District
Cost of Funds Rate, which will be calculated on such Interest Determination
Date. 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 immediately preceding the applicable Interest Reset
Date; 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 the applicable Interest Reset Date on which the Federal Home Loan
Bank of San Francisco (the "FHLB of San Francisco") publishes the Index (as
hereinafter defined); and the "Interest Determination Date" with respect to
LIBOR will be the second London Business Day immediately preceding the
applicable 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. With respect to the Treasury Rate, the
"Interest Determination Date" will be the day in the week in which the
applicable Interest Reset Date falls on which day Treasury Bills (as
hereinafter defined) are normally auctioned (Treasury Bills are normally sold
at an auction held on Monday of each week, unless that day is a legal holiday,
in which case the auction is normally held on the following Tuesday, except
that such 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 "Interest Determination Date" will be such preceding
Friday; provided, further, that if the Interest Determination Date would
otherwise fall on an Interest Reset Date, then such Interest Reset Date will be
postponed to the next succeeding Business Day. The "Interest Determination
Date" pertaining to a Floating Rate Note the interest rate of which is
determined by reference to two or more Interest Rate Bases will be the most
recent Business Day which is at least two Business Days prior to the applicable
Interest Reset Date for such Floating Rate Note on which each Interest Rate
Basis is determinable. Each Interest Rate Basis will be determined as of such
date, and the applicable interest rate will take effect on the applicable
Interest Reset Date.
Notwithstanding the foregoing, a Floating Rate Note may also have either or
both of the following: (i) a Maximum Interest Rate, or ceiling, that may accrue
during any Interest Period and (ii) a Minimum Interest Rate, or floor, that may
accrue during any Interest Period. In addition to any Maximum Interest Rate
that may apply to any Floating Rate Note, the interest rate on Floating Rate
Notes will in no event be higher than the maximum rate permitted by New York
law, as the same may be modified by United States law of general application.
Except as provided below or in the applicable Pricing Supplement, interest
will be payable, in the case of Floating Rate Notes which reset: (i) daily,
weekly or monthly, on 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; (ii) quarterly, on the third Wednesday of
March, June, September and December of each year; (iii) semiannually, on the
third Wednesday of the two months of each year specified in the applicable
Pricing Supplement; and (iv) annually, on the third Wednesday of the month of
each year specified in the applicable Pricing Supplement (each, an "Interest
Payment Date" with respect to Floating Rate Notes) and, in each case, on the
Maturity Date. If any Interest Payment Date other than the Maturity Date for
any Floating Rate Note would otherwise be a day that is not a Business Day,
such Interest Payment Date will be postponed to the next succeeding Business
Day, except that in the case of a Floating Rate Note as to which LIBOR is an
applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, such 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 required payment of principal, premium, if
any, and interest will be made on the next succeeding Business Day as if made
on the date such payment was due, and no interest will accrue on such payment
for the period from and after the Maturity Date to the date of such 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
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rounded upwards (e.g., 9.876545% (or .09876545) would be rounded to 9.87655%
(or .0987655)), and all amounts used in or resulting from such calculation on
Floating Rate Notes will be rounded, in the case of United States dollars, to
the nearest cent or, in the case of a foreign or composite currency, to the
nearest unit (with one-half cent or unit being rounded upwards).
With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its principal amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day in the applicable Interest Period. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for each such day will be
computed by dividing the interest rate applicable to such day by 360, in the
case of Floating Rate 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, or by the actual number of
days in the year in the case of Floating Rate Notes for which an applicable
Interest Rate Basis is the CMT Rate or the Treasury Rate. Unless otherwise
specified in the applicable Pricing Supplement, 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 the applicable Interest Rate Basis specified in the
applicable Pricing Supplement applied.
Unless otherwise specified in the applicable Pricing Supplement, The Chase
Manhattan Bank will be the "Calculation Agent." Upon request of the Holder of
any Floating Rate Note, the Calculation Agent will disclose 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 such 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 (i) the
tenth calendar day after such Interest Determination Date or, if such day is
not a Business Day, the next succeeding Business Day or (ii) the Business Day
immediately preceding the applicable Interest Payment Date or the Maturity
Date, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, the
Calculation Agent shall determine each Interest Rate Basis in accordance with
the following provisions.
CD RATE. Unless otherwise specified in the applicable Pricing Supplement, "CD
Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CD Rate (a "CD Rate Interest Determination Date"), the rate on such date
for negotiable United States dollar certificates of deposit having the Index
Maturity specified in the applicable Pricing Supplement as published by the
Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication ("H.15(519)")
under the heading "CDs (Secondary Market)," or, if not published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on such CD Rate
Interest Determination Date for negotiable United States dollar certificates of
deposit of the Index Maturity specified in the applicable Pricing Supplement as
published by the Federal Reserve Bank of New York in its daily statistical
release "Composite 3:30 P.M. Quotations for U.S. Government Securities" or any
successor publication ("Composite Quotations") under the heading "Certificates
of Deposit." If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 P.M., New York City time, on the related Calculation Date,
then the CD Rate on such CD Rate Interest Determination Date will be calculated
by the Calculation Agent and will be the arithmetic mean of the secondary
market offered rates as of 10:00 A.M., New York City time, on such CD Rate
Interest Determination Date, of three leading nonbank dealers in negotiable
United States dollar certificates of deposit in The City of New York (which may
include the Agents or their affiliates) selected by the Calculation Agent for
negotiable United States dollar certificates of deposit of major United States
money center 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
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market at that time; provided, however, that if the dealers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the CD Rate
determined as of such CD Rate Interest Determination Date will be the CD Rate
in effect on such CD Rate Interest Determination Date.
CMT RATE. Unless otherwise specified in the applicable Pricing Supplement,
"CMT Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CMT Rate (a "CMT Rate Interest Determination Date"), 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 (i) if the
Designated CMT Telerate Page is 7055, the rate on such CMT Rate Interest
Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the
weekly or 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 CMT Rate Interest
Determination Date falls. If such rate is no longer displayed on the relevant
page or is not displayed by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for such CMT Rate Interest Determination
Date will be such treasury constant maturity rate for the Designated CMT
Maturity Index as published in H.15(519). If such rate is no longer published
or is not published by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate on such CMT Rate Interest Determination
Date will be such treasury constant maturity rate for the Designated CMT
Maturity Index (or other United States Treasury rate for the Designated CMT
Maturity Index) for the CMT Rate Interest Determination Date with respect to
such 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). If such information is not provided by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate on the CMT Rate
Interest Determination Date will be calculated by the Calculation Agent and
will be 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 such
CMT Rate 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 the Agents or their affiliates)
(each, a ""Reference Dealer'') selected by the Calculation Agent (from five
such Reference Dealers selected by the Calculation Agent and 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. If the Calculation Agent is
unable to obtain three such Treasury Note quotations, the CMT Rate on such CMT
Rate Interest Determination Date will be calculated by the Calculation Agent
and will be 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 such
CMT Rate Interest Determination Date of three Reference Dealers in The City of
New York (from five such Reference Dealers selected by the Calculation Agent
and 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. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offered rates obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer than
three Reference Dealers so selected by the Calculation Agent are quoting as
mentioned herein, the CMT Rate determined as of such CMT Rate Interest
Determination Date will be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two Treasury Notes with an original maturity as
described in the second preceding sentence have remaining terms to maturity
equally close to the
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Designated CMT Maturity Index, the Calculation Agent will obtain quotations
for the Treasury Note with the shorter remaining term to maturity.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service (or any successor service) on the page specified in the applicable
Pricing Supplement (or any other page as may replace such page on such
service) for the purpose of displaying Treasury Constant Maturities as
reported in H.15(519). If no such page is specified in the applicable Pricing
Supplement, the Designated CMT Telerate Page shall be 7052 for the most recent
week.
"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 such maturity is specified in the applicable Pricing
Supplement, 2 years.
COMMERCIAL PAPER RATE. Unless otherwise specified in the applicable Pricing
Supplement, "Commercial Paper Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest
rate is determined with reference to the Commercial Paper Rate (a "Commercial
Paper Rate Interest Determination Date"), the Money Market Yield (as
hereinafter defined) on such date of the rate for commercial paper having the
Index Maturity specified in the applicable Pricing Supplement as published in
H.15(519) under the heading "Commercial Paper." In the event that such rate is
not published by 3:00 P.M., New York City time, on the related Calculation
Date, then the Commercial Paper Rate on such Commercial Paper Rate Interest
Determination Date will be the Money Market Yield of the rate for commercial
paper having the Index Maturity specified in the applicable Pricing Supplement
as published in Composite Quotations under the heading "Commercial Paper"
(with an Index Maturity of one month or three months being deemed to be
equivalent to an Index Maturity of 30 days or 90 days, respectively). If such
rate is not yet published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on the related Calculation Date, then the Commercial
Paper Rate on such Commercial Paper Rate Interest Determination Date will be
calculated by the Calculation Agent and will be the Money Market Yield of the
arithmetic mean of the offered rates at approximately 11:00 A.M., New York
City time, on such Commercial Paper Rate Interest Determination Date of three
leading dealers of commercial paper in The City of New York (which may include
the Agents or their affiliates) selected by the Calculation Agent for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement placed for an industrial issuer whose bond rating is "Aa", or the
equivalent, from a nationally recognized statistical rating organization;
provided, however, that if the dealers so selected by the Calculation Agent
are not quoting as mentioned in this sentence, the Commercial Paper Rate
determined as of such Commercial Paper Rate Interest Determination Date will
be the Commercial Paper Rate in effect on such Commercial Paper Rate Interest
Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated in
accordance with the following formula:
D x 360
Money Market Yield = --------------- 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. Unless otherwise specified in the
applicable Pricing Supplement, "Eleventh District Cost of Funds Rate" means,
with respect to any Interest Determination Date relating to a Floating Rate
Note for which the interest rate is determined with reference to the
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Eleventh District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate
Interest Determination Date"), the rate equal to the monthly weighted average
cost of funds for the calendar month immediately preceding the month in which
such Eleventh District Cost of Funds Rate Interest Determination Date falls, as
set forth under the caption "11th District" on Telerate Page 7058 as of 11:00
A.M., San Francisco time, on such Eleventh District Cost of Funds Rate Interest
Determination Date. If such rate does not appear on Telerate Page 7058 on such
Eleventh District Cost of Funds Rate Interest Determination Date, then the
Eleventh District Cost of Funds Rate on such Eleventh District Cost of Funds
Rate Interest Determination Date shall be 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 FHLB of San
Francisco as such cost of funds for the calendar month immediately preceding
such Eleventh District Cost of Funds Rate Interest Determination Date. If the
FHLB of San Francisco fails to announce the Index on or prior to such Eleventh
District Cost of Funds Rate Interest Determination Date for the calendar month
immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date, the Eleventh District Cost of Funds Rate determined as of
such Eleventh District Cost of Funds Rate Interest Determination Date will be
the Eleventh District Cost of Funds Rate in effect on such Eleventh District
Cost of Funds Rate Interest Determination Date.
FEDERAL FUNDS RATE. Unless otherwise specified in the applicable Pricing
Supplement, "Federal Funds Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest rate
is determined with reference to the Federal Funds Rate (a "Federal Funds Rate
Interest Determination Date"), the rate on such date for United States dollar
federal funds as published in H.15(519) under the heading "Federal Funds
(Effective)" or, if not published by 3:00 P.M., New York City time, on the
related Calculation Date, the rate on such Federal Funds Rate Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If such rate is not published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
related Calculation Date, then the Federal Funds Rate on such Federal Funds
Rate Interest Determination Date will be calculated by the Calculation Agent
and will be the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading brokers
of federal funds transactions in The City of New York (which may include the
Agents or their affiliates) selected by the Calculation Agent prior to 9:00
A.M., New York City time, on such Federal Funds Rate Interest Determination
Date; provided, however, that if the brokers so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds Rate
determined as of such Federal Funds Rate Interest Determination Date will be
the Federal Funds Rate in effect on such Federal Funds Rate Interest
Determination Date.
LIBOR. Unless otherwise specified in the applicable Pricing Supplement,
"LIBOR" means the rate determined in accordance with the following provisions:
(i) With respect to any Interest Determination Date relating to a Floating
Rate Note for which the interest rate is determined with reference to LIBOR (a
"LIBOR Interest Determination Date"), LIBOR will be either: (a) if "LIBOR
Reuters" is specified in the applicable Pricing Supplement, the arithmetic mean
of the offered rates (unless the Designated LIBOR Page by its terms provides
only for a single rate, in which case such single rate shall be used) for
deposits in the Designated LIBOR Currency having the Index Maturity specified
in such Pricing Supplement, commencing on the applicable Interest Reset Date,
that appear (or, if only a single rate is required as aforesaid, appears) on
the Designated LIBOR Page as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date, or (b) 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 such Pricing Supplement, commencing on such Interest
Reset Date, that appears on the Designated LIBOR Page as of 11:00 A.M., London
time, on such LIBOR Interest Determination Date. If fewer than
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two such offered rates so appear, or if no such rate so appears, as applicable,
LIBOR on such LIBOR Interest Determination Date will be determined in
accordance with the provisions described in clause (ii) below.
(ii) 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 clause (i) above, the Calculation Agent
will request the principal London offices of each of four major reference banks
(which may include affiliates of the Agents) in the London interbank market, as
selected by the Calculation Agent, 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 such LIBOR
Interest Determination Date and in a principal amount that is representative
for a single transaction in the Designated LIBOR Currency in such market at
such time. If at least two such quotations are so provided, then LIBOR on such
LIBOR Interest Determination Date will be the arithmetic mean of such
quotations. If fewer than two such quotations are so provided, then LIBOR on
such LIBOR Interest Determination Date will be the arithmetic mean of the rates
quoted at approximately 11:00 A.M., in the applicable Principal Financial
Center, on such LIBOR Interest Determination Date by three major banks (which
may include affiliates of the Agents) in such Principal Financial Center
selected by the Calculation Agent for loans in the Designated LIBOR Currency to
leading European banks, having the Index Maturity specified in the applicable
Pricing Supplement and in a principal amount that is representative for a
single transaction in the Designated LIBOR Currency in such market at such
time; provided, however, that if the banks so selected by the Calculation Agent
are not quoting as mentioned in this sentence, LIBOR determined as of such
LIBOR Interest Determination Date will be LIBOR in effect on such LIBOR
Interest Determination Date.
"Designated LIBOR Currency" means the currency or composite currency
specified in the applicable Pricing Supplement as to which LIBOR shall be
calculated or, if no such currency or composite currency is specified in the
applicable Pricing Supplement, United States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Pricing Supplement, the display on the Reuters Monitor Money Rates
Service (or any successor service) on the page specified in such Pricing
Supplement (or any other page as may replace such page on such service) for the
purpose of displaying the London interbank rates of major banks for the
Designated LIBOR Currency, or (b) if "LIBOR Telerate" is specified 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 the Dow Jones Telerate Service (or any successor service)
on the page specified in such Pricing Supplement (or any other page as may
replace such page on such service) for the purpose of displaying the London
interbank rates of major banks for the Designated LIBOR Currency.
PRIME RATE. Unless otherwise specified in the applicable Pricing Supplement,
"Prime Rate" means, with respect to any Interest Determination Date relating to
a Floating Rate Note for which the interest rate is determined with reference
to the Prime Rate (a "Prime Rate Interest Determination Date"), the rate on
such date as such rate is published in H.15(519) under the heading "Bank Prime
Loan." If such rate is not published prior to 3:00 P.M., New York City time, on
the related Calculation Date, then the Prime Rate shall be the arithmetic mean
of the rates of interest publicly announced by each bank that appears on the
Reuters Screen USPRIME1 Page (as hereinafter defined) as such bank's prime rate
or base lending rate as in effect for such Prime Rate Interest Determination
Date. If fewer than four such rates appear on the Reuters Screen USPRIME1 Page
for such Prime Rate Interest Determination Date, then the Prime Rate shall be
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 such Prime Rate Interest Determination Date by four
major money
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center banks (which may include affiliates of the Agents) in The City of New
York selected by the Calculation Agent. If fewer than four such quotations are
so provided, then the Prime Rate shall be the arithmetic mean of four prime
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 such Prime Rate Interest
Determination Date as furnished in The City of New York by the major money
center banks, if any, that have provided such quotations and by a reasonable
number of substitute banks or trust companies (which may include affiliates of
the Agents) to obtain four such prime rate quotations, provided such substitute
banks or trust companies are organized and doing business under the laws of the
United States, or any State thereof, each having total equity capital of at
least $500 million and being subject to supervision or examination by Federal
or State authority, selected by the Calculation Agent to provide such rate or
rates; provided, however, that if the banks or trust companies so selected by
the Calculation Agent are not quoting as mentioned in this sentence, the Prime
Rate determined as of such Prime Rate Interest Determination Date will be the
Prime Rate in effect on such Prime Rate Interest Determination Date.
"Reuters Screen USPRIME1 Page" means the display on the Reuters Monitor Money
Rates Service (or any successor service) on the "USPRIME1" page (or such other
page as may replace such page on such service) for the purpose of displaying
prime rates or base lending rates of major United States banks.
TREASURY RATE. Unless otherwise specified in the applicable Pricing
Supplement, "Treasury Rate" means, with respect to any Interest Determination
Date relating to a Floating Rate Note for which the interest rate is determined
by reference to the Treasury Rate (a "Treasury Rate Interest Determination
Date"), the rate from the auction held on such Treasury Rate Interest
Determination Date (the "Auction") of direct obligations of the United States
("Treasury Bills") having the Index Maturity specified in the applicable
Pricing Supplement, as such rate is published in H.15(519) under the heading
"Treasury Bills-auction average (investment)" or, if not published by 3:00
P.M., New York City time, on the related Calculation Date, the auction average
rate of such Treasury Bills (expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of the Treasury. In the
event that the results of the Auction of Treasury Bills having the Index
Maturity specified in the applicable Pricing Supplement are not reported as
provided by 3:00 P.M., New York City time, on the related Calculation Date, or
if no such Auction is held, then the Treasury Rate will be calculated by the
Calculation Agent and will be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on such Treasury Rate
Interest Determination Date, of three leading primary United States government
securities dealers (which may include the Agents or their 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; provided, however, that if the dealers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the Treasury
Rate determined as of such Treasury Rate Interest Determination Date will be
the Treasury Rate in effect on such Treasury Rate Interest Determination Date.
OTHER/ADDITIONAL PROVISIONS; ADDENDUM
Any provisions with respect to the Notes, including the specification and
determination of one or more Interest Rate Bases, the calculation of the
interest rate applicable to a Floating Rate Note, the Interest Payment Dates,
the Stated Maturity Date, any redemption or repayment provisions or any other
term relating thereto, may be modified and/or supplemented as specified under
"Other/Additional Provisions" on the face thereof or in an Addendum relating
thereto, if so specified on the face thereof and described in the applicable
Pricing Supplement.
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DISCOUNT NOTES
The Company may offer Notes ("Discount Notes") from time to time that have an
Issue Price (as specified in the applicable Pricing Supplement) that is less
than 100% of the principal amount thereof (i.e. par) by more than a percentage
equal to the product of 0.25% and the number of full years to the Stated
Maturity Date. 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 par is referred to
herein as the "Discount." Unless otherwise specified in the applicable Pricing
Supplement, in the event of redemption, repayment or acceleration of maturity
of a Discount Note, the amount payable to the Holder of such Discount Note 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 such 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 date of such redemption, repayment or
acceleration of maturity, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, for purposes
of determining the amount of Discount that has accrued as of any date on which
a redemption, repayment or acceleration of maturity occurs for a Discount Note,
such 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 hereinafter defined),
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 such 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 such 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 such 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 "United States
Federal Income Tax Considerations."
INDEXED NOTES
The Company may from time to time offer Notes ("Indexed Notes") with the
amount of principal, premium and/or interest payable in respect thereof to be
determined with reference to the price or prices of specified commodities or
stocks, to the exchange rate of one or more designated currencies (including a
composite currency such as the ECU) relative to an indexed currency or to other
items, in each case as specified in the applicable Pricing Supplement . In
certain cases, Holders of Indexed Notes may receive a principal payment on the
Maturity Date that is greater than or less than the principal amount of such
Indexed Notes depending upon the relative value on the Maturity Date of the
specified indexed item. Information as to the method for determining the amount
of principal, premium, if any, and/or interest, if any, payable in respect of
Indexed Notes, certain historical information with respect to the specified
indexed item and any material tax considerations associated with an investment
in Indexed Notes will be specified in the applicable Pricing Supplement. See
also "Risk Factors."
AMORTIZING NOTES
The Company may from time to time offer Notes ("Amortizing Notes") with the
amount of principal thereof and interest thereon payable in installments over
the term of such Notes. Unless otherwise
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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 thereon and then to the reduction of the unpaid principal amount
thereof. Further information concerning additional terms and provisions of
Amortizing Notes will be specified in the applicable Pricing Supplement,
including a table setting forth repayment information for such Amortizing
Notes.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes up to $200,000,000 aggregate principal
amount bearing interest at the same rate or pursuant to the same formula,
having the same date of issuance, redemption provisions, if any, stated
maturity and other terms will be represented by a single global Note (a "Global
Note"). Each Global Note representing Book-Entry Notes will be deposited with,
or on behalf of, The Depository Trust Company or such other depositary as is
specified in the applicable Pricing Supplement (the "Depositary"; unless
otherwise specified in the applicable Pricing Supplement, the Depositary shall
be The Depository Trust Company and as hereinafter used the term Depositary
means The Depository Trust Company), which is located in the Borough of
Manhattan, The City of New York, and will be registered in the name of the
Depositary or a nominee of the Depositary.
Upon the issuance of a Global Note, the Depositary for such Global Note or
its nominee will credit the accounts of persons held with it with the
respective principal or face amounts of the Book-Entry Note represented by such
Global Note. Such accounts shall be designated by the Agents with respect to
Book-Entry Notes or by the Company if such Notes are offered and sold directly
by the Company. Ownership of beneficial interests in a Global Note will be
limited to Participants (as defined below). Ownership of beneficial interests
by Participants in a Global Note will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by the
Depositary for such Global Note. Ownership of beneficial interests in such
Global Note by persons that hold through Participants will be shown on, and the
transfer of that ownership interest within such Participant will be effected
only through, records maintained by such Participants. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Note.
Payments of principal of and any premium and interest on Book-Entry Notes
represented by any such Global Note will be made to the Depositary or its
nominee, as the case may be, as the sole registered owner and the sole Holder
of the Book-Entry Notes represented thereby for all purposes under the
Indenture. None of the Company, the Trustee or any agent of the Company or the
Trustee will have any responsibility or liability for any aspect of the
Depositary's records relating to or payments made on account of beneficial
ownership interests in a Global Note representing any Book-Entry Notes or for
maintaining, supervising or reviewing any of the Depositary's records relating
to such beneficial ownership interests.
No Global Note described above may be transferred except as a whole by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor of the
Depositary or a nominee of such successor.
A Global Note representing Book-Entry Notes is exchangeable for definitive
Notes in registered form, bearing interest at the same rate or pursuant to the
same formula, having the same date of issuance, redemption provisions, if any,
stated maturity and other terms and of differing denominations aggregating a
like amount, only if (a) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Note or if at any
time the Depositary ceases to be a clearing agency registered under the
Exchange Act, (b) the Company in its sole discretion determines that all such
Global Notes shall be exchangeable for definitive Notes in registered form, or
(c) an Event of Default with respect to the Notes represented by such Global
Note has occurred and is continuing. Any
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Global Note that is exchangeable pursuant to the preceding sentence shall be
exchangeable for definitive Notes in registered form, bearing interest at the
same rate or pursuant to the same formula, having the same date of issuance,
redemption provisions, if any, stated maturity and other terms and of
denominations aggregating a like amount. Such definitive Notes shall be
registered in the names of the owners of the beneficial interests in such
Global Note as provided by the Depositary's relevant Participants (as
identified by the Depositary holding such Global Note).
So long as the Depositary for a Book-Entry Note, or its nominee, is the
registered owner of such Book-Entry Note, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Note
represented by such Book-Entry Note for the purposes of receiving payments on
the Notes, receiving notices and for all other purposes under the Indenture and
the Notes. Beneficial interests in Book-Entry Notes will be evidenced only by,
and transfers thereof will be effected only through, records maintained by the
Depositary (with respect to Participants' interests) and its Participants (with
respect to beneficial owners' interests). Except as provided above, owners of
beneficial interests in such Global Note will not be entitled to receive
physical delivery of Notes in definitive form and will not be considered the
Holders thereof for any purpose under the Indenture, and except as provided
above, no Global Note representing Book-Entry Notes shall be exchangeable.
Accordingly, each person owning a beneficial interest in such Global Note must
rely on the procedures of the Depositary and, if such person is not a
Participant, on the procedures of the Participant through which such person
owns its interest, to exercise any rights of a Holder under the Indenture.
The following is based on information furnished by the Depositary:
The Depositary will act as securities depository for the Book-Entry Notes.
The Book-Entry Notes will be issued as fully registered securities registered
in the name of Cede & Co. (the Depositary's partnership nominee). One fully
registered Global Note will be issued for each issue of Book-Entry Notes, each
in the aggregate principal amount of such issue, and will be deposited with the
Depositary. If, however, the aggregate principal amount of any issue exceeds
$200,000,000, one Global Note will be issued with respect to each $200,000,000
of principal amount and an additional Global Note will be issued with respect
to any remaining principal amount of such issue.
The Depositary 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 Exchange
Act. The Depositary holds securities that its participants ("Participants")
deposit with the Depositary. The Depositary 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 Depositary ("Direct
Participants") include securities brokers and dealers (including the Agents),
banks, trust companies, clearing corporations and certain other organizations.
The Depositary is owned by a number of its Direct Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the Depositary'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 ("Indirect Participants").
The rules applicable to the Depositary and its Participants are on file with
the SEC.
Purchases of Book-Entry Notes under the Depositary's system must be made by
or through Direct Participants, which will receive a credit for such Book-Entry
Notes on the Depositary's records. The ownership interest of each actual
purchaser of each Book-Entry Note represented by a Global Note ("Beneficial
Owner") is in turn to be recorded on the records of Direct Participants and
Indirect Participants. Beneficial Owners will not receive written confirmation
from the Depositary of their
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purchases, but Beneficial Owners are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the Direct Participants or Indirect Participants through which
such Beneficial Owners entered into the transactions. Transfers of ownership
interests in a Global Note representing Book-Entry Notes are to be accomplished
by entries made on the books of Participants acting on behalf of Beneficial
Owners.
To facilitate subsequent transfers, all Global Notes representing Book-Entry
Notes which are deposited with, or on behalf of, the Depositary are registered
in the name of the Depositary's nominee, Cede & Co. The deposit of Global Notes
with, or on behalf of, the Depositary and their registration in the name of
Cede & Co. effect no change in beneficial ownership. The Depositary has no
knowledge of the actual Beneficial Owners of the Global Notes representing the
Book-Entry Notes; the Depositary's records reflect only the identity of the
Direct Participants to whose accounts such Book-Entry Notes 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.
Conveyance of notices and other communications by the Depositary 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 Depositary nor Cede & Co. will consent or vote with respect to
the Global Notes representing the Book-Entry Notes. Under its usual procedures,
the Depositary mails an Omnibus Proxy to the Company as soon as possible after
the applicable record date. The Omnibus Proxy assigns Cede & Co.'s consenting
or voting rights to those Direct Participants to whose accounts the Book-Entry
Notes are credited on the applicable record date (identified in a listing
attached to the Omnibus Proxy).
Principal, premium, if any, and/or interest, if any, payments on the Global
Notes representing the Book-Entry Notes will be made in immediately available
funds to the Depositary. The Depositary's practice is to credit Direct
Participants' accounts on the applicable payment date in accordance with their
respective holdings shown on the Depositary's records unless the Depositary has
reason to believe that it will not receive payment on such 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 such Participant and not of the Depositary, the Trustee or
the Company, 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 Depositary is the responsibility of the Company and
the Trustee, disbursement of such payments to Direct Participants shall be the
responsibility of the Depositary, and disbursement of such payments to the
Beneficial Owners shall 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 Book-Entry Notes of like tenor and terms are being redeemed, the
Depositary's practice is to determine by lot the amount of the interest of each
Direct Participant in such issue to be redeemed.
A Beneficial Owner shall give notice of any option to elect to have its Book-
Entry Notes repaid by the Company, through its Participant, to the Trustee, and
shall effect delivery of such Book-Entry Notes by causing the Direct
Participant to transfer the Participant's interest in the Global Note or Notes
representing such Book-Entry Notes, on the Depositary's records, to the
Trustee. The requirement for physical delivery of Book-Entry Notes in
connection with a demand for repayment will be deemed satisfied when the
ownership rights in the Global Note or Notes representing such Book-Entry Notes
are transferred by Direct Participants on the Depositary's records.
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The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes at any time by giving
reasonable notice to the Company or the Trustee. Under such circumstances, in
the event that a successor securities depository is not obtained, Certificated
Notes are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor securities depository). In
that event, Certificated Notes will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes to
be reliable, but the Company takes no responsibility for the accuracy thereof.
REPURCHASE
The Company may at any time purchase Notes at any price or prices on the open
market or otherwise. Notes so purchased by the Company may be held or resold
or, at the discretion of the Company, may be surrendered to the Trustee for
cancellation.
EVENTS OF DEFAULT
The following constitute Events of Default under the Indenture with respect
to the Notes (parenthetical references to certain applicable sections of the
Indenture as in effect on the date hereof have been set forth below for
convenience of reference): (1) default in the payment of principal of any Note
when due and the continuation of such default for a period of three Business
Days thereafter; (2) default in the payment of interest on any Note when due
and the continuation thereof for a period of 30 days; (3) default in the
deposit of any sinking fund payment (if any) on any Note when due and
continuance of such default for a period of three Business Days thereafter; (4)
default in the performance or breach of any other covenant or warranty of the
Company in the Indenture (other than a covenant or warranty included in the
Indenture solely for the benefit of one or more series of debt securities other
than the Notes) and the continuation thereof for 60 days after written notice
to the Company as provided in the Indenture; (5) default in the payment of
principal or interest on, or acceleration of, securities of any other series
issued under the Indenture or any other mortgage, indenture or instrument or
other evidence of indebtedness of the Company for borrowed money, in an
aggregate amount exceeding $5,000,000, which default is not cured or
acceleration not rescinded or annulled, or indebtedness not discharged, within
90 days after written notice to the Company as provided in the Indenture; and
(6) certain events of bankruptcy, insolvency or reorganization (Section 501).
No Event of Default with respect to the Notes necessarily constitutes an Event
of Default with respect to other debt securities issued under the Indenture.
If an Event of Default with respect to the Notes occurs and is continuing,
either the Trustee or the Holders of at least 33 percent in aggregate principal
amount of the outstanding Notes may declare the principal amount of all Notes
to be due and payable immediately. At any time after the declaration of
acceleration with respect to the Notes 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 Notes may, under certain circumstances,
rescind and annul such acceleration (Section 502).
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity (Section 603). Subject to such
provisions for the indemnification of the Trustee, the Holders of a majority in
principal amount of the outstanding Notes will have the right to direct the
time, method and place of conducting any proceeding for any remedy
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available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Notes (Section 512). The right of a Holder of any
Note to institute a proceeding with respect to the Indenture is subject to
certain conditions precedent, but each Holder has an absolute right to receive
payment of principal, premium, if any, and interest when due and to institute
suit for the enforcement of any such payment (Sections 507 and 508). The
Indenture provides that the Trustee, within 90 days after the occurrence of a
default with respect to the Notes, is required to give the Holders of the Notes
notice of such default, unless cured or waived; provided that, except in the
case of default in the payment of principal or of interest on any Note, the
Trustee may withhold such notice if it determines it is in the interest of such
Holders to do so (Section 602).
The Company will be required to furnish annually to the Trustee a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance (Section 1009).
CERTAIN COVENANTS OF THE COMPANY
Although the Indenture contains certain covenants, described below, with
respect to consolidations, mergers, or conveyances involving the Company, these
covenants do not focus on the debt incurred in any such transaction and do not
otherwise afford protection to holders of Notes in the event of a highly
leveraged transaction that is not in violation of the covenants. The Company
does not currently intend to include any covenants or other provisions
affording such protection in the Notes.
LIMITATION OF LIENS.
The Company will not, and will not permit any Subsidiary to, issue, assume or
guarantee any debt for money borrowed (herein referred to as "Debt") if such
Debt is secured by any mortgage, security interest, pledge, lien or other
encumbrance (herein referred to as a "mortgage") upon any property of the
Company or any Subsidiary or indebtedness issued by any Subsidiary and owned by
the Company or any other Subsidiary, whether owned at the date of the Indenture
or thereafter acquired, without effectively securing the Notes equally and
ratably with (or prior to) such Debt. The foregoing restriction does not apply
to: (i) mortgages to secure Debt issued under the Indenture; (ii) "permitted
liens" as defined in the Indenture; (iii) mortgages on any property acquired,
constructed or improved after the date of the Indenture which are created or
assumed within 120 days after such acquisition or completion of such
construction or improvement (or within six months thereafter pursuant to a firm
commitment for financing arrangements entered into within such 120-day period)
to secure or provide for the payment of the purchase price or cost thereof
incurred after the date of the Indenture, or existing mortgages on property
acquired, provided such mortgages shall not apply to any property theretofore
owned by the Company or a Subsidiary other than theretofore unimproved real
property; (iv) existing mortgages of a corporation merged with or into the
Company or a Subsidiary; (v) mortgages of any corporation existing at the time
it becomes a Subsidiary; (vi) mortgages securing Debt owed by a Subsidiary to
the Company or to another Subsidiary; (vii) mortgages in favor of domestic or
foreign governmental bodies to secure advances or other payments pursuant to
any contract or statute or to secure indebtedness incurred to finance the
purchase price or cost of constructing or improving the property subject to
such mortgages, including mortgages to secure Debt of the pollution control or
industrial revenue bond type; (viii) mortgages to secure loans to the Company
or any Subsidiary maturing within 12 months and made in the ordinary course of
business; (ix) mortgages existing on the date of the Indenture; (x) mortgages
on any property to secure all or part of the cost of exploration, drilling or
development thereof or to secure Debt incurred to provide funds for any such
purpose; or (xi) mortgages for extending, renewing or replacing Debt secured by
any mortgage referred to in the foregoing clauses (i) to (x) inclusive or in
this clause (xi), provided, however, that the principal amount of Debt secured
thereby shall not exceed the principal amount of Debt so secured at the time of
such extension, renewal or replacement and that the mortgage for such
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extension, renewal or replacement shall be limited to the original property or
indebtedness. Furthermore, such restriction does not apply to the issuance,
assumption or guarantee by the Company or any Subsidiary of Debt secured by a
mortgage which would otherwise be subject to the foregoing restriction up to an
aggregate amount which, together with all other secured Debt (not including
secured Debt permitted under the foregoing exceptions), does not exceed 5% of
Consolidated Net Tangible Assets (Section 1008).
CONSOLIDATION, MERGER, SALE OR CONVEYANCE.
The Indenture provides that the Company may, without the consent of the
Holders of the Notes, consolidate with, or sell or convey all or substantially
all of its property and assets to, or merge into another corporation, only if
in any such case (i) if the Company is not the continuing corporation, the
successor corporation shall assume by a supplemental indenture the Company's
obligations under the Indenture and (ii) immediately after giving effect to
such transaction no Event of Default, and no event which after notice or lapse
of time would become an Event of Default, shall have happened and be continuing
(Section 801). If, upon any consolidation or merger of the Company with or into
any other corporation, or upon any sale or conveyance of all or substantially
all of its property and assets to another corporation, any property of the
Company or any Subsidiary or any indebtedness issued by any Subsidiary then
owned by the Company or any other Subsidiary would thereupon become subject to
a mortgage, other than the permitted mortgages referred to under "Limitations
on Liens" above, the Company, prior to or concurrently with such consolidation,
merger, sale or conveyance, will by a supplemental indenture secure the Notes
equally and ratably with any other indebtedness of the Company or such
Subsidiary entitled thereto, by a direct lien, on such property of the Company
or any Subsidiary or such indebtedness issued by a Subsidiary, prior to all
liens other than any theretofore existing thereon (Section 801).
CERTAIN DEFINITIONS.
Certain terms defined in the Indenture are summarized below. All accounting
terms not specifically defined in the Indenture are to be construed in
accordance with generally accepted accounting principles and practices in use
on the date of the Indenture.
"Consolidated Net Tangible Assets" means the total amount of assets appearing
on the consolidated balance sheet of the Company and its Subsidiaries less
(without duplication) the following: (1) current liabilities; (2) reserves for
depreciation and other asset valuation reserves but excluding reserves for
deferred Federal income taxes; (3) intangible assets such as goodwill,
trademarks, trade names, patents and unamortized debt discount and expense; and
(4) appropriate adjustments on account of minority interests of other persons
holding common stock in any Subsidiary of the Company (Section 101).
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which
ordinarily has voting power for the election of directors, whether at all times
or only so long as no senior class of stock has such voting power by reason of
any contingency (Section 101).
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in principal amount
of the securities of each series then outstanding under the Indenture affected
by such supplemental indenture (each such series voting as a single class), to
execute supplemental indentures adding any provisions to or changing or
eliminating any of the provisions of the Indenture or modifying the rights of
the holders of securities of such series,
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except that no such supplemental indenture may (i) change the stated maturity
of any securities outstanding under the Indenture, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the method of calculating the rate of interest
thereon or on any overdue principal amount, or reduce amount thereof, or reduce
any amount payable upon any redemption thereof, or (ii) reduce the aforesaid
percentage of securities of any series outstanding under the Indenture, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each security so affected (Section 902).
The Indenture also permits the Company and the Trustee to amend the Indenture
in certain circumstances without the consent of the holders of the securities
outstanding under the Indenture to evidence the merger of the Company or the
replacement of the Trustee with respect to the securities of one or more series
and for certain other purposes (Section 901).
LISTING
The Notes will not be listed on any national or regional securities exchange.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
Unless otherwise specified in the applicable Pricing Supplement, Foreign
Currency Notes will not be sold in, or to residents of, the country issuing the
applicable currency. The information set forth in this Prospectus is directed
to prospective purchasers who are United States residents and, with respect to
Foreign Currency Notes, is by necessity incomplete. The Company and the Agents
disclaim any responsibility to advise prospective purchasers who are residents
of countries other than the United States with respect to any matters that may
affect the purchase, holding or receipt of payments of principal of, and
premium, if any, and interest, if any, on, Foreign Currency Notes. Such persons
should consult their own financial and legal advisors with regard to such
matters. See "Risk Factors--Exchange Rates and Exchange Controls."
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST, IF ANY
Unless otherwise specified in the applicable Pricing Supplement, the Company
is obligated to make payments of principal of, and premium, if any, and
interest, if any, on, a Foreign Currency Note in the Specified Currency. Any
such amounts payable by the Company in the Specified Currency will be converted
by the exchange rate agent named in the applicable Pricing Supplement (the
"Exchange Rate Agent") into United States dollars for payment to Holders unless
otherwise specified in the applicable Pricing Supplement or the Holder of such
Foreign Currency Note elects, in the manner hereinafter described, to receive
such amounts in the Specified Currency.
Any United States dollar amount to be received by a Holder of a Foreign
Currency Note will be based on the highest bid quotation in The City of New
York received by the Exchange Rate Agent at approximately 11:00 A.M., New York
City time, on the second Business Day preceding the applicable payment date
from three recognized foreign exchange dealers (one of whom may be the Exchange
Rate Agent) selected by the Exchange Rate Agent and approved by the Company for
the purchase by the quoting dealer of the Specified Currency for United States
dollars for settlement on such payment date in the aggregate amount of such
Specified Currency payable to all Holders of Foreign Currency Notes scheduled
to receive United States dollar payments and at which the applicable dealer
commits to execute a contract. All currency exchange costs will be borne by the
Holders of such Foreign Currency Notes by deductions from such payments. If
three such bid quotations are not available, payments will be made in the
Specified Currency.
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Holders of Foreign Currency Notes may elect to receive all or a specified
portion of any payment of principal, premium, if any, and/or interest, if any,
in the Specified Currency by submitting a written request for such payment to
the Trustee at its corporate trust office in The City of New York on or prior
to the applicable Record Date or at least fifteen calendar days prior to the
Maturity Date, as the case may be. Such written request may be mailed or hand
delivered or sent by cable, telex or other form of facsimile transmission.
Holders of Foreign Currency Notes may elect to receive all or a specified
portion of all future payments in the Specified Currency and need not file a
separate election for each payment. Such election will remain in effect until
revoked by written notice to the Trustee, but written notice of any such
revocation must be received by the Trustee on or prior to the applicable Record
Date or at least fifteen calendar days prior to the Maturity Date, as the case
may be. Holders of Foreign Currency Notes to be held in the name of a broker or
nominee should contact such broker or nominee to determine whether and how an
election to receive payments in the Specified Currency may be made.
Unless otherwise specified in the applicable Pricing Supplement , if the
Specified Currency is other than United States dollars, a Beneficial Owner of
the related Global Note or Securities which elects to receive payments of
principal, premium, if any, and/or interest, if any, in the Specified Currency
must notify the Participant through which it owns its interest on or prior to
the applicable Record Date or at least fifteen calendar days prior to the
Maturity Date, as the case may be, of such Beneficial Owner's election. Such
Participant must notify the Depositary of such election on or prior to the
third Business Day after such Record Date or at least twelve calendar days
prior to the Maturity Date, as the case may be, and the Depositary will notify
the Trustee of such election on or prior to the fifth Business Day after such
Record Date or at least ten calendar days prior to the Maturity Date, as the
case may be. If complete instructions are received by the Participant from the
Beneficial Owner and forwarded by the Participant to the Depositary, and by the
Depositary to the Trustee, on or prior to such dates, then such Beneficial
Owner will receive payments in the Specified Currency.
Payments of the principal of, and premium, if any, and/or interest, if any,
on, Foreign Currency Notes which are to be made in United States dollars will
be made in the manner specified herein with respect to Notes denominated in
United States dollars. See "Description of Notes--General." Payments of
interest, if any, on Foreign Currency Notes which are to be made in the
Specified Currency on an Interest Payment Date other than the Maturity Date
will be made by check mailed to the address of the Holders of such Foreign
Currency Notes as they appear in the Security Register, subject to the right to
receive such interest payments by wire transfer of immediately available funds
under the circumstances described under "Description of Notes--General."
Payments of principal of, and premium, if any, and/or interest, if any, on,
Foreign Currency Notes which are to be made in the Specified Currency on the
Maturity Date will be made by wire transfer of immediately available funds to
an account with a bank designated at least fifteen calendar days prior to the
Maturity Date by each Holder thereof, provided that such bank has appropriate
facilities therefor and that the applicable Foreign Currency Note is presented
and surrendered at the office or agency maintained by the Company for such
purpose in the Borough of Manhattan, The City of New York, currently the
corporate trust office of the Trustee, in time for the Trustee to make such
payments in such funds in accordance with its normal procedures.
AVAILABILITY OF SPECIFIED CURRENCY
Except as set forth below, if the Specified Currency for a Foreign Currency
Note is not available for the required payment of principal, premium, if any,
and/or interest, if any, in respect thereof due to the imposition of exchange
controls or other circumstances beyond the control of the Company, the Company
will be entitled to satisfy its obligations to the Holder of such Foreign
Currency Note by making such payment in United States dollars on the basis of
the Market Exchange Rate, computed by the Exchange Rate Agent, on the second
Business Day prior to such payment or, if such Market
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Exchange Rate is not then available, on the basis of the most recently
available Market Exchange Rate, or as otherwise specified in the applicable
Pricing Supplement.
If the Specified Currency for a Foreign Currency Note is a composite currency
that is not available for the required payment of principal, premium, if any,
and/or interest, if any, in respect thereof due to the imposition of exchange
controls or other circumstances beyond the control of the Company, the Company
will be entitled to satisfy its obligations to the Holder of such Foreign
Currency Note by making such payment in United States dollars on the basis of
the equivalent of the composite currency in United States dollars. The
component currencies of the composite currency for this purpose (the "Component
Currencies") shall be the currency amounts that were components of the
composite currency as of the last day on which the composite currency was used.
The equivalent of the composite currency in United States dollars shall be
calculated by aggregating the United States dollar equivalents of the Component
Currencies. The United States dollar equivalent of each of the Component
Currencies shall be determined by the Exchange Rate Agent on the basis of the
Market Exchange Rate on the second Business Day prior to the required payment
or, if such Market Exchange Rate is not then available, on the basis of the
most recently available Market Exchange Rate for each such Component Currency,
or as otherwise specified in the applicable Pricing Supplement.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
The "Market Exchange Rate" for a Specified Currency other than United States
dollars means the noon dollar buying rate in The City of New York for cable
transfers for such Specified Currency as certified for customs purposes (or, if
not so certified, as otherwise determined) by the Federal Reserve Bank of New
York. Any payment made in United States dollars under such circumstances where
the required payment is in a Specified Currency other than United States
dollars will not constitute an Event of Default under the Indenture with
respect to the Notes.
All determinations referred to above made by the Exchange Rate Agent shall be
at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the Holders of the Foreign Currency
Notes.
JUDGMENTS
Under current New York law, a state court in the State of New York rendering
a judgment in respect of a Foreign Currency Note would be required to render
such judgment in the Specified Currency, and such foreign currency judgment
would be converted into United States dollars at the exchange rate prevailing
on the date of entry of such judgment. Accordingly, the Holder of such Foreign
Currency Note would be subject to exchange rate fluctuations between the date
of entry of such foreign currency judgment and the time the amount of such
foreign currency judgment is paid to such Holder in United States dollars and
converted by such Holder into the Specified Currency. It is not certain,
however, whether a non-New York state court would follow the same rules and
procedures with respect to conversions of foreign currency judgments.
The Company will indemnify the Holder of any Note against any loss incurred
by such Holder as a result of any judgment or order being given or made for any
amount due under such Note and such judgment or order requiring payment in a
currency or composite currency (the "Judgment Currency")
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other than the Specified Currency, and as a result of any variation between (i)
the rate of exchange at which the Specified Currency amount is converted into
the Judgment Currency for the purpose of such judgment or order, and (ii) the
rate of exchange at which the Holder of such Note, on the date of payment of
such judgment or order, is able to purchase the Specified Currency with the
amount of the Judgment Currency actually received by such Holder, as the case
may be.
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 herein, 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 created
or organized in or under the laws of the United States or of any political
subdivision thereof, (iii) an estate or trust the income of which is subject to
United States Federal income taxation regardless of its source or (iv) any
other person whose income or gain in respect of a Note is effectively connected
with the conduct of a United States trade or business. As used herein, 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 Notes issued with original issue discount ("Original Issue
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 hereinafter defined) 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
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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 an Original Issue 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 an
Original Issue Discount Note is the sum of the daily portions of original issue
discount with respect to such Original Issue Discount Note for each day during
the taxable year (or portion of the taxable year) on which such U.S. Holder
held such Original Issue Discount Note. The "daily portion" of original issue
discount on any Original Issue 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 Original Issue
Discount Note, 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 Original Issue 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 an
Original Issue Discount Note at the beginning of any accrual period is the sum
of the issue price of the Original Issue Discount Note plus the amount of
original issue discount allocable to all prior accrual periods minus the amount
of any prior payments on the Original Issue 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 an Original Issue 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 Original Issue Discount
Note after the purchase date other than payments of qualified stated interest,
will be considered to have purchased the Original Issue 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 Original Issue Discount Note for any taxable year (or
portion thereof in which the U.S. Holder holds the Original Issue 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 and Indexed Notes ("Variable
Notes") are subject to special rules whereby a Variable 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 Variable Note
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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
Variable 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 .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 .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 Variable Note (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the Variable
Note's issue date) will be treated as a single qualified floating rate.
Notwithstanding the foregoing, a variable rate that would otherwise constitute
a 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 which is based upon 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 Variable 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 Variable 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 Variable 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
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 such Note will constitute qualified stated interest and will be
taxed accordingly. Thus, a Variable 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 Variable 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 Variable 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 Variable Note. The qualified stated
interest allocable to an accrual period is increased
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(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 Variable 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 Variable Note. The OID Regulations
generally require that such a Variable Note be converted into an "equivalent"
fixed rate debt instrument by substituting any qualified floating rate or
qualified inverse floating rate provided for under the terms of the Variable
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 Variable Note's
issue date. Any objective rate (other than a qualified inverse floating rate)
provided for under the terms of the Variable Note is converted into a fixed
rate that reflects the yield that is reasonably expected for the Variable Note.
In the case of a Variable 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 Variable 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 Variable Note as of the Variable
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 Variable Note is then converted into
an "equivalent" fixed rate debt instrument in the manner described above.
Once the Variable 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 Variable 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. 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 Variable Note during the accrual period.
If a Variable Note does not qualify as a "variable rate debt instrument"
under the OID Regulations, then the Variable Note would be treated as a
contingent payment debt obligation. It is not entirely clear under current law
how a Variable Note would be taxed if such Note were treated as a contingent
payment debt obligation. U.S. Holders should be aware that on June 11, 1996 the
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 differ substantially 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 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 Variable Notes that are treated as contingent
payment debt obligations will be more fully described in the applicable Pricing
Supplement. Furthermore, any other
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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 the Company 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 an Original Issue 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 an Original Issue 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 an Original Issue 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 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
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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 then owned and thereafter 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.
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.
NOTES DENOMINATED, OR IN RESPECT OF WHICH INTEREST IS PAYABLE, IN A FOREIGN
CURRENCY
As used herein, "Foreign Currency" means a currency or composite currency
other than U.S. dollars.
PAYMENTS OF INTEREST IN A FOREIGN CURRENCY
CASH METHOD. A U.S. Holder who uses the cash method of accounting for United
States Federal income tax purposes and who receives a payment of interest on a
Note (other than original issue discount or market discount) will be required
to include in income the U.S. dollar value of the Foreign Currency payment
(determined on the date such payment is received) regardless of whether the
payment is in fact converted to U.S. dollars at that time, and such U.S. dollar
value will be the U.S. Holder's tax basis in such Foreign Currency.
ACCRUAL METHOD. A U.S. Holder who uses the accrual method of accounting for
United States Federal income tax purposes, or who otherwise is required to
accrue interest prior to receipt, will be required to include in income the
U.S. dollar value of the amount of interest income (including original
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issue discount or market discount and reduced by amortizable bond premium to
the extent applicable) that has accrued and is otherwise required to be taken
into account with respect to a Note during an accrual period. The U.S. dollar
value of such accrued income will be determined by translating such income at
the average rate of exchange for the accrual period or, with respect to an
accrual period that spans two taxable years, at the average rate for the
partial period within the taxable year. A U.S. Holder may elect, however, to
translate such accrued interest income using the rate of exchange on the last
day of the accrual period or, with respect to an accrual period that spans two
taxable years, using the rate of exchange on the last day of the taxable year.
If the last day of an accrual period is within five business days of the date
of receipt of the accrued interest, a U.S. Holder may translate such interest
using the rate of exchange on the date of receipt. The above election will
apply to other debt obligations held by the U.S. Holder and may not be changed
without the consent of the IRS. A U.S. Holder should consult a tax advisor
before making the above election. A U.S. Holder will recognize exchange gain or
loss (which will be treated as ordinary income or loss) with respect to accrued
interest income on the date such income is received. The amount of ordinary
income or loss recognized will equal the difference, if any, between the U.S.
dollar value of the Foreign Currency payment received (determined on the date
such payment is received) in respect of such accrual period and the U.S. dollar
value of interest income that has accrued during such accrual period (as
determined above).
PURCHASE, SALE AND RETIREMENT OF NOTES
A U.S. Holder who purchases a Note with previously owned Foreign Currency
will recognize ordinary income or loss in an amount equal to the difference, if
any, between such U.S. Holder's tax basis in the Foreign Currency and the U.S.
dollar fair market value of the Foreign Currency used to purchase the Note,
determined on the date of purchase.
Except as discussed above with respect to Short-Term Notes, upon the sale,
exchange or retirement of a Note, a U.S. Holder will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement and such U.S. Holder's adjusted tax basis in the Note. Such gain
or loss generally will be capital gain or loss (except to the extent of any
accrued market discount not previously included in the U.S. Holder's income)
and will be long-term capital gain or loss if at the time of sale, exchange or
retirement the Note has been held by such U.S. Holder for more than one year.
To the extent the amount realized represents accrued but unpaid interest,
however, such amounts must be taken into account as interest income, with
exchange gain or loss computed as described in "Payments of Interest in a
Foreign Currency" above. If a U.S. Holder receives Foreign Currency on such a
sale, exchange or retirement the amount realized will be based on the U.S.
dollar value of the Foreign Currency on the date the payment is received or the
Note is disposed of (or deemed disposed of as a result of a material change in
the terms of such Note). In the case of a Note that is denominated in Foreign
Currency and is traded on an established securities market, a cash basis U.S.
Holder (or, upon election, an accrual basis U.S. Holder) will determine the
U.S. dollar value of the amount realized by translating the Foreign Currency
payment at the spot rate of exchange on the settlement date of the sale. A U.S.
Holder's adjusted tax basis in a Note will equal the cost of the Note to such
holder, increased by the amounts of any market discount or original issue
discount previously included in income by the holder with respect to such Note
and reduced by any amortized acquisition or other premium and any principal
payments received by the holder. A U.S. Holder's tax basis in a Note, and the
amount of any subsequent adjustments to such holder's tax basis, will be the
U.S. dollar value of the Foreign Currency amount paid for such Note, or of the
Foreign Currency amount of the adjustment, determined on the date of such
purchase or adjustment.
Gain or loss realized upon the sale, exchange or retirement of a Note that is
attributable to fluctuations in currency exchange rates will be ordinary income
or loss which will not be treated as interest income or expense. Gain or loss
attributable to fluctuations in exchange rates will equal the
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difference between the U.S. dollar value of the Foreign Currency principal
amount of the Note, determined on the date such payment is received or the Note
is disposed of, and the U.S. dollar value of the Foreign Currency principal
amount of the Note, determined on the date the U.S. Holder acquired the Note.
Such Foreign Currency gain or loss will be recognized only to the extent of the
total gain or loss realized by the U.S. Holder on the sale, exchange or
retirement of the Note.
ORIGINAL ISSUE DISCOUNT
In the case of an Original Issue Discount Note or Short-Term Note, (i)
original issue discount is determined in units of the Foreign Currency, (ii)
accrued original issue discount is translated into U.S. dollars as described in
"Payments of Interest in a Foreign Currency--Accrual Method" above and (iii)
the amount of Foreign Currency gain or loss on the accrued original issue
discount is determined by comparing the amount of income received attributable
to the discount (either upon payment, maturity or an earlier disposition), as
translated into U.S. dollars at the rate of exchange on the date of such
receipt, with the amount of original issue discount accrued, as translated
above.
PREMIUM AND MARKET DISCOUNT
In the case of a Note with market discount, (i) market discount is determined
in units of the Foreign Currency, (ii) accrued market discount taken into
account upon the receipt of any partial principal payment or upon the sale,
exchange, retirement or other disposition of the Note (other than accrued
market discount required to be taken into account currently) is translated into
U.S. dollars at the exchange rate on such disposition date (and no part of such
accrued market discount is treated as exchange gain or loss) and (iii) accrued
market discount currently includible in income by a U.S. Holder for any accrual
period is translated into U.S. dollars on the basis of the average exchange
rate in effect during such accrual period, and the exchange gain or loss is
determined upon the receipt of any partial principal payment or upon the sale,
exchange, retirement or other disposition of the Note in the manner described
in "Payments of Interest in a Foreign Currency--Accrual Method" above with
respect to computation of exchange gain or loss on accrued interest.
With respect to a Note issued with amortizable bond premium, such premium is
determined in the relevant Foreign Currency and reduces interest income in
units of the Foreign Currency. Although not entirely clear, a U.S. Holder
should recognize exchange gain or loss equal to the difference between the U.S.
dollar value of the bond premium amortized with respect to a period, determined
on the date the interest attributable to such period is received, and the U.S.
dollar value of the bond premium determined on the date of the acquisition of
the Note.
EXCHANGE OF FOREIGN CURRENCIES
A U.S. Holder will have a tax basis in any Foreign Currency received as
interest or on the sale, exchange or retirement of a Note equal to the U.S.
dollar value of such Foreign Currency, determined at the time the interest is
received or at the time of the sale, exchange or retirement. Any gain or loss
realized by a U.S. Holder on a sale or other disposition of Foreign Currency
(including its exchange for U.S. dollars or its use to purchase Notes) will be
ordinary income or loss.
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 the Company, a controlled foreign
corporation related to the Company 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
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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 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 United States Federal
income taxes on any amount which constitutes capital gain upon retirement or
disposition of a Note, provided the gain is not effectively connected with the
conduct of a trade or business in the United States by the non-U.S. Holder.
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 the
Company 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 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 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.
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PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by the Company to
or through Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated (the
"Agents"). The Agents, individually or in a syndicate, may purchase Notes, as
principal, from the Company from time to time for resale to investors and other
purchasers at varying prices relating to prevailing market prices at the time
of resale as determined by the applicable Agent or, if so specified in the
applicable Pricing Supplement, for resale at a fixed offering price. If agreed
to by the Company and an Agent, such Agent may also utilize its reasonable
efforts on an agency basis to solicit offers to purchase the Notes at 100% of
the principal amount thereof, unless otherwise specified in the applicable
Pricing Supplement. The Company will pay a commission to an Agent, ranging from
.150% to .750% of the principal amount of each Note, depending upon its stated
maturity, sold through such Agent as an agent of the Company. The Company may
also sell Notes directly to purchasers in those jurisdictions in which it is
permitted to do so and in certain circumstances may engage other agents to act
on the same terms as the Agents. No commission will be payable by the Company
on Notes sold directly by the Company.
Unless otherwise specified in the applicable Pricing Supplement, any Note
sold to an Agent as principal will be purchased by such Agent at a price equal
to 100% of the principal amount thereof less a percentage of the principal
amount equal to the commission applicable to an agency sale of a Note of
identical maturity. An Agent may sell Notes it has purchased from the Company
as principal to certain dealers less a concession equal to all or any portion
of the discount received in connection with such purchase. Such Agent may
allow, and such dealers may reallow, a discount to certain other dealers. After
the initial offering of the Notes, the offering price (in the case of Notes to
be resold on a fixed offering price basis), the concession and the reallowance
may be changed.
The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject offers in whole or in part (whether placed
directly with the Company or through an Agent). Each Agent will have the right,
in its discretion reasonably exercised, to reject in whole or in part any offer
to purchase Notes received by it on an agency basis.
Unless otherwise specified in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in the Specified Currency in The City of New York on the date
of settlement. See "Description of Notes--General."
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.
During and after offerings of Notes, the Agents may purchase and sell the
offered Notes in the open market. These transactions may include over-allotment
and stabilizing transactions, and purchases to cover short positions created in
connection with such offerings. Stabilizing transactions consist of certain
bids or purchases for the purpose of preventing or retarding a decline in the
market price of the Notes; and short positions involve the sale by the Agents
of a greater number of Notes than they are required to purchase in connection
with such offerings. The Agents also may impose penalty bids, whereby selling
concessions allowed to other broker-dealers in respect of the Notes sold in
such offerings for their account may be reclaimed by the Agents if such Notes
are repurchased by the Agents in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market prices of
such Notes, which may be higher than the prices that might otherwise
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prevail in the open market. These transactions may be effected in the over-
the-counter market or otherwise, and these activities, if commenced, may be
discontinued at any time.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act. The Company has agreed to indemnify the Agents against, and to
provide contribution with respect to, certain liabilities (including
liabilities under the Securities Act). The Company has agreed to reimburse the
Agents for certain other expenses.
In the ordinary course of its business, the Agents and their affiliates have
engaged and may in the future engage in investment and commercial banking
transactions with the Company and certain of its affiliates.
LEGAL OPINIONS
The legality of the Notes offered hereby will be passed upon for the Company
by Schiff Hardin & Waite, 7200 Sears Tower, Chicago, Illinois 60606. Certain
legal matters relating to the Notes offered hereby will be passed upon for the
Agents by Sonnenschein Nath & Rosenthal, 8000 Sears Tower, Chicago, Illinois
60606.
EXPERTS
The consolidated financial statements and schedules of the Company
incorporated by reference herein from the Company's Annual Report on Form 10-K
for the year ended December 31, 1996 have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and is included herein in reliance upon the authority of said firm as
experts in giving said reports.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND ANY PRICING
SUPPLEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS AND ANY PRICING
SUPPLEMENT DO NOT CONSTITUTE ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH THEY RELATE OR ANY
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY PRICING SUPPLEMENT NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information...................................................... 2
Documents Incorporated by Reference........................................ 2
The Company................................................................ 3
Ratios of Earnings to Fixed Charges........................................ 3
Use of Proceeds............................................................ 3
Risk Factors............................................................... 4
Description of Notes....................................................... 6
Special Provisions Relating to Foreign Currency Notes...................... 25
Certain United States Federal Income Tax Considerations.................... 28
Plan of Distribution....................................................... 37
Legal Opinions............................................................. 38
Experts.................................................................... 38
</TABLE>
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$217,692,000
NORTHERN INDIANA PUBLIC
SERVICE COMPANY
MEDIUM-TERM NOTES, SERIES E
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LOGO
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GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
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<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses in connection with the issuance
and distribution of the Medium-Term Notes being registered, other than
underwriting discounts and commissions. All the amounts shown below are
estimates, except the registration fee.
<TABLE>
<S> <C>
Registration fee of the Securities and Exchange Commission...... $ 65,968
Accountants' fees and expenses.................................. 20,000
Legal fees and expenses......................................... 75,000
Printing Registration Statement, prospectus and exhibits and
other printing expenses........................................ 25,000
Trustee fees and expenses....................................... 3,000
Rating agency fees.............................................. 30,000
Blue sky fees, expenses and legal fees.......................... 7,500
Miscellaneous................................................... 5,000
========
Total....................................................... $231,468
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-Laws of the Company provide for indemnification by the Company of each
of its directors and officers to the fullest extent permitted by law for
liability of such director or officer arising by reason of his or her status as
a director or officer of the Company. Under the Company's By-Laws and the
Indiana Business Corporation Law (the "Indiana BCL"), the Company is required
to indemnify any director and officer against expenses, judgments, decrees,
fines, penalties and settlements actually and reasonably incurred by such
person in connection with any action, suit or proceeding, whether civil,
criminal, administrative or investigative, to which such person is a party by
reason of his or her connection with the Company, provided that such person
acted in good faith and in a manner he or she reasonably believed to be in the
Company's best interest, or, with respect to a criminal proceeding, has no
reasonable cause to believe that his or her conduct was unlawful.
The By-Laws provide that, except where a director or officer is substantially
and finally successful on the merits, the Company may not indemnify a director
or officer (unless ordered by a court) until after a determination has been
made that indemnification of the director or officer is permissible because he
or she met the applicable standards of conduct. The Company also may not
advance expenses prior to the disposition of an action, suit or proceeding
until: (a) the director or officer provides the Company with a written
affirmation of his or her good faith belief that he or she has met the
applicable standards of conduct and an undertaking to repay the advance if it
is ultimately determined that he or she did not meet the applicable standards
of conduct, and (b) a determination has been made that, based on the facts then
known to those making the determination, the director or officer met the
applicable standards of conduct. The determination that a director or officer
has met the applicable standards of conduct may be made by a majority vote of a
quorum consisting of disinterested directors, a majority vote of a committee
designated by the board of directors consisting of two or more disinterested
directors (only if a quorum of the board of directors cannot be obtained),
special legal counsel or a majority vote of disinterested shareholders.
In addition, the Company has agreed to indemnify, hold harmless and defend
its directors, officers, counsel and employees against any and all claims or
liability, joint or several, to which they or any of them may become subject
under the Securities Act of 1933, as amended, or under the common law, arising
out of or based upon the preparation of, filing or use of, the Registration
Statement or any Prospectus used in connection therewith, relating to the
issuance by the Company of the securities
II-1
<PAGE>
registered hereunder, provided that the ground or basis of such liability shall
not have been due to the willful default or gross negligence of such director,
officer, counsel or employee, and provided, that no officer, director, counsel
or employee shall be entitled to any indemnification from the Company against
any costs, expenses or payment with relation to (a) any matter with respect to
said securities as to which he shall be finally adjudicated liable under the
Securities Act of 1933, as amended, or derelict in the performance of his
duties under such Act as officer, director, counsel or employee, as the case
may be, or (b) any matter with respect to said securities as to which there has
been no adjudication with respect to his performance of said duties unless the
Company shall receive an opinion from independent counsel that as to such
matters such officer, director, counsel or employee, as the case may be, is
not, in their opinion, liable under said Act and has not been so derelict.
As authorized under the By-Laws of the Company and the Indiana BCL, the
Company has insurance which insures directors and officers for acts committed
as such directors or officers which are determined not to be indemnifiable
under the Company's indemnity provisions. The insurance coverage pays 100
percent of losses, without any deductible per director or officer, to a maximum
aggregate per year of $100 million. The policy excludes coverage for libel,
slander, personal gain, improper indemnification by the Company, violation of
Section 16(b) of the Securities Exchange Act of 1934, as amended, dishonesty,
coverage under any existing policies, actions arising from various unlawful
payments, liabilities arising under the Employee Retirement Income Security Act
of 1974 (insured under separate coverage), claims arising from bodily injury or
property damage, pollution control violations, claims brought about by an
insured against itself, claims arising from an effort to resist a change of
control, and failure to maintain adequate insurance coverage.
ITEM 16. EXHIBITS.
The exhibits filed herewith are set forth on the Exhibit Index filed as part
of the Registration Statement.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of Notes offered (if the total dollar value of Notes
offered would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the SEC pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in
II-2
<PAGE>
periodic reports filed with or furnished to the SEC by the registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as
amended, that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, as amended, each such post-effective amendment shall be deemed to
be a new registration statement relating to the Notes offered therein, and the
offering of such Notes at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the Notes being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities Act
of 1933, as amended, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, that
is incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the Notes offered therein, and the
offering of such Notes at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 15
above, or otherwise, the registrant has been advised that in the opinion of the
SEC such indemnification is against public policy as expressed in the
Securities Act of 1933, as amended, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the Notes being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933, as amended, and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF HAMMOND, STATE OF INDIANA, ON THE
9TH DAY OF MAY, 1997.
Northern Indiana Public Service
Company
(Registrant)
/s/ GARY L. NEALE
By: _________________________________
Gary L. Neale
Chairman and President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GARY L. NEALE Chairman, President, May 9, 1997
____________________________________ Director and Principal
Gary L. Neale Executive Officer
/s/ STEPHEN P. ADIK Executive Vice President and May 9, 1997
____________________________________ Principal Financial Officer
Stephen P. Adik
/s/ DAVID J. VAJDA Controller and Principal May 9, 1997
____________________________________ Accounting Officer
David J. Vajda
*/s/ STEVEN C. BEERING Director May 9, 1997
____________________________________
Steven C. Beering
*/s/ ARTHUR J. DECIO Director May 9, 1997
____________________________________
Arthur J. Decio
*/s/ ERNESTINE M. RACLIN Director May 9, 1997
____________________________________
Ernestine M. Raclin
*/s/ DENIS E. RIBORDY Director May 9, 1997
____________________________________
Denis E. Ribordy
*/s/ IAN M. ROLLAND Director May 9, 1997
____________________________________
Ian M. Rolland
*/s/ EDMUND A. SCHROER Director May 9, 1997
____________________________________
Edmund A. Schroer
*/s/ JOHN W. THOMPSON Director May 9, 1997
____________________________________
John W. Thompson
*/s/ ROBERT J. WELSH Director May 9, 1997
____________________________________
Robert J. Welsh
</TABLE>
/s/ ARTHUR A. PAQUIN
*By: __________________________
Arthur A. Paquin, Attorney-
in-Fact
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------
<C> <S>
1 Form of Distribution Agreement relating to Medium-Term Notes.
4 Indenture, dated as of March 1, 1988 between Northern Indiana Public
Service Company and Manufacturers Hanover Trust Company, as Trustee,
under which The Chase Manhattan Bank, as successor to Manufacturers
Hanover Trust Company, is currently serving as Trustee (incorporated
by reference to Exhibit 4 to the Company's Registration Statement on
Form S-3 (Registration No.33-44193)).
4.1 First Supplemental Indenture, dated as of December 1, 1991 between
the Company and Manufacturers Hanover Trust Company, as Trustee,
under which The Chase Manhattan Bank, as successor to Manufacturers
Hanover Trust Company, is currently serving as Trustee (incorporated
by reference to Exhibit 4.1 to the Company's Registration Statement
on Form S-3 (Registration No. 33-63870)).
4.2 Form of Fixed Rate Medium-Term Note.
4.3 Form of Floating Rate Medium-Term Note.
5 Opinion of Schiff Hardin & Waite.
12 Statement regarding Computation of Ratio of Earnings to Fixed Charges
of Northern Indiana Public Service Company and its subsidiaries.
23.1 Consent of Schiff Hardin & Waite (contained in their opinion filed as
Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
24 Powers of Attorney.
25 T-1 Statement of Eligibility under the Trust Indenture Act of 1939
(incorporated by reference to Exhibit 25 to the Company's
Registration Statement on Form S-3 (Registration Nos. 33-44193 and
33-63870)).
</TABLE>
<PAGE>
EXHIBIT 1
NORTHERN INDIANA PUBLIC SERVICE COMPANY
$217,692,000
MEDIUM-TERM NOTES, SERIES E
Distribution Agreement
----------------------
_____________, 1997
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Merrill Lynch & Co.
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
250 Vesey Street
New York, New York 10281
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs:
Northern Indiana Public Service Company, an Indiana corporation (the
"Company") proposes to issue and sell from time to time its Medium-Term Notes,
Series E (the "Securities"), in an aggregate amount up to $217,692,000 and
agrees with each of you (individually, an "Agent" and collectively, the
"Agents") as set forth in this Agreement.
Subject to the terms and conditions stated herein and to the reservation by
the Company of the right to sell Securities on its own behalf as set forth in
Section 2(a) hereof, the Company hereby (i) appoints each Agent as an agent of
the Company for the purpose of soliciting and receiving offers to purchase
Securities from the Company pursuant to Section 2(a) hereof and (ii) agrees
that, except as otherwise contemplated herein, whenever it determines to sell
Securities directly to any Agent as principal, it will enter into a separate
agreement, which may be an oral agreement confirmed in writing by such Agent to
the Company (each a "Terms Agreement"), substantially in the form of Annex I
hereto or otherwise specifying the applicable terms set forth in the Schedule to
Annex I relating to such sale, in accordance with Section 2(b) hereof. Without
limiting the generality of the foregoing, any Agent may sell Securities to or
through any dealer or dealers selected by such Agent and may allow all or part
of such Agent's commission with respect to such Securities to such dealer or
dealers. This Distribution Agreement shall not be construed to create either an
obligation on the part of the Company to sell any Securities or an obligation of
any of the Agents to purchase Securities as a principal.
The Securities will be issued under an indenture, dated as of March 1,
1988, as amended by a First Supplemental Indenture dated as of December 1, 1991
(collectively, the "Indenture"), between the Company and Manufacturers Hanover
Trust Company, as Trustee under which The Chase Manhattan
<PAGE>
Bank, as successor to Manufacturers Hanover Trust Company, is currently serving
as Trustee (the "Trustee"). The Securities shall have the maturity ranges,
interest rates, if any, redemption provisions and other terms set forth in the
Prospectus referred to below as it may be amended or supplemented from time to
time. The Securities will be issued, and the terms and rights thereof
established, from time to time by the Company, in accordance with the Indenture.
1. The Company represents and warrants to, and agrees with, each Agent
that:
(a) A registration statement on Form S-3 (Reg. No. 333-______) in respect
of the Securities has been filed with the Securities and Exchange Commission
(the "Commission"); such registration statement and any post-effective amendment
thereto, each in the form heretofore delivered to or to be delivered to such
Agent, excluding exhibits to such registration statement but including all
documents incorporated by reference in the prospectus included therein, and such
registration statement in such form has been declared effective by the
Commission in such form; no other document with respect to such registration
statement or document incorporated by reference therein has heretofore been
filed or transmitted for filing with the Commission (other than the prospectuses
filed pursuant to Rule 424(b) of the rules and regulations of the Commission
under the Securities Act of 1933, as amended (the "Act"), each in the form
heretofore delivered to the Agents); and no stop order suspending the
effectiveness of such registration statement has been issued and no proceeding
for that purpose has been initiated or threatened by the Commission. Any
preliminary prospectus included in such registration statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations under the Act is
hereinafter called a "Preliminary Prospectus"; the various parts of such
registration statement, including all exhibits thereto but excluding Form T-1
and the documents incorporated by reference in the prospectus contained in the
registration statement at the time such part of the registration statement
becomes effective and, if applicable, including the information contained in the
form of final prospectus filed with the Commission pursuant to Rule 424(b) under
the Act, each as amended at the time such part of the registration statement
became effective, is hereinafter called the "Registration Statement"; the
prospectus (including, if applicable, any prospectus supplement) relating to the
Securities, in the form in which it has most recently been filed or transmitted
for filing with the Commission on or prior to the date of this Agreement, is
hereinafter called the "Prospectus"; any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to the applicable form
under the Act, as of the date of such Preliminary Prospectus or Prospectus, as
the case may be; any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus, including any supplement to the Prospectus that
sets forth only the terms of a particular issue of the Securities (a "Pricing
Supplement"), shall be deemed to refer to and include any documents filed after
the date of such Preliminary Prospectus or Prospectus, as the case may be, under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated therein by reference; any reference to the Registration Statement
shall be deemed to refer to and include any annual report of the Company filed
pursuant to Section 13(a) or 15(d) of the Exchange Act after the effective date
of the Registration Statement that is incorporated by reference in the
Registration Statement; and any reference to the Prospectus as amended or
supplemented shall be deemed to refer to and include the Prospectus as amended
or supplemented (including by the applicable Pricing Supplement filed in
accordance with Section 4(a) hereof in relation to Securities sold pursuant to
this Agreement, in the form in which it is filed with the Commission pursuant to
Rule 424(b) under the Act and in accordance with Section 4(a) hereof, including
any documents incorporated by reference therein as of the date of such filing).
(b) The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the
-2-
<PAGE>
requirements of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by reference in
the Prospectus, or any further amendment or supplement thereto, when such
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company by
any Agent expressly for use in the Prospectus as amended or supplemented.
(c) The Registration Statement, the Prospectus and the Form T-1 conform,
and any further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and
the rules and regulations of the Commission thereunder and do not and will not,
as of the applicable effective date as to the Registration Statement and any
amendment thereto and as of the applicable filing date as to the Prospectus and
any supplement thereto, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company by
any Agent expressly for use in the Prospectus as amended or supplemented to
relate to a particular issuance of Securities.
(d) Neither the Company nor any of its subsidiaries has sustained since
the date of the latest audited consolidated financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, which could, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the general affairs, management, financial
position, shareholders' equity or results of operations of the Company and its
subsidiaries taken as a whole or upon the ability the Company to perform its
obligations under this Agreement (a "Material Adverse Effect"), otherwise than
as set forth or contemplated in the Prospectus; and, since the respective dates
as of which information is given in the Prospectus, there has not been any
material change in the consolidated share capital or long-term debt of the
Company and its subsidiaries, or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the general
affairs, management, financial position, shareholders' equity or results of
operations of the Company and its subsidiaries (taken as a whole), otherwise
than as set forth or contemplated in the Prospectus.
(e) The accountants who certified the audited financial statements
included in the Registration Statement are independent public accountants as
required by the Act and the rules and regulations of the Commission thereunder.
(f) The financial statements included or incorporated by reference in the
Prospectus present fairly the financial position of the Company and its
subsidiaries as at the dates indicated and the results of their operations for
the periods specified; except as may otherwise be stated in the Prospectus or in
the reports of independent public accountants accompanying said financial
statements, said financial statements have
-3-
<PAGE>
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis; and the supporting schedules included or
incorporated by reference in the Prospectus present fairly the information
required to be stated therein.
(g) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Indiana, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties,
or conducts any business, so as to require such qualification, or is subject to
no material liability or disability by reason of the failure to be so qualified
in any such jurisdiction; and each other subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation.
(h) The Company has an authorized capitalization as set forth in the
Prospectus; all of the issued capital shares of the Company and each wholly-
owned subsidiary of the Company have been duly and validly authorized and issued
and are fully paid and non-assessable; and except as the Company shall have
otherwise advised the Agents in writing prior to the date of the amendment or
supplement to the Prospectus (including any Pricing Supplement) relating to any
particular sale of Securities, all of the issued capital shares of each
subsidiary of the Company (except for directors' qualifying shares and as set
forth or incorporated by reference in the Registration Statement) are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(i) The Securities have been duly authorized and, when duly executed,
authenticated, issued and delivered pursuant to the Indenture, this Agreement
and any applicable Terms Agreement against payment of the agreed consideration
therefor, will constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency or other laws relating to or affecting
enforcement of creditors' rights or by general equity principles, and will be
entitled to the benefits of the Indenture, which will be substantially in the
form filed as an exhibit to the Registration Statement; the Indenture has been
duly authorized, executed and delivered and qualified under the Trust Indenture
Act and, with like exception, constitutes the valid and legally binding
obligation of the Company enforceable in accordance with its terms; and the
Indenture conforms and the Securities of any particular issuance of Securities
will conform in all material respects to the descriptions thereof contained in
the Prospectus as amended or supplemented to relate to such issuance of
Securities.
(j) This Agreement has been duly authorized and, when executed and
delivered by the parties hereto, will be the valid and legally binding
obligation of the Company enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other laws
relating to or affecting enforcement of creditors' rights or by general equity
principles.
(k) The Company is not in violation of its Articles of Incorporation or
By-Laws or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or any other instrument to which it is a party or by
which it may be bound where such defaults, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect. The issue and
sale of the Securities, the compliance by the Company with all of the provisions
of the Securities, the Indenture and this Agreement, and the consummation of the
transactions herein and therein contemplated, will not conflict with or result
in a breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture,
-4-
<PAGE>
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, nor will any such action
result in any violation of the provisions of the Articles of Incorporation or
By-laws of the Company or any of its subsidiaries, or any statute, rule or
regulation, or any order of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties.
(l) As of the Commencement Date (as defined in Section 3 hereof), the
Indiana Utility Regulatory Commission will have duly authorized the issuance and
sale of the Securities on terms consistent with this Agreement, and no other
approval, consent, authorization, order, registration or qualification of or
with any court, regulatory agency or public body, State or Federal, is or will
be necessary in connection with the solicitation of offers for or the issuance
and sale of the Securities by the Company and no consent, approval,
authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the Securities
or the consummation by the Company of the transactions contemplated by this
Agreement, any Terms Agreement or the Indenture, except as have been or will
have been prior to the Commencement Date obtained under the Act or the Trust
Indenture Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the solicitation by any Agent of offers to purchase Securities
from the Company and with purchases of Securities by such Agent as principal, as
the case may be, in each case in the manner contemplated hereby.
(m) The Company has no material contingent liability which is not
disclosed in the Prospectus.
(n) The Company has statutory authority, franchises and consents free from
burdensome restrictions and adequate for the conduct of the business in which it
is engaged.
(o) Except for NIPSCO Industries, Inc. ("Industries"), as and to the
extent described in the Prospectus, no person or corporation which is a "holding
company" or a "subsidiary of a holding company" within the meaning of such terms
as defined in the Public Utility Holding Company Act of 1935, as amended (the
"1935 Act"), directly or indirectly owns, controls or holds with power to vote
10% or more of the outstanding voting securities of the Company; Industries is
exempt from all provisions of the 1935 Act except Section 9(a)(2); and the
Company is not a "holding company" as so defined.
(p) The Company has good and marketable title in fee simple to such of its
fixed assets as are real property and good and marketable title to its other
assets reflected in the most recent consolidated balance sheet incorporated by
reference in the Prospectus, except properties and assets that are leased by the
Company or that are sold or otherwise disposed of in the ordinary course of
business after the date of said balance sheet, subject to no mortgages, liens,
charges or encumbrances of any kind whatsoever ("Liens") other than Liens
permitted under the Indenture.
(q) The Company will apply the proceeds of the sale of the Securities in
the manner described in the Prospectus.
(r) Neither the Company nor any of its subsidiaries does business with the
government of Cuba or with any person or affiliate located in Cuba within the
meaning of Section 517.075, Florida Statutes.
-5-
<PAGE>
(s) Other than as disclosed in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its subsidiaries
is a party or to which any property of the Company or any of its subsidiaries is
subject which could reasonably be expected, individually or in the aggregate, to
have a material adverse effect on the consolidated financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries; and, to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others.
(t) Immediately after the sale of Securities by the Company hereunder or
under any Terms Agreement, the aggregate amount of Securities which shall have
been issued and sold by the Company hereunder or under any Terms Agreement and
of any debt securities of the Company (other than such Securities) that shall
have been issued and sold pursuant to the Registration Statement will not exceed
the amount of debt securities registered under the Registration Statement.
2. (a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, each of the Agents hereby severally
and not jointly agrees, as agent of the Company, to use its reasonable efforts
to solicit and receive offers to purchase the Securities from the Company upon
the terms and conditions set forth in the Prospectus as amended or supplemented
from time to time. The Company reserves the right to offer and sell Securities
otherwise than to or through an Agent; provided, however, that so long as this
Agreement is in effect the Company will not appoint any other agent for the
purpose of soliciting purchases of the Securities on an ongoing basis. It is
understood, however, that if from time to time the Company is approached by a
prospective agent offering to solicit a specific purchase of Securities, the
Company may appoint such agent to act as its agent with respect to such specific
purchase of Securities, provided that (i) the Agents are given at least five
business days advance notice of the proposed appointment of such agent and (ii)
any such agent shall have entered into an agreement with the Company upon the
same terms and conditions as set forth in this Agreement (including the
commission schedule set forth in Section 2(a) hereof). Each such agent acting
in connection with the Securities is acting individually and not collectively or
jointly with the Agents. So long as this Agreement shall remain in effect with
respect to any Agent, the Company shall not, without the consent of such Agent,
solicit or accept offers to purchase, or sell, any unsecured and unsubordinated
debt securities with a maturity at the time of original issuance of one year to
30 years except (i) pursuant to this Agreement or any Terms Agreement, (ii)
pursuant to a private placement not constituting a public offering under the Act
or (iii) in connection with a firm commitment underwriting pursuant to any
underwriting agreement that does not provide for a continuous offering of
medium-term debt securities. However, the Company reserves the right to sell
(and may solicit and accept offers to purchase) Securities directly on its own
behalf; in the case of any such sale not resulting from a solicitation made by
any Agent, no commission will be payable to an Agent with respect to such sale.
These provisions shall not limit Section 4(f) hereof or any similar provision
included in any Terms Agreement.
Procedural details relating to the issue and delivery of Securities, the
solicitation of offers to purchase Securities and the payment in each case
therefor shall be as set forth in the Administrative Procedures attached hereto
as Annex II as they may be amended from time to time by written agreement
between the Agents and the Company (the "Administrative Procedures"), it being
understood that the provisions of the Administrative Procedures shall apply to
all transactions contemplated hereby other than those made pursuant to a Terms
Agreement. Each Agent and the Company agree to perform the respective duties
and obligations specifically provided to be performed by each of them in the
Administrative Procedures. The Company will furnish to the Trustee a copy of
the Administrative Procedures as from time to time in effect.
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<PAGE>
The Company reserves the right, in its sole discretion, to instruct the
Agents to suspend at any time for any period of time or permanently, the
solicitation of offers to purchase the Securities. As soon as practicable, but
in any event not later than one business day in New York City, after receipt of
notice from the Company, the Agents will suspend solicitation of offers to
purchase Securities from the Company until such time as the Company has advised
the Agents that such solicitation may be resumed.
The Company agrees to pay each Agent a commission (which may be in the form
of a discount), at the time of settlement of any sale of a Security by the
Company as a result of a solicitation made by such Agent, in an amount equal to
the following applicable percentage of the principal amount of such Security
sold:
Commission (percentage of
aggregate principal amount
Range of Maturities of Securities sold)
------------------- --------------------------
From 1 year to less than 18 months .150%
From 18 months to less than 2 years .200%
From 2 years to less than 3 years .250%
From 3 years to less than 4 years .350%
From 4 years to less than 5 years .450%
From 5 years to less than 6 years .500%
From 6 years to less than 7 years .550%
From 7 years to less than 10 years .600%
From 10 years to less than 15 years .625%
From 15 years to less than 20 years .675%
From 20 years to 30 years .750%
(b) Each sale of Securities to any Agent as principal shall be made in
accordance with the terms of this Agreement and (unless such Agent shall
otherwise agree) a Terms Agreement which will provide for the sale of such
Securities to, and the purchase thereof by, such Agent. A Terms Agreement may
also specify certain provisions relating to the reoffering of such Securities by
such Agent. The commitment of any Agent to purchase Securities as principal,
whether pursuant to any Terms Agreement or otherwise, shall be deemed to have
been made on the basis of the representations and warranties of the Company
herein contained and shall be subject to the terms and conditions herein set
forth. Each Terms Agreement shall specify the principal amount of Securities to
be purchased by any Agent pursuant thereto, the price to be paid to the Company
for such Securities, any provisions relating to rights of, and default by,
underwriters acting together with such Agent in the reoffering of the Securities
and the time and date and place of delivery of, if applicable, and payment for
such Securities. Such Terms Agreement shall also specify any requirements for
opinions of counsel, accountants' letters and officers' certificates pursuant to
Section 4 hereof. Each Agent proposes to offer Securities purchased by it as
principal for sale at prevailing market prices or prices related thereto at the
time of sale, which may be equal to, greater than or less than the price at
which such Securities are purchased by such Agent from the Company.
For each sale of Securities to an Agent as principal that is not made
pursuant to a Terms Agreement, the procedural details relating to the issue and
delivery of such Securities and payment therefor shall be as set forth in the
Administrative Procedures. For each such sale of Securities to an Agent as
principal that is not made pursuant to a Terms Agreement, the Company agrees to
pay such
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<PAGE>
Agent a commission as provided in Section 2(a) hereof and in accordance with the
schedule set forth therein.
Each time and date of delivery of and payment for Securities to be
purchased by an Agent as principal, whether set forth in a Terms Agreement or in
accordance with the Administrative Procedures, is referred to herein as a "Time
of Delivery."
(c) Each Agent agrees, with respect to any Security denominated in a
currency other than U.S. dollars, as agent, directly or indirectly, not to
solicit offers to purchase, and as principal under any Terms Agreement or
otherwise, directly or indirectly, not to offer, sell or deliver, such Security
in, or to residents of, the country issuing such currency, except as permitted
by applicable law.
3. The documents required to be delivered pursuant to Section 6 hereof on
the Commencement Date (as defined below) shall be delivered to the Agents at the
offices of Sonnenschein Nath & Rosenthal, 8000 Sears Tower, Chicago, Illinois at
10:00 a.m., Chicago time, on the date of this Agreement, which date and time of
such delivery may be postponed by agreement between the Agents and the Company
but in no event shall be later than the day prior to the date on which
solicitation of offers to purchase Securities is commenced or on which any Terms
Agreement is executed (such time and date being referred to herein as the
"Commencement Date").
4. The Company covenants and agrees with each Agent:
(a) (i) To make no amendment or supplement to the Registration Statement
or the Prospectus (A) after the date hereof but prior to the Commencement Date
which shall be disapproved by any Agent promptly after reasonable notice thereof
or (B) after the date of any Terms Agreement and prior to the related Time of
Delivery which shall be disapproved by any Agent party to such Terms Agreement
promptly after reasonable notice thereof, (ii) to prepare, with respect to any
Securities to be sold pursuant to this Agreement, a Pricing Supplement with
respect to such Securities in a form previously approved by the Agent which
solicited the purchaser of such Securities and to file such Pricing Supplement
pursuant to Rule 424(b) under the Act not later than the close of business of
the Commission on the legally required day following the date on which such
Pricing Supplement is first used, (iii) to make no amendment or supplement to
the Registration Statement or Prospectus, other than any Pricing Supplement, at
any other time prior to having afforded each Agent a reasonable opportunity to
review and comment thereon, (iv) to file promptly all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for
so long as the delivery of a prospectus is required in connection with the
offering or sale of the Securities, and during such same period to advise such
Agent, promptly after the Company receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or has become effective
or any supplement to the Prospectus or any amended Prospectus (other than any
Pricing Supplement that relates to Securities not purchased through or by such
Agent) has been filed with the Commission, of the issuance by the Commission of
any stop order or of any order preventing or suspending the use of any
prospectus relating to the Securities, of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose or of any request by the
Commission for the amendment or supplement of the Registration Statement or
Prospectus or for additional information and (v) in the event of the issuance of
any such stop order or of any such order preventing or suspending the use of any
such prospectus or suspending any such qualification, to use promptly its best
efforts to obtain its withdrawal.
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<PAGE>
(b) Promptly from time to time to take such action as such Agent may
reasonably request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as such Agent may request and to comply
with such laws so as to permit the continuance of sales and dealings therein for
as long as may be necessary to complete the distribution or sale of the
Securities; provided, however, that in connection therewith the Company shall
not be required to qualify as a foreign corporation or to file a general consent
to service of process in any jurisdiction.
(c) To furnish such Agent copies of the Registration Statement and
each amendment thereto, and copies of the Prospectus as each time amended or
supplemented, other than any Pricing Supplement (except as provided in the
Administrative Procedures), in the form in which it is filed with the Commission
pursuant to Rule 424 under the Act, and with copies of the documents
incorporated by reference therein, all in such quantities as such Agent may
reasonably request from time to time; and, if the delivery of a prospectus is
required at any time in connection with the offering or sale of the Securities
(including Securities purchased from the Company by such Agent as principal) and
if at such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of circumstances under which they were made
when such Prospectus is delivered, not misleading, or, if for any other reason
it shall be necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated by
reference in the Prospectus in order to comply with the Act, the Exchange Act or
the Trust Indenture Act, to notify such Agent and request such Agent, in its
capacity as agent of the Company, to suspend solicitation of offers to purchase
Securities from the Company (and if so notified, such Agent shall cease such
solicitations as soon as practicable, but in any event not later than one
business day later); and if the Company shall decide to amend or supplement the
Registration Statement or the Prospectus as then amended or supplemented, to so
advise such Agent promptly by telephone (with confirmation in writing) and to
prepare and cause to be filed promptly with the Commission an amendment or
supplement to the Registration Statement or the Prospectus as then amended or
supplemented that will correct such statement or omission or effect such
compliance, provided, however, that if during such same period such Agent
continues to own Securities purchased from the Company by such Agent as
principal or such Agent is otherwise required to deliver a prospectus in respect
of transactions in the Securities, the Company shall promptly prepare and file
with the Commission such an amendment or supplement.
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earning statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company, Rule
158);
(e) So long as any Securities are outstanding, to furnish to such Agent
copies of all reports or other communications (financial or other) furnished to
shareholders and deliver to such Agent (i) as soon as they are available, copies
of any reports and financial statements of the Company furnished to or filed
with the Commission or any national securities exchange on which any class of
securities of the Company is listed, and (ii) such additional information
concerning the business and financial condition of the Company and its
subsidiaries as such Agent may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports furnished to its
shareholders generally or to the Commission).
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<PAGE>
(f) That, from the date of any Terms Agreement with such Agent and
continuing to and including the later of (i) the termination of the trading
restrictions for the Securities purchased thereunder, as notified to the Company
by such Agent and (ii) the related Time of Delivery, the Company will not,
without the prior written consent of such Agent, offer, sell, contract to sell
or otherwise dispose of any debt securities of the Company (other than
Securities) which both mature more than nine months after such Time of Delivery
and are substantially similar to the Securities.
(g) That each acceptance by the Company of an offer to purchase Securities
hereunder (including any purchase by such Agent as principal not pursuant to a
Terms Agreement), and each execution and delivery by the Company of a Terms
Agreement with such Agent, shall be deemed to be an affirmation to such Agent
that the representations and warranties of the Company contained in or made
pursuant to this Agreement are true and correct as of the date of such
acceptance or of such Terms Agreement, as the case may be, as though made at and
as of such date, and an undertaking that such representations and warranties
will be true and correct as of the settlement date for the Securities relating
to such acceptance or as of the Time of Delivery relating to such sale, as the
case may be, as though made at and as of such date (except that such
representations and warranties shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented relating to such
Securities).
(h) That reasonably in advance of each time the Registration Statement or
the Prospectus shall be amended or supplemented (other than by a Pricing
Supplement) and each time a document filed under the Act or the Exchange Act is
incorporated by reference into the Prospectus, and each time the Company sells
Securities to such Agent as principal and the applicable Terms Agreement
specifies the delivery of an opinion or opinions by Sonnenschein Nath &
Rosenthal, counsel to the Agents, as a condition to the purchase of Securities
pursuant to such Terms Agreement, the Company shall furnish to such counsel such
papers and information as they may reasonably request to enable them to furnish
to such Agent the opinion or opinions referred to in Section 6(b) hereof.
(i) That each time the Registration Statement or the Prospectus shall be
amended or supplemented (other than by a Pricing Supplement), each time a
document filed under the Act or the Exchange Act is incorporated by reference
into the Prospectus, and each time the Company sells Securities to such Agent as
principal and the applicable Terms Agreement specifies the delivery of an
opinion under this Section 4(i) as a condition to the purchase of Securities
pursuant to such Terms Agreement, the Company shall furnish or cause to be
furnished forthwith to such Agent a written opinion of Schiff Hardin & Waite,
counsel for the Company, or other counsel for the Company satisfactory to such
Agent, dated the date of such amendment, supplement, incorporation or Time of
Delivery relating to such sale, as the case may be, in form satisfactory to such
Agent, to the effect that such Agent may rely on the opinion of such counsel
referred to in Section 6(c) hereof which was last furnished to such Agent to the
same extent as though it were dated the date of such letter authorizing reliance
(except that the statements in such last opinion shall be deemed to relate to
the Registration Statement and the Prospectus as amended and supplemented to
such date) or, in lieu of such opinion, an opinion of the same tenor as the
opinion of such counsel referred to in Section 6(c) hereof but modified to
relate to the Registration Statement and the Prospectus as amended and
supplemented to such date.
(j) That each time the Registration Statement or the Prospectus shall
be amended or supplemented and each time that a document filed under the Act or
the Exchange Act is incorporated by reference into the Prospectus, in either
case to set forth financial information included in or derived from the
Company's consolidated financial statements or accounting records, and each time
the Company sells Securities to such Agent as principal and the applicable Terms
Agreement specifies the delivery of a letter under this
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<PAGE>
Section 4(j) as a condition to the purchase of Securities pursuant to such Terms
Agreement, the Company shall cause the independent certified public accountants
who have certified the financial statements of the Company and its subsidiaries
included or incorporated by reference in the Registration Statement forthwith to
furnish such Agent a letter, dated the date of such amendment, supplement,
incorporation or Time of Delivery relating to such sale, as the case may be, in
form satisfactory to such Agent, of the same tenor as the letter referred to in
Section 6(d) hereof but modified to relate to the Registration Statement and the
Prospectus as amended or supplemented to the date of such letter, with such
changes as may be necessary to reflect changes in the financial statements and
other information derived from the accounting records of the Company and its
subsidiaries, to the extent such financial statements and other information are
available as of a date not more than five business days prior to the date of
such letter; provided, however, that, with respect to any financial information
or other matter, such letter may reconfirm as true and correct at such date as
though made at and as of such date, rather than repeat, statements with respect
to such financial information or other matter made in the letter referred to in
Section 6(d) hereof which was last furnished to such Agent.
(k) That each time the Registration Statement or the Prospectus shall
be amended or supplemented (other than by a Pricing Supplement), each time a
document filed under the Act or the Exchange Act is incorporated by reference
into the Prospectus, and each time the Company sells Securities to such Agent as
principal and the applicable Terms Agreement specifies the delivery of a
certificate under this Section 4(k) as a condition to the purchase of Securities
pursuant to such Terms Agreement, the Company shall furnish or cause to be
furnished forthwith to such Agent a certificate, dated the date of such
supplement, amendment, incorporation or Time of Delivery relating to such sale,
as the case may be, in such form and executed by such officers of the Company as
shall be satisfactory to such Agent, to the effect that the statements contained
in the certificates referred to in Section 6(i) hereof which was last furnished
to such Agent are true and correct at such date as though made at and as of such
date (except that such statements shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to such date) or, in
lieu of such certificate, certificates of the same tenor as the certificates
referred to in said Section 6(i) but modified to relate to the Registration
Statement and the Prospectus as amended and supplemented to such date.
(l) To offer to any person who has agreed to purchase Securities as
the result of an offer to purchase solicited by such Agent the right to refuse
to purchase and pay for such Securities if, on the related settlement date fixed
pursuant to the Administrative Procedures, any condition set forth in the
introductory language of Section 6 and in Section 6(a), 6(e), 6(f) or 6(g)
hereof shall not have been satisfied (it being understood that the judgment of
such person with respect to the impracticability or inadvisability of such
purchase of Securities shall be substituted, for purposes of this Section 4(l),
for the respective judgments referred to therein of an Agent with respect to
certain matters referred to in such introductory language of Section 6 and in
such Sections 6(a), 6(e) and 6(g), and that such Agent shall have no duty or
obligation whatsoever to exercise the judgment permitted under such introductory
language of Section 6 and in such Sections 6(a), 6(e) and 6(g) on behalf of any
such person).
(m) So long as any Securities are outstanding, to promptly notify the
Agents of (i) any adverse change in the rating accorded any debt securities of
Industries, NIPSCO Capital Markets, Inc. ("Capital Markets") or the Company by
any "nationally recognized statistical rating organization," as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act; (ii) the
public announcement of any such rating organization that it has under
surveillance or review its rating of any of Industries', Capital Market's or the
Company's debt securities; (iii) any change in the consolidated share capital or
long-term debt of the Company or any of its subsidiaries or any change, or any
development involving
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<PAGE>
a prospective change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
5. The Company covenants and agrees with each Agent that the Company will
pay or cause to be paid the following: (i) the fees, disbursements and expenses
of the Company's counsel and accountants in connection with the registration of
the Securities under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any Preliminary
Prospectus, the Prospectus and Pricing Supplements and all other amendments and
supplements thereto and the mailing and delivering of copies thereof to such
Agent; (ii) the fees, disbursements and expenses of counsel for the Agents in
connection with the establishment of the program contemplated hereby, any
opinions to be rendered by such counsel hereunder and the transactions
contemplated hereunder; (iii) the out-of-pocket expenses of such Agent; (iv) the
cost of printing, producing or reproducing this Agreement, any Terms Agreement,
any Indenture, any Blue Sky and Legal Investment Memoranda and any other
documents in connection with the offering, purchase, sale and delivery of the
Securities; (v) all expenses in connection with the qualification of the
Securities for offering and sale under state securities laws as provided in
Section 4(b) hereof, including fees and disbursements of counsel for the Agents
in connection with such qualification and in connection with the Blue Sky and
Legal Investment Memoranda; (vi) any fees charged by securities rating services
for rating the Securities; (vii) any filing fees incident to, and the fees and
disbursements of counsel for the Agents in connection with, any required review
by the National Association of Securities Dealers, Inc. of the terms of the sale
of the Securities; (viii) the cost of preparing the Securities; (ix) the fees
and expenses of any Trustee and any agent of any Trustee and any transfer or
paying agent of the Company and the fees and disbursements of counsel for any
Trustee or such agent in connection with any Indenture and the Securities; (x)
any advertising expenses connected with the solicitation of offers to purchase
and the sale of Securities so long as such advertising expenses have been
approved by the Company; and (xi) all other costs and expenses incident to the
performance of the Company's obligations hereunder which are not otherwise
specifically provided for in this Section. Except as provided in Sections 7 and
8 hereof, each Agent shall pay all other expenses it incurs.
6. The obligation of any Agent, as agent of the Company, at any time
("Solicitation Time") to solicit offers to purchase the Securities and the
obligation of any Agent to purchase Securities as principal, pursuant to any
Terms Agreement or otherwise, shall in each case be subject in such Agent's
discretion, to the condition that all representations and warranties and other
statements of the Company herein (and, in the case of an obligation of an Agent
under a Terms Agreement, in or incorporated in such Terms Agreement by
reference) are true and correct at and as of the Commencement Date and any
applicable date referred to in Section 4(k) hereof that is prior to such
Solicitation Time or Time of Delivery, as the case may be, and at and as of such
Solicitation Time or Time of Delivery, as the case may be (except that the
representations and warranties herein shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented through
such applicable date), the condition that prior to such Solicitation Time or
Time of Delivery, as the case may be, the Company shall have performed all of
its obligations hereunder theretofore to be performed and the following
additional conditions precedent:
(a) (i) With respect to any Securities sold at or prior to such
Solicitation Time or Time of Delivery, as the case may be, the Prospectus as
amended or supplemented (including the Pricing Supplement) with respect to such
Securities, shall have been filed with the Commission pursuant to Rule 424(b)
under the Act within the applicable time period prescribed for such filing by
the rules and
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<PAGE>
regulations under the Act and in accordance with Section 4(a) hereof; (ii) no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and (iii) all requests for additional information
on the part of the Commission shall have been complied with to the reasonable
satisfaction of such Agent.
(b) Sonnenschein Nath & Rosenthal, counsel to the Agents, shall have
furnished to such Agent (i) such opinion or opinions, dated the Commencement
Date, with respect to the incorporation of the Company, the validity of the
Indenture, the Securities, the Registration Statement, the Prospectus as amended
or supplemented and other related matters as such Agent may reasonably request,
and (ii) if and to the extent requested by such Agent, with respect to each
applicable date referred to in Section 4(a) hereof that is on or prior to such
Solicitation Time or Time of Delivery, as the case may be, an opinion or
opinions, dated such applicable date, to the effect that such Agent may rely on
the opinion or opinions which were last furnished to such Agent pursuant to this
Section 6(b) to the same extent as though it or they were dated the date of such
letter authorizing reliance (except that the statements in such last opinion or
opinions shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented to such date) or, in any case, in lieu of
such an opinion or opinions, an opinion or opinions of the same tenor as the
opinion or opinions referred to in clause (i) but modified to relate to the
Registration Statement and the Prospectus as amended and supplemented to such
date; and in each case such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters.
(c) Schiff Hardin & Waite, counsel for the Company, or other counsel
for the Company satisfactory to such Agent, shall have furnished to such Agent
their written opinions, dated the Commencement Date and each applicable date
referred to in Section 4(i) hereof that is on or prior to such Solicitation Time
or Time of Delivery, as the case may be, in form and substance satisfactory to
such Agent to the effect that:
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Indiana, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus.
(ii) The Company has an authorized capitalization as set forth in the
Prospectus; all of the issued capital shares of the Company have been duly
and validly authorized and issued and are fully paid and non-assessable.
(iii) The Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction.
(iv) To the best of such counsel's knowledge, other than as set forth
in the Prospectus, there are no legal or governmental proceedings pending
to which the Company or any of its subsidiaries is a party or to which any
property of the Company or any of its subsidiaries is subject which could
reasonably be expected, individually or in the aggregate, to have a
material adverse effect on the consolidated financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries; and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
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<PAGE>
(v) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding obligation,
enforceable against each in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles and to any
limitations by reason of public policy considerations on the enforcement
under certain circumstances of the indemnity provisions thereof.
(vi) The Indenture has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding instrument,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and the Indenture has been duly
qualified under the Trust Indenture Act.
(vii) The Securities have been duly and validly authorized by all
necessary corporate action; the Securities, when duly executed,
authenticated, issued and delivered pursuant to the terms of the Indenture,
this Agreement and any applicable Terms Agreement against payment of the
agreed consideration therefor, will be valid and legally binding
obligations of the Company entitled to the benefits provided by the
Indenture and will be enforceable obligations of the Company in accordance
with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws relating to or affecting enforcement of creditors'
rights or by general equity principles; the Securities and the Indenture
conform as to legal matters with the statements concerning them made in the
Prospectus, and such statements accurately set forth the matters respecting
the Securities and the Indenture required to be set forth in the
Prospectus.
(viii) The execution and delivery of this Agreement, any applicable
Terms Agreement and the Indenture, the compliance by the Company with all
of the provisions of the Securities, the Indenture, this Agreement and any
applicable Terms Agreement, and the consummation of the transactions herein
and therein contemplated, will not conflict with or result in a breach or
violation of any terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any of its
Significant Subsidiaries is a party or by which the Company or any of its
Significant Subsidiaries is bound or to which any of the property or assets
of the Company or any of its Significant Subsidiaries is subject, nor will
such actions result in any violation of the provisions of the Articles of
Incorporation or the By-Laws of the Company or any of its Significant
Subsidiaries, or any statute, rule or regulation, or any order known to
such counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its Significant Subsidiaries or any
of their properties.
(ix) The Indiana Utility Regulatory Commission has duly authorized
the issue and sale of the Securities on terms consistent with the terms set
forth in the Registration Statement and this Agreement; such authorization,
to the best of their knowledge, is still in force and effect; and no other
consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the
issue and sale of the Securities or the consummation by the Company of the
transactions contemplated by this Agreement, any applicable Terms Agreement
or the Indenture, except such as have been obtained under the Act and the
Trust Indenture Act and such consents, approvals, authorizations,
registrations or
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<PAGE>
qualifications as may be required under state securities or Blue Sky laws
in connection with the solicitation by any Agent of offers to purchase
Securities from the Company and with purchases of Securities by such Agent
as principal, as the case may be.
(x) The documents incorporated by reference in the Prospectus or any
further amendment or supplement thereto made by the Company prior to the
Time of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion), when they
became effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the requirements of the
Act or the Exchange Act, as applicable, and the rules and regulations of
the Commission thereunder.
(xi) The Registration Statement has become effective under the Act,
and, to the best of the knowledge of such counsel, no stop order suspending
the effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the Act;
the Registration Statement and the Prospectus and any further amendments
and supplements thereto made by the Company prior to the Time of Delivery
(other than the financial statements and related schedules therein, as to
which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act and the Trust Indenture
Act and the rules and regulations thereunder.
(xii) This Agreement and any applicable Terms Agreement have been
duly authorized, executed and delivered by the Company.
(xiii) The Company holds and operates under certain indeterminate
permits and franchises conferring upon it certain rights and privileges
which enable it to conduct its business as a public utility.
(xiv) The statements made in the Prospectus under the captions
"Description of Notes" and "Certain United States Federal Income Tax
Consequences" and any other statements which are stated therein to have
been made on the basis of the opinion of said counsel have been reviewed by
said counsel and, as to matters of law and legal conclusions, are correct
in all material respects.
Such counsel shall also advise the Agents that although such counsel is not
passing upon and assumes no responsibility or liability for the accuracy,
completeness or fairness of the statements contained in the documents
incorporated by reference in the Prospectus or any further amendment or
supplement thereto made by the Company prior to the Time of Delivery (other than
the financial statements and related schedules therein, as to which such counsel
need express no opinion), they have no reason to believe that any of such
documents, when such documents became effective or were filed with the
Commission, as the case may be, contained, in the case of a registration
statement which became effective under the Act, an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or, in the case of
other documents which were filed under the Act or the Exchange Act with the
Commission, an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made when such documents were so filed, not
misleading.
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<PAGE>
Such counsel shall also advise the Agents that although such counsel is not
passing upon and assumes no responsibility or liability for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus and any further amendments and supplements thereto
made by the Company prior to the Time of Delivery (other than the financial
statements and related schedules therein, as to which such counsel need express
no opinion), they have no reason to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made by the Company
prior to the Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that, as of its date, the Prospectus or any further amendment or
supplement thereto made by the Company prior to the Time of Delivery (other than
the financial statements and related schedules therein, as to which such counsel
need express no opinion) contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading or that,
as of the Time of Delivery either the Registration Statement or the Prospectus
or any further amendment or supplement thereto made by the Company prior to the
Time of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; and they do not know of any amendment to the Registration
Statement required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration Statement or
required to be incorporated by reference into the Prospectus or required to be
described in the Registration Statement or the Prospectus which are not filed or
incorporated by reference or described as required.
(d) Not later than 10:00 a.m., New York City time, on the Commencement
Date and on each applicable date referred to in Section 4(j) hereof that is on
or prior to such Solicitation Time or Time of Delivery, as the case may be, the
independent certified public accountants who have certified the financial
statements of the Company and its subsidiaries included or incorporated by
reference in the Registration Statement shall have furnished to such Agent a
letter, dated the Commencement Date or such applicable date, as the case may be,
in form and substance satisfactory to such Agent, to the effect set forth in
Annex III hereto.
(e) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus, and
(ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the consolidated share
capital or long-term debt of the Company or any of its subsidiaries or any
change, or any development involving a prospective change, in or affecting the
general affairs, management, financial position, shareholders' equity or results
of operations of the Company and its subsidiaries, otherwise than as set forth
or contemplated in the Prospectus, the effect of which, in any such case
described in Clause (i) or (ii), is in the judgment of such Agent so material
and adverse as to make it impracticable or inadvisable to proceed with the
solicitation by such Agent of offers to purchase Securities from the Company or
the purchase by such Agent of Securities from the Company as principal, as the
case may be, on the terms and in the manner contemplated by the Prospectus.
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(f) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded any of Industries', Capital Market's, or the Company's debt
securities by any "nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule 436(g)(2) under the
Act and (ii) no such organization shall have publicly announced that it has
under surveillance or review, with possible negative implications, its rating of
any of Industries', Capital Market's or the Company's debt securities.
(g) There shall not have occurred any of the following: (i) a suspension
or material limitation in trading in securities generally on the New York Stock
Exchange; (ii) a suspension or material limitation in trading of any securities
of the Industries, Capital Markets or the Company on any securities exchange;
(iii) a general moratorium on commercial banking activities in New York or
Illinois declared by either Federal or State authorities; or (iv) the outbreak
or escalation of hostilities or the declaration by the United States of a
national emergency or war, or any change in financial markets or any calamity or
crisis, if the effect of any such event specified in the clause in the judgment
of such Agent makes it impracticable or inadvisable to proceed with the
solicitation of offers to purchase Securities or the purchase of Securities from
the Company as principal, pursuant to the applicable Terms Agreement or
otherwise, as the case may be, on the terms and in the manner contemplated by
the Prospectus as amended or supplemented.
(h) With respect to any Security denominated in a currency other than the
U.S. dollar, more than one currency or a composite currency or any Security the
principal or interest of which is indexed to such currency, currencies or
composite currency, there shall not have occurred a suspension or material
limitation in foreign exchange trading in such currency, currencies or composite
currency by a major international bank, a general moratorium on commercial
banking activities in the country or countries issuing such currency, currencies
or composite currency, the outbreak or escalation of hostilities involving, the
occurrence of any material adverse change in the existing financial, political
or economic conditions of, or the declaration of war or a national emergency by,
the country or countries issuing such currency, currencies or composite currency
or the imposition or proposal of exchange controls by any governmental authority
in the country or countries issuing such currency, currencies or composite
currency.
(i) The Company shall have furnished or caused to be furnished to such
Agent certificates of officers of the Company dated the Commencement Date and
each applicable date referred to in Section 4(k) hereof that is on or prior to
such Solicitation Time or Time of Delivery, as the case may be, in such form and
executed by such officers of the Company as shall be satisfactory to such Agent,
as to the accuracy of the representations and warranties of the Company herein
at and as of the Commencement Date or such applicable date, as the case may be
(except that the representations and warranties herein shall be deemed to relate
to the Registration Statement and the Prospectus as amended and supplemented
through such applicable date or, in the case of an obligation of an Agent under
a Terms Agreement, to the Registration Statement and the Prospectus as described
therein), as to the performance by the Company of all of its obligations
hereunder to be performed at or prior to the Commencement Date or such
applicable date, as the case may be, as to the matters set forth in subsections
(a), (e), (f) and (g) of this Section 6; as to the identity of all "Significant
Subsidiaries" of the Company (as defined in Section 13 below); and as to such
other matters as such Agent may reasonably request.
7. (a) The Company will indemnify and hold harmless each Agent against any
losses, claims, damages or liabilities, joint or several, to which such Agent
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out
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<PAGE>
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement (including the Form T-1), the Prospectus or any other prospectus
relating to the Securities, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse such Agent for any legal or other
expenses reasonably incurred by it in connection with investigating or defending
any such action or claim as such expenses are incurred; provided, however, that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement, the Prospectus or any
other prospectus relating to the Securities, or any such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by such Agent expressly for use therein.
(b) Each Agent will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, the Prospectus, the
Prospectus as amended or supplemented or any other prospectus relating to the
Securities, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement, the Prospectus, the
Prospectus as amended or supplemented or any other prospectus relating to the
Securities, or any such amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by such Agent
expressly for use therein; and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party was or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability and claims that are the subject matter
of such proceeding.
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<PAGE>
(d) If the indemnification provided for in this Section 7 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof), referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and each Agent on the other from the offering of
the Securities to which such loss, claim, damage or liability (or action in
respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the one
hand and each Agent on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and each Agent on the
other shall be deemed to be in the same proportion as the total net proceeds
from the sale of Securities (before deducting expenses) received by the Company
bears to the total commissions or discounts received by such Agent in respect
thereof. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading
relates to information supplied by the Company on the one hand or by any Agent
on the other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and each Agent agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by per capita allocation (even
if all Agents were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claim, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), an Agent shall
not be required to contribute any amount in excess of the amount by which the
total public offering price at which the Securities purchased by or through it
were sold exceeds the amount of the damages which such Agent has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
obligations of each of the Agents under this subsection (d) and any similar
provision of any agreement contemplated by Section 2(a) hereof to contribute are
several in proportion to the respective purchases made by or through it to which
such loss, claim, damage or liability (or action in respect thereof) relates and
are not joint.
(e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions to each person, if any, who controls any
Agent within the meaning of the Act; and the obligations of each Agent under
this Section 7 shall be in addition to any liability which such Agent may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company within the meaning of the Act.
8. Each Agent, in soliciting offers to purchase Securities from the
Company and in performing the other obligations of such Agent hereunder (other
than in respect of any Terms Agreement), is acting
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<PAGE>
solely as agent for the Company and not as principal. Each Agent will make
reasonable efforts to assist the Company in obtaining performance by each
purchaser whose offer to purchase Securities from the Company was solicited by
such Agent and has been accepted by the Company but such Agent shall not have
any liability to the Company in the event such purchase is not consummated for
any reason. If the Company shall default on its obligation to deliver
Securities to a purchaser whose offer it has accepted, the Company shall (i)
hold each Agent harmless against any loss, claim or damage arising from or as a
result of such default by the Company and (ii) notwithstanding such default, pay
to the Agent that solicited such offer any commission to which it would be
entitled in connection with such sale.
9. The respective indemnities, agreements, representations, warranties and
other statements by any Agent and the Company set forth in or made pursuant to
this Agreement shall remain in full force and effect regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Agent or any controlling person of any Agent or the Company, or any
officer or director or any controlling person of the Company, and shall survive
each delivery of and payment for any of the Securities.
10. (a) The provisions of this Agreement relating to the solicitation of
offers to purchase Securities from the Company may be suspended or terminated at
any time by the Company as to any Agent or by any Agent as to such Agent upon
the giving of written notice of such suspension or termination to such Agent or
the Company, as the case may be. In the event of such suspension or termination
with respect to any Agent, (i) this Agreement shall remain in full force and
effect with respect to any Agent as to which such suspension or termination has
not occurred, (ii) this Agreement shall remain in full force and effect with
respect to the rights and obligations of any party which have previously accrued
or which relate to Securities which are already issued, agreed to be issued or
the subject of a pending offer at the time of such suspension or termination
(including any Securities held by an Agent as principal) and (iii) in any event,
this Agreement shall remain in full force and effect insofar as the fourth
paragraph of Section 2(a), Section 4(d), Section 4(e), Section 5, Section 7,
Section 8 and Section 9 hereof are concerned.
(b) Without limiting the provisions of clause (a) above, and in any event
subject to the provisions of clause (a)(iii) above, this Agreement may be
terminated at any time by the Company as to any Agent or by any Agent upon the
giving of written notice of such termination to such Agent or the Company, as
the case may be.
(c) In the event of any suspension of the provisions of this Agreement
relating to the solicitation of offers to purchase securities by all of the
Agents, the obligations of the Company under Section 4(h), 4(i), 4(j) and 4(k)
shall cease during the pendency of such suspension, provided that prior to any
termination of such suspension the Company shall furnish the deliveries required
under Sections 4(h), 4(i), 4(j) and 4(k) as of the time then most recently
required thereunder.
11. Except as otherwise specifically provided herein or in the
Administrative Procedures, all statements, requests, notices and advices
hereunder shall be in writing, or by telephone if promptly confirmed in writing,
and if to Goldman, Sachs & Co. shall be sufficient in all respects when
delivered or sent by facsimile transmission or registered mail to Goldman, Sachs
& Co., 85 Broad Street, New York, New York 10004, Facsimile Transmission No.
(212) 902-3000, Attention: Registration Department, and, if the notice to be
delivered is a Pricing Supplement, to Goldman, Sachs & Co., 85 Broad Street, New
York, New York 10004, Facsimile Transmission No. (212) 902-0658, Attention:
Karen Robertson, Medium-Term Note Trading Department, if to Merrill Lynch & Co.
shall be sufficient
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<PAGE>
in all respects when delivered or sent by facsimile transmission or registered
mail to Merrill Lynch & Co., Merrill Lynch World Headquarters, World Financial
Center, North Tower, 10th Floor, New York, New York 10281, Attention: MTN
Product Management, Facsimile Transmission No. (212) 449-2234 and, if the notice
to be delivered is a Pricing Supplement, also to Merrill Lynch & Co.-Tritech
Services, 40 Colonial Drive, Piscataway, New Jersey 08854, Attention: Final
Prospectus Unit/Nachman Kimmerling, Facsimile Transmission No. (908) 878-6530,
if to Morgan Stanley & Co. Incorporated shall be sufficient in all respects when
delivered or sent by facsimile transmission or registered mail to Morgan Stanley
& Co. Incorporated, 2nd Floor, 1585 Broadway, New York, New York 10036,
Attention: Manager, Continuously Offered Products, Facsimile Transmission No.
(212) 761-0780 and to Morgan Stanley & Co. Incorporated, 34th Floor, 1585
Broadway, New York, New York 10036, Attention: Peter Cooper, Investment Banking
Information Center, Facsimile Transmission No. (212) 764-0260, and, if the
notice to be delivered is a Pricing Supplement, to Morgan Stanley & Co.
Incorporated, 2nd Floor, 1585 Broadway, New York, New York 10036, Attention:
Carlos Cabrera, Medium-Term Note Trading Desk, Facsimile Transmission No. (212)
761-8846, and if to the Company shall be sufficient in all respects when
delivered or sent by facsimile transmission or registered mail to Northern
Indiana Public Service Company, 5265 Hohman Avenue, Hammond, Indiana 46320,
Attention: Francis P. Girot, Jr., Treasurer, Facsimile Transmission No. (219)
853-5352.
12. This Agreement and any Terms Agreement shall be binding upon, and
inure solely to the benefit of each Agent and the Company, and to the extent
provided in Section 7, Section 8 and Section 9 hereof, the officers and
directors of the Company and any person who controls any Agent or the Company,
and their respective personal representatives, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement or any Terms Agreement. No purchaser of any of the Securities through
or from any Agent hereunder shall be deemed a successor or assign merely by
reason of such purchase.
13. Time shall be of the essence in this Agreement and any Terms
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business. As used herein,
"Significant Subsidiaries" shall mean all direct and indirect subsidiaries of
the Company as of the Time of Delivery other than any subsidiaries which,
considered in the aggregate as a single subsidiary as of the end of the most
recent fiscal year of the Company, would not constitute a significant subsidiary
as defined in Rule 1-02 of Regulation S-X (or any successor thereto).
14. This Agreement and any Terms Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
15. This Agreement and any Terms Agreement may be executed by any one or
more of the parties hereto and thereto in any number of counterparts, each of
which shall be an original, but all of such respective counterparts shall
together constitute one and the same instrument.
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<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof, whereupon this letter and the acceptance
by you thereof shall constitute a binding agreement between the Company, on the
one hand, and each of you, on the other hand, in accordance with its terms.
Very truly yours,
NORTHERN INDIANA PUBLIC SERVICE COMPANY
By: _______________________________________
Name:
Title:
Accepted in New York, New York,
as of the date hereof:
________________________________
(Goldman, Sachs & Co.)
Morgan Stanley & Co. Incorporated
By: _____________________________
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
By: _____________________________
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<PAGE>
ANNEX I
NORTHERN INDIANA PUBLIC SERVICE COMPANY
MEDIUM-TERM NOTES, SERIES E
Terms Agreement
---------------
___________________, 19__
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Merrill Lynch & Co.
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
250 Vesey Street
New York, New York 10281
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs:
Northern Indiana Public Service Company, an Indiana corporation (the
"Company") proposes, subject to the terms and conditions stated herein and in
the Distribution Agreement dated ______________, 1997 (the "Distribution
Agreement"), between the Company on the one hand and Goldman, Sachs & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co.
Incorporated (the "Agents") on the other, to issue and sell to [Goldman, Sachs &
Co.] [Merrill Lynch & Co.] [Merrill Lynch, Pierce, Fenner & Smith Incorporated]
[Morgan Stanley & Co. Incorporated] the securities specified in the Schedule
hereto (the "Purchased Securities"). Each of the provisions of the Distribution
Agreement not specifically related to the solicitation by the Agents as agents
of the Company of offers to purchase Securities is incorporated herein by
reference in its entirety, and shall be deemed to be part of this Terms
Agreement to the same extent as if such provisions had been set forth in full
herein. Nothing contained herein or in the Distribution Agreement shall make
any party hereto an agent of the Company or make such party subject to the
provisions therein relating to the solicitation of offers to purchase securities
from the Company, solely by virtue of its execution of this Terms Agreement.
Each of the representations and warranties set forth therein shall be deemed to
have been made at and as of the date of this Terms Agreement, except that each
representation and warranty in Section 1 of the Distribution Agreement which
makes reference to the Prospectus shall be deemed to be a representation and
warranty as of the date of the Distribution Agreement in relation to the
Prospectus (as therein defined) and also a representation and warranty as of the
date of this Terms Agreement in relation to the Prospectus as amended and
supplemented to relate to the Purchased Securities.
I-1
<PAGE>
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Purchased Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company agrees to
issue and sell to [Goldman, Sachs & Co.] [Merrill Lynch & Co.] [Merrill Lynch,
Pierce, Fenner & Smith Incorporated] [Morgan Stanley & Co. Incorporated] and
[Goldman, Sachs & Co.] [Merrill Lynch & Co.] [Merrill Lynch, Pierce, Fenner &
Smith Incorporated] [Morgan Stanley & Co. Incorporated] agrees to purchase from
the Company the Purchased Securities, at the time and place, in the principal
amount and at the purchase price set forth in the Schedule hereto.
If the foregoing is in accordance with your understanding, please sign and
return to us five counterparts hereof, and upon acceptance hereof by you this
letter and such acceptance hereof, including those provisions of the
Distribution Agreement incorporated herein by reference, shall constitute a
binding agreement between you, on the one hand, and the Company on the other.
Very truly yours,
NORTHERN INDIANA PUBLIC SERVICE COMPANY
By: _______________________________________
Name:
Title:
Accepted in New York, New York,
as of the date hereof:
________________________________
(Goldman, Sachs & Co.)
Morgan Stanley & Co. Incorporated
By: _____________________________
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
By: _____________________________
I-2
<PAGE>
Schedule to Annex I
Title of Purchased Securities:
[ %] Medium-Term Notes, Series E
Aggregate Principal Amount:
[$________]
[Price to Public:]
Purchase Price by [Goldman, Sachs & Co.] [Merrill Lynch, & Co.] [Merrill Lynch,
Pierce, Fenner & Smith Incorporated] [Morgan Stanley & Co. Incorporated]
% of the principal amount of the Purchased Securities [plus accrued
interest, if any, from __________ to __________] [and accrued amortization,
if any, from __________ to __________]
Method of and Specified Funds for Payment of Purchase Prices
[By certified or official bank check or checks, payable to the order of the
Company, in [[New York] Clearing House] [immediately available] funds]
[By wire transfer to a bank account specified by the Company in [next day]
[immediately available] funds]
[Through the facilities of the Same-Day Funds Settlement System of The
Depository Trust Company]
Indenture:
Indenture, dated as of March 1, 1988, as amended by a First Supplemental
Indenture dated as of December 1, 1991, between the Company and
Manufacturers Hanover Trust Company, as Trustee under which The Chase
Manhattan Bank, as successor to Manufacturers Hanover Trust Company, is
currently serving as Trustee
Time of Delivery:
Closing Location:
Maturity:
Interest Rate:
[ %]
I-3
<PAGE>
Interest Payment Date:
[months and dates, commencing __________]
Documents to be Delivered:
The following documents referred to in the Distribution Agreement shall be
delivered as a condition to the Closing:
[(1) The opinion or opinions of counsel to the Agents referred to in
Section 4(h).]
[(2) The opinion of counsel to the Company referred to in Section 4(i).]
[(3) The accountants' letter referred to in Section 4(j).]
[(4) The officers' certificate referred to in Section 4(k).]
Other Provisions (including Syndicate Provisions, if applicable):
I-4
<PAGE>
ANNEX II
NIPSCO CAPITAL MARKETS, INC.
Administrative Procedures
These Administrative Procedures relate to the Securities defined in the
Distribution Agreement dated _______________, 1997 (the "Distribution
Agreement"), between Northern Indiana Public Service Company, an Indiana
corporation (the "Company"), and Goldman, Sachs & Co., Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co.
Incorporated (together, in such capacity, the "Agents"), to which these
Administrative Procedures are attached as Annex II. Defined terms used herein
and not defined herein shall have the meanings given such terms in the
Distribution Agreement, the Prospectus as amended or supplemented or the
Indenture.
The procedures to be followed with respect to the settlement of sales of
Securities directly by the Company to purchasers solicited by an Agent, as
agent, are set forth below. The terms and settlement details related to a
purchase of Securities by an Agent, as principal, from the Company will be set
forth in a Terms Agreement pursuant to the Distribution Agreement, unless the
Company and such Agent otherwise agree as provided in Section 2(b) of the
Distribution Agreement, in which case the procedures to be followed in respect
of the settlement of such sale will be as set forth below. An Agent, in
relation to a purchase of a Security by a purchaser solicited by such Agent, is
referred to herein as the "Selling Agent" and, in relation to a purchase of a
Security by such Agent as principal other than pursuant to a Terms Agreement, as
the "Purchasing Agent".
The Company will advise each Agent in writing of those persons with whom
such Agent is to communicate regarding offers to purchase Securities and the
related settlement details.
Each Security will be issued only in fully registered form and will be
represented by either a global security (a "Global Security") delivered to the
Trustee, as agent for The Depository Trust Company (the "Depositary") and
recorded in the book-entry system maintained by the Depositary (a "Book-Entry
Security") or a certificate issued in definitive form (a "Certificated
Security") delivered to a person designated by an Agent, as set forth in the
applicable Pricing Supplement. An owner of a Book-Entry Security will not be
entitled to receive a certificate representing such a Security, except as
provided in the Indenture.
Book-Entry Securities will be issued in accordance with the Administrative
Procedure set forth in Part I hereof, and Certificated Securities will be issued
in accordance with the Administrative Procedure set forth in Part II hereof.
PART I: ADMINISTRATIVE PROCEDURE FOR BOOK-ENTRY SECURITIES
- -----------------------------------------------------------
In connection with the qualification of the Book-Entry Securities for
eligibility in the book-entry system maintained by the Depositary, the Trustee
will perform the custodial, document control and administrative functions
described below, in accordance with its respective obligations under a Letter of
Representation from the Company and the Trustee to the Depositary, dated as of
.................., 19.., and a Medium-Term Note Certificate Agreement between
the Trustee and the Depositary, dated as of .................., 19.., (the
"Certificate Agreement"), and its obligations as a participant in the
Depositary, including the Depositary's Same-Day Funds Settlement System
("SDFS").
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Posting Rates by the Company:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Book-Entry Securities that
may be sold as a result of the solicitation of offers by an Agent. The Company
may establish a fixed set of interest rates and maturities for an offering
period ("posting"). If the Company decides to change already posted rates, it
will promptly advise the Agents to suspend solicitation of offers until the new
posted rates have been established with the Agents.
Acceptance of Offers by the Company:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Book-Entry Securities,
other than those rejected by such Agent. Each Agent may, in its discretion
reasonably exercised, reject any offer received by it in whole or in part. Each
Agent also may make offers to the Company to purchase Book-Entry Securities as a
Purchasing Agent. The Company will have the sole right to accept offers to
purchase Book-Entry Securities and may reject any such offer in whole or in
part.
The Company will promptly notify the Agent or Purchasing Agent, as the case
may be, of its acceptance or rejection of an offer to purchase Book-Entry
Securities. If the Company accepts an offer to purchase Book-Entry Securities,
it will confirm such acceptance in writing to the Selling Agent or Purchasing
Agent, as the case may be, and the Trustee.
Communication of Sale Information to the Company by Agent and Settlement
Procedures:
A. After the acceptance of an offer by the Company, the Selling Agent or
Purchasing Agent, as the case may be, will communicate promptly, but in no event
later than the time set forth under "Settlement Procedure Timetable" below, the
following details of the terms of such offer (the "Sale Information") to the
Company by telephone (confirmed in writing) or by facsimile transmission or
other acceptable written means:
(1) Principal Amount of Book-Entry Securities to be purchased;
(2) If a Fixed Rate Book-Entry Security, the interest rate and
initial interest payment date;
(3) Trade Date;
(4) Settlement Date;
(5) Maturity Date;
(6) Specified Currency and, if the Specified Currency is other than
U.S. dollars, the applicable Exchange Rate for such Specified
Currency (it being understood that currently the Depositary
accepts deposits of Global Securities denominated in U.S. dollars
only);
(7) Indexed Currency, the Base Rate and the Exchange Rate
Determination Date, if applicable;
(8) Issue Price;
(9) Selling Agent's commission or Purchasing Agent's discount, as the
case may be;
(10) Net Proceeds to the Company;
(11) If a redeemable Book-Entry Security, such of the following as are
applicable:
(i) Redemption Commencement Date,
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(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price shall decline
(but not below par) on each anniversary of the Redemption
Commencement Date;
(12) If a Floating Rate Book-Entry Security, such of the following as
are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates, and
(xii) Calculation Agent;
(13) Name, address and taxpayer identification number of the
registered owner(s);
(14) Denomination of certificates to be delivered at settlement;
(15) Book-Entry Security or Certificated Security; and
(16) Selling Agent or Purchasing Agent.
B. After receiving the Sale Information from the Selling Agent or
Purchasing Agent, as the case may be, the Company will communicate such Sale
Information to the Trustee by facsimile transmission or other acceptable written
means. The Trustee will assign a CUSIP number to the Global Security from a list
of CUSIP numbers previously delivered to the Trustee by the Company representing
such Book-Entry Security and then advise the Company and the Selling Agent or
Purchasing Agent, as the case may be, of such CUSIP number.
C. The Trustee will enter a pending deposit message through the
Depositary's Participant Terminal System, providing the following settlement
information to the Depositary, and the Depositary shall forward such information
to such Agent and Standard & Poor's Corporation:
(1) The applicable Sale Information;
(2) CUSIP number of the Global Security representing such Book-Entry
Security;
(3) Whether such Global Security will represent any other Book-Entry
Security (to the extent known at such time);
(4) Number of the participant account maintained by the Depositary on
behalf of the Selling Agent or Purchasing Agent, as the case may
be;
(5) The interest payment period; and
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(6) Initial Interest Payment Date for such Book-Entry Security,
number of days by which such date succeeds the record date for
the Depositary's purposes (which in the case of Floating Rate
Securities which reset weekly shall be the date five calendar
days immediately preceding the applicable Interest Payment Date
and in the case of all other Book-Entry Securities shall be the
Regular Record Date, as defined in the Security) and, if
calculable at that time, the amount of interest payable on such
Interest Payment Date.
D. The Trustee will complete and authenticate the Global Security
previously delivered by the Company representing such Book-Entry Security.
E. The Depositary will credit such Book-Entry Security to the Trustee's
participant account at the Depositary.
F. The Trustee will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary to (i) debit such Book-
Entry Security to the Trustee's participant account and credit such Book-Entry
Security to such Agent's participant account and (ii) debit such Agent's
settlement account and credit the Trustee's settlement account for an amount
equal to the price of such Book-Entry Security less such Agent's commission.
The entry of such a deliver order shall constitute a representation and warranty
by the Trustee to the Depositary that (a) the Global Security representing such
Book-Entry Security has been issued and authenticated and (b) the Trustee is
holding such Global Security pursuant to the Certificate Agreement.
G. Such Agent will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary (i) to debit such Book-
Entry Security to such Agent's participant account and credit such Book-Entry
Security to the participant accounts of the Participants with respect to such
Book-Entry Security and (ii) to debit the settlement accounts of such
Participants and credit the settlement account of such Agent for an amount equal
to the price of such Book-Entry Security.
H. Transfers of funds in accordance with SDFS deliver orders described in
Settlement Procedures "F" and "G" will be settled in accordance with SDFS
operating procedures in effect on the settlement date.
I. Upon confirmation of receipt of funds, the Trustee will transfer to the
account of the Company maintained at Bank of America, Illinois, Account No. 50-
03598, ABA No. 071000039, Reference: Northern Indiana Public Service Company,
or such other account as the Company may have previously specified to the
Trustee, in funds available for immediate use in the amount transferred to the
Trustee in accordance with Settlement Procedure "F".
J. Upon request, the Trustee will send to the Company a statement setting
forth the principal amount of Book-Entry Securities outstanding as of that date
under the Indenture.
K. Such Agent will confirm the purchase of such Book-Entry Security to the
purchaser either by transmitting to the Participants with respect to such Book-
Entry Security a confirmation order or orders through the Depositary's
institutional delivery system or by mailing a written confirmation to such
purchaser.
L. The Depositary will, at any time, upon request of the Company or the
Trustee, promptly furnish to the Company or the Trustee a list of the names and
addresses of the participants for whom the Depositary has credited Book-Entry
Securities.
Preparation of Pricing Supplement:
If the Company accepts an offer to purchase a Book-Entry Security, it will
prepare a Pricing Supplement reflecting the terms of such Book-Entry Security
and arrange to have delivered to the Selling
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Agent or Purchasing Agent, as the case may be, at least ten copies of such
Pricing Supplement, not later than 11:00 a.m., New York City time, on the
Business Day following the Trade Date (as defined below), or if the Company and
the purchaser agree to settlement on the Business Day following the date of
acceptance of such offer, not later than noon, New York City time, on such date.
The Company will arrange to have the Pricing Supplement filed with the
Commission not later than the close of business of the Commission on the fifth
Business Day following the date on which such Pricing Supplement is first used.
Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Book-Entry Security a
written confirmation of the sale and delivery and payment instructions. In
addition, the Selling Agent will deliver to such purchaser or its agent the
Prospectus as amended or supplemented (including the Pricing Supplement) in
relation to such Book-Entry Security prior to or together with the earlier of
the delivery to such purchaser or its agent of (a) the confirmation of sale or
(b) the Book-Entry Security.
Date of Settlement:
The receipt by the Company of immediately available funds in payment for a
Book-Entry Security and the authentication and issuance of the Global Security
representing such Book-Entry Security shall constitute "settlement" with respect
to such Book-Entry Security. All orders of Book-Entry Securities solicited by a
Selling Agent or made by a Purchasing Agent and accepted by the Company on a
particular date (the "Trade Date") will be settled on a date (the "Settlement
Date") which is the fourth Business Day, if permitted under Rule 15c6-1 under
the Exchange Act, (or the third Business Day if required under Rule 15c6-1 under
the Exchange Act) after the Trade Date pursuant to the "Settlement Procedure
Timetable" set forth below, unless the Company and the purchaser agree to
settlement on another Business Day which shall be no earlier than the next
Business Day after the Trade Date.
Settlement Procedure Timetable:
For orders of Book-Entry Securities solicited by a Selling Agent and
accepted by the Company for settlement on the fourth Business Day, if permitted
under Rule 15c6-1 under the Exchange Act, (or the third Business Day if required
under Rule 15c6-1 under the Exchange Act) after the Trade Date, Settlement
Procedures "A" through "I" set forth above shall be completed as soon as
possible but not later than the respective times (New York City time) set forth
below:
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Settlement
Procedure Time
---------- ----
A 5:00 p.m. on the Business Day following the Trade Date or 10:00
a.m. on the Business Day prior to the Settlement Date,
whichever is earlier
B 12:00 noon on the second Business Day immediately preceding the
Settlement Date
C 2:00 p.m. on the second Business Day immediately preceding the
Settlement Date
D 9:00 a.m. on the Settlement Date
E 10:00 a.m. on the Settlement Date
F-G 2:00 p.m. on the Settlement Date
H 4:45 p.m. on the Settlement Date
I 5:00 p.m. on the Settlement Date
If the initial interest rate for a Floating Rate Book-Entry Security has
not been determined at the time that Settlement Procedure "A" is completed,
Settlement Procedures "B" and "C" shall be completed as soon as such rate has
been determined but no later than 2:00 p.m. on the second Business Day
immediately preceding the Settlement Date. Settlement Procedure "H" is subject
to extension in accordance with any extension of Fedwire closing deadlines and
in the other events specified in the SDFS operating procedures in effect on the
Settlement Date.
If settlement of a Book-Entry Security is rescheduled or canceled, the
Trustee, upon obtaining knowledge thereof, will deliver to the Depositary,
through the Depositary's Participation Terminal System, a cancellation message
to such effect by no later than 2:00 p.m. on the Business Day immediately
preceding the scheduled Settlement Date.
Failure to Settle:
If the Trustee fails to enter an SDFS deliver order with respect to a Book-
Entry Security pursuant to Settlement Procedure "F", the Trustee may deliver to
the Depositary, through the Depositary's Participant Terminal System, as soon as
practicable a withdrawal message instructing the Depositary to debit such Book-
Entry Security to the Trustee's participant account, provided that the Trustee's
participant account contains a principal amount of the Global Security
representing such Book-Entry Security that is at least equal to the principal
amount to be debited. If a withdrawal message is processed with respect to all
the Book-Entry Securities represented by a Global Security, the Trustee will
mark such Global Security "canceled", make appropriate entries in the Trustee's
records and send such canceled Global Security to the Company. The CUSIP number
assigned to such Global Security shall, in accordance with CUSIP Service Bureau
procedures, be canceled and not immediately reassigned. If a withdrawal message
is processed with respect to one or more, but not all, of the Book-Entry
Securities represented by a Global Security, the Trustee will exchange such
Global Security for two Global Securities, one of which shall represent such
Book-Entry Security or Securities and shall be canceled immediately after
issuance and the other of which shall represent the remaining Book-Entry
Securities previously represented by the surrendered Global Security and shall
bear the CUSIP number of the surrendered Global Security.
If the purchase price for any Book-Entry Security is not timely paid to the
participants with respect to such Book-Entry Security by the beneficial
purchaser thereof (or a person, including an indirect participant in the
Depositary, acting on behalf of such purchaser), such participants and, in turn,
the Agent for such Book-Entry Security may enter deliver orders through the
Depositary's Participant Terminal System debiting such Book-Entry Security to
such participant's account and crediting such
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Book-Entry Security to such Agent's account and then debiting such Book-Entry
Security to such Agent's participant account and crediting such Book-Entry
Security to the Trustee's participant account and shall notify the Company and
the Trustee thereof. Thereafter, the Trustee will (i) immediately notify the
Company of such order and the Company shall transfer to such Agent funds
available for immediate use in an amount equal to the price of such Book-Entry
Security which was credited to the account of the Company maintained at the
Trustee in accordance with Settlement Procedure I, and (ii) deliver the
withdrawal message and take the related actions described in the preceding
paragraph. If such failure shall have occurred for any reason other than
default by the applicable Agent to perform its obligations hereunder or under
the Distribution Agreement, the Company will reimburse such Agent on an
equitable basis for the loss of its use of funds during the period when the
funds were credited to the account of the Company.
Notwithstanding the foregoing, upon any failure to settle with respect to a
Book-Entry Security, the Depositary may take any actions in accordance with its
SDFS operating procedures then in effect. In the event of a failure to settle
with respect to one or more, but not all, of the Book-Entry Securities to have
been represented by a Global Security, the Trustee will provide, in accordance
with Settlement Procedure "D", for the authentication and issuance of a Global
Security representing the other Book-Entry Securities to have been represented
by such Global Security and will make appropriate entries in its records. The
Company will, from time to time, furnish the Trustee with a sufficient quantity
of Securities.
PART II: ADMINISTRATIVE PROCEDURE FOR CERTIFICATED SECURITIES
- --------------------------------------------------------------
Posting Rates by Company:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Certificated Securities
that may be sold as a result of the solicitation of offers by an Agent. The
Company may establish a fixed set of interest rates and maturities for an
offering period ("posting"). If the Company decides to change already posted
rates, it will promptly advise the Agents to suspend solicitation of offers
until the new posted rates have been established with the Agents.
Acceptance of Offers by Company:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Certificated Securities,
other than those rejected by such Agent. Each Agent may, in its discretion
reasonably exercised, reject any offer received by it in whole or in part. Each
Agent also may make offers to the Company to purchase Certificated Securities as
a Purchasing Agent. The Company will have the sole right to accept offers to
purchase Certificated Securities and may reject any such offer in whole or in
part.
The Company will promptly notify the Selling Agent or Purchasing Agent, as
the case may be, of its acceptance or rejection of an offer to purchase
Certificated Securities. If the Company accepts an offer to purchase
Certificated Securities, it will confirm such acceptance in writing to the
Selling Agent or Purchasing Agent, as the case may be, and the Trustee.
Communication of Sale Information to Company by Agent:
After the acceptance of an offer by the Company, the Selling Agent or
Purchasing Agent, as the case may be, will communicate the following details of
the terms of such offer (the "Sale Information") to the Company by telephone
(confirmed in writing) or by facsimile transmission or other acceptable written
means:
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(1) Principal Amount of Certificated Securities to be purchased;
(2) If a Fixed Rate Certificated Security, the interest rate and
initial interest payment date;
(3) Trade Date;
(4) Settlement Date;
(5) Maturity Date;
(6) Specified Currency and, if the Specified Currency is other than
U.S. dollars, the applicable Exchange Rate for such Specified
Currency;
(7) Indexed Currency, the Base Rate and the Exchange Rate
Determination Date, if applicable;
(8) Issue Price;
(9) Selling Agent's commission or Purchasing Agent's discount, as the
case may be;
(10) Net Proceeds to the Company;
(11) If a redeemable Certificated Security, such of the following as
are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price shall decline
(but not below par) on each anniversary of the Redemption
Commencement Date;
(12) If a Floating Rate Certificated Security, such of the following
as are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
(xi) Regular Record Dates, and
(xii) Calculation Agent;
(13) Name, address and taxpayer identification number of the
registered owner(s);
(14) Denomination of certificates to be delivered at settlement;
(15) Book-Entry Security or Certificated Security; and
(16) Selling Agent or Purchasing Agent.
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Preparation of Pricing Supplement by Company:
If the Company accepts an offer to purchase a Certificated Security, it
will prepare a Pricing Supplement reflecting the terms of such Certificated
Security and arrange to have delivered to the Selling Agent or Purchasing Agent,
as the case may be, at least ten copies of such Pricing Supplement, not later
than 11:00 a.m., New York City time, on the Business Day following the Trade
Date, or if the Company and the purchaser agree to settlement on the date of
acceptance of such offer, not later than noon, New York City time, on such date.
The Company will arrange to have the Pricing Supplement filed with the
Commission not later than the close of business of the Commission on the fifth
Business Day following the date on which such Pricing Supplement is first used.
Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Certificated Security
a written confirmation of the sale and delivery and payment instructions. In
addition, the Selling Agent will deliver to such purchaser or its agent the
Prospectus as amended or supplemented (including the Pricing Supplement) in
relation to such Certificated Security prior to or together with the earlier of
the delivery to such purchaser or its agent of (a) the confirmation of sale or
(b) the Certificated Security.
Date of Settlement:
All offers of Certificated Securities solicited by a Selling Agent or made
by a Purchasing Agent and accepted by the Company will be settled on a date (the
"Settlement Date") which is the fourth Business Day, if permitted under Rule
15c6-1 under the Exchange Act, (or the third Business Day if required under Rule
15c6-1 under the Exchange Act) after the date of acceptance of such offer,
unless the Company and the purchaser agree to settlement (a) on another Business
Day after the acceptance of such offer or (b) with respect to an offer accepted
by the Company prior to 10:00 a.m., New York City time, on the date of such
acceptance.
Instruction from Company to Trustee for Preparation of Certificated Securities:
After receiving the Sale Information from the Selling Agent or Purchasing
Agent, as the case may be, the Company will communicate such Sale Information to
the Trustee by telephone (confirmed in writing) or by facsimile transmission or
other acceptable written means.
The Company will instruct the Trustee by facsimile transmission or other
acceptable written means to authenticate and deliver the Certificated Securities
no later than 2:15 p.m., New York City time, on the Settlement Date. Such
instruction will be given by the Company prior to 3:00 p.m., New York City time,
on the Business Day immediately preceding the Settlement Date unless the
Settlement Date is the date of acceptance by the Company of the offer to
purchase Certificated Securities in which case such instruction will be given by
the Company by 11:00 a.m., New York City time.
Preparation and Delivery of Certificated Securities by Trustee and Receipt of
Payment Therefor:
The Trustee will prepare each Certificated Security and appropriate
receipts that will serve as the documentary control of the transaction.
In the case of a sale of Certificated Securities to a purchaser solicited
by a Selling Agent, the Trustee will, by 2:15 p.m., New York City time, on the
Settlement Date, deliver the Certificated Securities to the Selling Agent for
the benefit of the purchaser of such Certificated Securities against delivery by
the Selling Agent of a receipt therefor. On the Settlement Date the Selling
Agent will deliver payment for such Certificated Securities in immediately
available funds to the Company in an amount equal to the issue price of the
Certificated Securities less the Selling Agent's commission; provided that the
Selling
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Agent reserves the right to withhold payment for which it has not received funds
from the purchaser. The Company shall not use any proceeds advanced by a
Selling Agent to acquire securities.
In the case of a sale of Certificated Securities to a Purchasing Agent, the
Trustee will, by 2:15 p.m., New York City time, on the Settlement Date, deliver
the Certificated Securities to the Purchasing Agent against delivery of payment
for such Certificated Securities in immediately available funds to the Company
in an amount equal to the issue price of the Certificated Securities less the
Purchasing Agent's discount.
Failure of Purchaser to Pay Selling Agent:
If a purchaser (other than a Purchasing Agent) fails to make payment to the
Selling Agent for a Certificated Security, the Selling Agent will promptly
notify the Trustee and the Company thereof by telephone (confirmed in writing)
or by facsimile transmission or other acceptable written means. The Selling
Agent will immediately return the Certificated Security to the Trustee.
Immediately upon receipt of such Certificated Security by the Trustee, the
Company will return to the Selling Agent an amount equal to the amount
previously paid to the Company in respect of such Certificated Security. The
Company will reimburse the Selling Agent on an equitable basis for its loss of
the use of funds during the period when they were credited to the account of the
Company.
The Trustee will cancel the Certificated Security in respect of which the
failure occurred, make appropriate entries in its records and, unless otherwise
instructed by the Company, destroy the Certificated Security.
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ANNEX III
ACCOUNTANTS' LETTER
Pursuant to Section 4(j) and Section 6(d), as the case may be, of the
Distribution Agreement, the Company's independent certified public accountants
shall furnish letters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules audited (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included or incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as applicable, and
the related published rules and regulations thereunder; and, if applicable,
they have made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the consolidated
interim financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company for the periods
specified in such letter, as indicated in their reports thereon, copies of
which have been furnished to the Agents;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus and/or included in the Company's quarterly report on Form 10-Q
incorporated by reference into the Prospectus as indicated in their reports
thereon copies of which have been separately furnished to the Agents; and
on the basis of specified procedures including inquiries of officials of
the Company who have responsibility for financial and accounting matters
regarding whether the unaudited condensed consolidated financial statements
referred to in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations, nothing came
to their attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus and
included or incorporated by reference in Item 6 of the Company's Annual
Report on Form 10-K for the most recent fiscal year agrees with the
corresponding amounts (after restatement where applicable) in the audited
consolidated financial statements for five such fiscal years which were
included or incorporated by reference in the Company's Annual Reports on
Form 10-K for such fiscal years;
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(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus and/or included or incorporated
by reference in the Company's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus do not comply as to form
in all material respects with the applicable accounting requirements
of the Exchange Act and the related published rules and regulations,
or (ii) any material modifications should be made to the unaudited
condensed consolidated statements of income, consolidated balance
sheets and consolidated statements of cash flows included in the
Prospectus or included in the Company's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived the unaudited condensed
financial statements referred to in clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of
III-2
<PAGE>
performance shares and upon conversions of convertible securities, in
each case which were outstanding on the date of the latest balance
sheet included or incorporated by reference in the Prospectus) or any
increase in the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current assets or
shareholders' equity or other items specified by the Agents, or any
increases in any items specified by the Agents, in each case as
compared with amounts shown in the latest balance sheet included or
incorporated by reference in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in Clause (E) there were any decreases
in consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified by
the Agents, or any increases in any items specified by the Agents, in
each case as compared with the comparable period of the preceding year
and with any other period of corresponding length specified by the
Agents, except in each case for increases or decreases which the
Prospectus discloses have occurred or may occur or which are described
in such letter; and
(vii) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an audit in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Agents which are
derived from the general accounting records of the Company and its
subsidiaries, which appear in the Prospectus (excluding documents
incorporated by reference), or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the Agents or in documents
incorporated by reference in the Prospectus specified by the Agents, and
have compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its subsidiaries
and have found them to be in agreement.
All references in this Annex III to the Prospectus shall be deemed to refer
to the Prospectus (including the documents incorporated by reference therein) as
defined in the Distribution Agreement as of the Commencement Date referred to in
Section 6(d) thereof and to the Prospectus as amended or supplemented (including
the documents incorporated by reference therein) as of the date of the
amendment, supplement, incorporation or the Time of Delivery relating to the
Terms Agreement requiring the delivery of such letter under Section 4(j)
thereof.
III-3
<PAGE>
EXHIBIT 4.2
[FORM OF FACE OF FIXED RATE NOTE]
[Except as otherwise indicated or applicable, insert additional bracketed
language hereinafter appearing if Note is to be a Global Note]
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
IS MADE TO CEDE & CO., OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
REGISTERED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY.]
<TABLE>
<CAPTION>
REGISTERED No. FXR-_____ REGISTERED [CUSIP] No.: _______ PRINCIPAL AMOUNT:
___________________________
<S> <C> <C>
NORTHERN INDIANA
PUBLIC SERVICE COMPANY
[GLOBAL NOTE]
[representing]
MEDIUM-TERM NOTE, SERIES E
(Fixed Rate)
ORIGINAL ISSUE DATE: INTEREST RATE: ____% STATED MATURITY DATE:
INTEREST PAYMENT DATE(S): DEFAULT RATE: ____%
[ ] March 15 and September 15
[ ] Other:
ANNUAL REDEMPTION
INITIAL REDEMPTION DATE: INITIAL REDEMPTION PERCENTAGE: ____% PERCENTAGE REDUCTION: ____%
OPTIONAL REPAYMENT DATE(S): [ ] CHECK IF AN ORIGINAL ISSUE
DISCOUNT NOTE
Issue Price ____%
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION: EXCHANGE RATE AGENT:
[ ] United States dollars [ ] $1,000 and integral multiples thereof
[ ] Other: [ ] Other:
ADDENDUM ATTACHED OTHER/ADDITIONAL PROVISIONS:
[ ] Yes
[ ] No
</TABLE>
<PAGE>
Northern Indiana Public Service Company, an Indiana corporation (the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
, or registered assigns, the principal sum of
dollars, on the Stated Maturity Date specified above (or any Redemption Date or
Repayment Date, each as defined on the reverse hereof) (each such Stated
Maturity Date, Redemption Date or Repayment Date being hereinafter referred to
as the "Maturity Date" with respect to the principal repayable on such date) and
to pay interest thereon, at Interest Rate per annum specified above, until the
principal hereof is paid or duly made available for payment, and (to the extent
that the payment of such interest shall be legally enforceable) at the Default
Rate per annum specified above on any overdue principal, premium and/or
interest. The Company will pay interest in arrears on each Interest Payment
Date, if any, specified above (each, an "Interest Payment Date"), commencing
with the first Interest Payment Date next succeeding the Original Issue Date
specified above, and on the Maturity Date; provided, however, that if the
Original Issue Date occurs between a Record Date (as defined below) and the next
succeeding Interest Payment Date, interest payments will commence on the second
Interest Payment Date next succeeding the Original Issue Date to the holder of
this Note on the Record Date with respect to such second Interest Payment Date.
Interest on this Note will be computed on the basis of a 360-day year of twelve
30-day months.
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly provided
for (or from, and including, the Original Issue Date if no interest has been
paid or duly provided for) to, but excluding, the applicable Interest Payment
Date or the Maturity Date, as the case may be (each, an "Interest Period"). The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, subject to certain exceptions described herein, be paid to
the person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the fifteenth calendar day (whether or
not a Business Day, as defined below) immediately preceding such Interest
Payment Date (the "Record Date"); provided, however, that interest payable on
the Maturity Date will be payable to the person to whom the principal hereof and
premium, if any, hereon shall be payable. Any such interest not so punctually
paid or duly provided for ("Defaulted Interest") will forthwith cease to be
payable to the holder on any Record Date, and shall be paid to the person in
whose name this Note is registered at the close of business on a special record
date (the "Special Record Date") for the payment of such Defaulted Interest to
be fixed by the Trustee hereinafter referred to, notice whereof shall be given
to the holder of this Note by the Trustee not less than 10 calendar days prior
to such Special Record Date or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which this note may be listed, and upon such notice as may be required by such
exchange, all as more fully provided for in the Indenture.
Payment of principal, premium, if any, and interest in respect of this Note
due on the Maturity Date will be made in immediately available funds upon
presentation and surrender of this Note (and, with respect to any applicable
repayment of this Note, a duly completed election form as contemplated on the
reverse hereof) at the corporate trust office of the Trustee maintained for that
purpose in the Borough of Manhattan, The City of New York, or at such other
paying agency in the Borough of Manhattan, The City of New York, as the Company
may determine; provided, however, that if such payment is to be made in a
Specified Currency other than United States dollars as set forth below, such
payment will be made by wire transfer of immediately available funds to an
account with a bank designated by the holder hereof at least 15 calendar days
prior to the Maturity Date, provided that such bank has appropriate facilities
therefor and that this Note (and, if applicable, a duly completed
2
<PAGE>
repayment election form) is presented and surrendered at the aforementioned
office of the Trustee in time for the Trustee to make such payment in such funds
in accordance with its normal procedures. Payment of interest due on any
Interest Payment Date other than the Maturity Date will be made at the corporate
trust office of the Trustee referred to above maintained for such purpose (or at
such other paying agency referred to above) or, at the option of the Company, by
check mailed to the address of the person entitled thereto as such address shall
appear in the Security Register maintained at the aforementioned office of the
Trustee; provided, however, that a holder of U.S.$10,000,000 (or, if the
Specified Currency specified above is other than United States dollars, the
equivalent thereof in the Specified Currency) or more in aggregate principal
amount of Notes (whether having identical or different terms and provisions)
will be entitled to receive interest payments on such Interest Payment Date by
wire transfer of immediately available funds to an account in the United States
if appropriate wire transfer instructions have been received in writing by the
Trustee not less than 15 calendar days prior to such Interest Payment Date. Any
such wire transfer instructions received by the Trustee shall remain in effect
until revoked by such holder.
If any Interest Payment Date or the Maturity Date falls on a day that is
not a Business Day, the required payment of principal, premium, if any, and/or
interest shall be made on the next succeeding Business Day as if made on the
date such payment was due, and no interest shall accrue on such payment for the
period from and after such Interest Payment Date or the Maturity Date, as the
case may be, to the date of such payment on the next succeeding Business Day.
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 banking institutions
are authorized or required by law, regulation or executive order to close in The
City of New York; provided, however, that if the Specified Currency is other
than United States dollars and any payment is to be made in the Specified
Currency in accordance with the provisions hereof, such day is also not a day on
which banking institutions are authorized or required by law, regulation or
executive order to close in the Principal Financial Center (as defined below) of
the country issuing the Specified Currency (or, in the case of European Currency
Units ("ECU"), is not a day that appears as an ECU non-settlement day on the
display designated as "ISDE" on the Reuter Monitor Money Rates Service (or is
not a day designated as an ECU non-settlement date by the ECU Banking
Association) or, if ECU non-settlement days do not appear on that page (and are
not so designated), a day that is not a day on which payments in ECU cannot be
settled in the international interbank market); provided, further, that if LIBOR
is an applicable Interest Rate Basis, such day is also a London Business Day (as
defined below). "London Business Day" means a day on which dealings in the
Designated LIBOR Currency (as defined below) are transacted in the London
interbank market. "Principal Financial Center" means (i) the capital city of
the country issuing the Specified Currency (except as described in the
immediately preceding sentence with respect to ECU) or (ii) the capital city of
the country to which the Designated LIBOR Currency, if applicable relates (or,
in the case of ECU, Luxembourg), except, in each case, that with respect to
United States dollars, Australian dollars, Canadian dollars, Deutsche marks,
Dutch guilders, Italian lire and Swiss francs, the "Principal Financial Center"
shall be The City of New York, Sydney, Toronto, Frankfurt, Amsterdam, Milan
(solely in the case of clause (i) above) and Zurich, respectively.
The Company is obligated to make payment of principal, premium, if any, and
interest, if any, in respect of this Note in the Specified Currency (or, if the
Specified Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or currency of the
country which issued the Specified Currency as at the time of such payment is
legal tender for the payment of such debts). If the Specified Currency is other
than United States dollars, any such amounts so payable by the Company will be
converted by the Exchange Rate Agent specified above into United
3
<PAGE>
States dollars for payment to the holder of this Note; provided, however, that
the holder of this Note may elect to receive such amounts in such Specified
Currency pursuant to the provisions set forth below.
If the Specified Currency is other than United States dollars and the
holder of this Note shall not have duly made an election to receive all or a
specified portion of any payment of principal, premium, if any, and/or interest,
if any, in respect of this Note in the Specified Currency, any United States
dollar amount to be received by the holder of this Note will be based on the
highest bid quotation in The City of New York received by the Exchange Rate
Agent at approximately 11:00 A.M., New York City time, on the second Business
Day preceding the applicable payment date from three recognized foreign exchange
dealers (one of whom may be the Exchange Rate Agent) selected by the Exchange
Rate Agent and approved by the Company for the purchase by the quoting dealer of
the Specified Currency for United States dollars for settlement on such payment
date in the aggregate amount of the Specified Currency payable to all holders of
Notes scheduled to receive United States dollar payments and at which the
applicable dealer commits to execute a contract. All currency exchange costs
will be borne by the holder of this Note by deductions from such payments. If
three such bid quotations are not available, payments on this Note will be made
in the Specified Currency.
If the Specified Currency is other than United States dollars, the holder
of this Note may elect to receive all or a specified portion of any payment of
principal, premium, if any, and/or interest, if any, in respect of this Note in
the Specified Currency by submitting a written request for such payment to the
Trustee at its corporate trust office in The City of New York on or prior to the
applicable Record Date or at least 15 calendar days prior to the Maturity Date,
as the case may be. Such written request may be mailed or hand delivered or
sent by cable, telex or other form of facsimile transmission. The holder of
this Note may elect to receive all or a specified portion of all future payments
in the Specified Currency and need not file a separate election for each
payment. Such election will remain in effect until revoked by written notice to
the Trustee, but written notice of any such revocation must be received by the
Trustee on or prior to the applicable Record Date or at least 15 calendar days
prior to the Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars or a
composite currency and the holder of this Note shall have duly made an election
to receive all or a specified portion of any payment of principal, premium, if
any, and/or interest, if any, in respect of this Note in the Specified Currency
and if the Specified Currency is not available due to the imposition of exchange
controls or other circumstances beyond the control of the Company, the Company
will be entitled to satisfy its obligations to the holder of this Note by making
such payment in United States dollars on the basis of the Market Exchange Rate
(as defined below), computed by the Exchange Rate Agent, on the second Business
Day prior to such payment date or, if such Market Exchange Rate is not then
available, on the basis of the most recently available Market Exchange Rate, or
as otherwise specified on the face hereof. The "Market Exchange Rate" for a
Specified Currency other than United States dollars means the noon dollar buying
rate in The City of New York for cable transfers for Specified Currency as
certified for customs purposes (or, if not so certified, as otherwise determined
by, the Federal Reserve Bank of New York. Any payment made under such
circumstances in United States dollars will not constitute an Event of Default
(as defined in the Indenture).
If the Specified Currency is a composite currency and the holder of this
Note shall have duly made an election to receive all or a specified portion of
any payment of principal, premium, if any, and/or interest in respect of this
Note in the Specified Currency and if such composite currency is unavailable due
to the imposition of exchange controls or other circumstances beyond the control
of
4
<PAGE>
the Company, then the Company will be entitled to satisfy its obligations to the
holder of this Note by making such payment in United States dollars. The amount
of each payment in United States dollars shall be computed by the Exchange Rate
Agent on the basis of the equivalent of the composite currency in United States
dollars. The component currencies of the composite currency for this purpose
(collectively, the "Component Currencies" and each, a "Component Currency")
shall be the currency amounts that were components of the composite currency as
of the last day on which the composite currency was used. The equivalent of the
composite currency in United States dollars shall be calculated by aggregating
the United States dollar equivalents of the Component Currencies. The United
States dollar equivalent of each of the Component Currencies shall be determined
by the Exchange Rate Agent on the basis of the most recently available Market
Exchange Rate for each such Component Currency, or as otherwise specified on the
face hereof.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
Notwithstanding the foregoing, if an Addendum is attached hereto or
"Other/Additional Provisions" apply to this Note as specified above, this Note
shall be subject to the terms set forth in such Addendum or such
"Other/Additional Provisions".
All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holder of this Note.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof and, if so specified above, in the Addendum hereto, which
further provisions shall have the same force and effect as if set forth on the
face hereof.
Unless the Certificate of Authentication hereon has been executed by the
Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
5
<PAGE>
IN WITNESS WHEREOF, Northern Indiana Public Service Company, has caused
this Note to be duly executed.
NORTHERN INDIANA PUBLIC SERVICE COMPANY
[SEAL] By:
------------------------------------------
Attest:
Title:
----------------------------------------
- -----------------------------
Secretary
Dated:
----------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By:
---------------------------------
Authorized Officer
6
<PAGE>
[FORM OF REVERSE OF NOTE]
[GLOBAL NOTE]
[representing]
NORTHERN INDIANA PUBLIC SERVICE COMPANY
MEDIUM-TERM NOTE, SERIES E
(Fixed Rate)
This Note is one of a duly authorized issue of debentures, notes or other
evidences of indebtedness of the Company (hereinafter called the "Securities")
of the series hereinafter specified, all issued or to be issued under and
pursuant to an Indenture dated as of March 1, 1988, between the Company and
Manufacturers Hanover Trust Company, as Trustee, as supplemented by a First
Supplemental Indenture dated as of December 1, 1991 (the "Indenture"), under
which The Chase Manhattan Bank, as successor to Manufacturers Hanover Trust
Company, is currently serving as Trustee (the "Trustee") to which Indenture and
all indentures supplemental thereto reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the holders of the Securities. The
Securities may be issued in one or more series, which different series may be
issued in various aggregate principal amounts, may mature at different times,
may bear interest (if any) at different rates, may be subject to different
redemption provisions (if any), may be subject to different sinking, purchase or
analogous funds (if any) and may otherwise vary as in the Indenture provided.
This Note is one of a series designated as the Medium-Term Notes, Series E, of
the Company, aggregate principal amount not to exceed $217,692,000 (the
"Notes"). The Notes are unsecured and rank pari passu with all other unsecured
and unsubordinated indebtedness of the Company. The Notes may be issued at
various times, may have different maturity dates, may bear interest at different
rates and may otherwise vary in terms.
This Note is issuable only in registered form without coupons in minimum
denominations of U.S.$1,000 and integral multiples thereof or the minimum
Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless otherwise
provided on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or repayable prior to the Stated Maturity
Date.
This Note will be subject to redemption at the option of the Company on any
date on or after the Initial Redemption Date, if any, specified on the face
hereof, in whole or from time to time in part in increments of U.S.$1,000 or the
minimum Authorized Denomination (provided that any remaining principal amount
hereof shall be at least U.S.$1,000 or such minimum Authorized Denomination), at
the Redemption Price (as defined below), together with unpaid interest accrued
thereon to the date fixed for redemption (each, a "Redemption Date"), on written
notice given no more than 60 nor less than 30 calendar days prior to the
Redemption Date and in accordance with the provisions of the Indenture. The
"Redemption Price" shall initially be the Initial Redemption Percentage
specified on the face hereof multiplied by the unpaid principal amount of this
Note to be redeemed. The Initial Redemption Percentage shall decline at each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction, if any, specified on the face hereof until the Redemption Price is
100% of unpaid principal amount to be redeemed. In the event of redemption of
this Note in part only, a new Note of like tenor for the unredeemed portion
hereof and otherwise having the same terms
7
<PAGE>
as this Note shall be issued in the name of the holder hereof upon the
presentation and surrender hereof.
This Note will be subject to repayment by the Company at the option of the
holder hereof on the Optional Repayment Date(s), if any, specified on the face
hereof, in whole or from time to time in part in increments of U.S.$1,000 or the
minimum Authorized Denomination (provided that any remaining principal amount
hereof shall be at least U.S.$1,000 or such minimum Authorized Denomination), at
a repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, this Note must be
received, together with the form hereon entitled "Option to Elect Repayment"
duly completed, by the Trustee at its corporate trust office not more than 60
nor less than 30 calendar days prior to the Repayment Date. Exercise of such
repayment option by the holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note shall be issued
in the name of the holder hereof upon the presentation and surrender hereof.
If this Note is an Original Issue Discount Note as specified on the face
hereof, the amount payable to the holder of this Note in the event of
redemption, repayment or acceleration of maturity of this Note will be equal to
the sum of (1) the Issue Price specified on the face hereof (increased by any
accruals of the Discount, as defined below) and, in the event of any redemption
of this Note (if applicable), multiplied by the Initial Redemption Percentage
(as adjusted by the Annual Redemption Percentage Reduction, if applicable) and
(2) any unpaid interest on this Note accrued from the Original Issue Date to the
Redemption Date, Repayment Date or date of acceleration of maturity, as the case
may be. The difference between the Issue Price and 100% of the principal amount
of this Note is referred to herein as the "Discount."
For purposes of determining the amount of Discount that has accrued as of
any Redemption Date, Repayment Date or date of acceleration of maturity of this
Note, such Discount will be accrued so as to cause the yield on the Note to be
constant. 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 (with ratable accruals within a compounding period), a coupon rate equal
to the initial interest rate applicable to this Note and an assumption that the
maturity of this Note will not be accelerated. If the period from the Original
Issue Date to the initial Interest Payment Date (the "Initial Period") is
shorter than the compounding period for this 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 such 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.
If an Event of Default, as defined in the Indenture, shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture provides that the Company and the Trustee may enter into
supplemental indentures for certain purposes. The Indenture also contains
provisions permitting the Company and
8
<PAGE>
the Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Securities at the time outstanding of each
series to be affected (each such series voting as a single class), evidenced as
in the Indenture provided, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of any supplemental indenture or modifying in any manner the
rights of the holders of the Securities of each such series; provided, that no
such supplemental indenture shall, without the consent of the holder of each
outstanding Security to be affected, (i) change the Stated Maturity of the
principal of, or of any installment of principal of or interest on, any
Security, or reduce the principal amount thereof or the interest rate thereon or
any premium payable upon the redemption thereof, or change the method of
calculating the rate of interest thereon, or change any obligation of the
Company to pay certain additional amounts pursuant to the Indenture or reduce
the amount of the principal of an Original Issue Discount Security (as defined
in the Indenture) that would be due and payable upon a declaration of
acceleration of the Maturity thereof or change any Place of Payment in the
United States where, or the coin or currency in which, any Security or any
premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date), (ii)
reduce the percentage in principal amount of the Outstanding Securities of any
series, the consent of whose holders is required for any such supplemental
indenture, or the consent of whose holders is required for any waiver (of
compliance with certain provisions of the Indenture or certain defaults
thereunder and their consequences) provided for in the Indenture, or reduce the
requirements of the Indenture for quorum or voting, (iii) change any obligation
of the Company to maintain an office or agency in each Place of Payment and, in
certain instances as set forth in the Indenture, outside the United States or
(iv) modify certain provisions of the Indenture relating to the above and waiver
of certain Defaults (as defined in the Indenture and covenants (other than to
increase any such percentage or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the holder of each
Outstanding Security affected thereby). It is also provided in the Indenture
that, with respect to certain Defaults or Events of Default regarding the
Securities of any series, prior to any declaration accelerating the maturity of
such Securities, the holders of a majority in aggregate principal amount
outstanding of the Securities of such series (or, in the case of certain
Defaults or Events of Default, all of the Securities ) may on behalf of the
holders of all the Securities of such series (or all of the Securities, as the
case may be) waive any such past Default or Event of Default of its
consequences. The preceding sentence shall not, however, apply to a Default in
the payment of principal of (or premium, if any) or interest on any of the
Securities or in respect of a covenant or provision of the Indenture that cannot
be modified or amended without the consent of the holder of each Security
affected. Any such consent or waiver by the holder of this Note (unless revoked
as provided in the Indenture) shall be conclusive and binding upon such holder
and upon all future holders and owners of this Note and any Notes which may be
issued in exchange or substitution herefor, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay principal, premium, if any, and interest in
respect of this Note at the times, places and rate or formula, and in the coin
or currency, herein prescribed.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, the City of New
York, State of New York, a new Note or Notes of authorized denominations for an
equal aggregate principal amount will be issued to the transferee in exchange
herefor, subject to the limitations provided in the Indenture (which include
restrictions on
9
<PAGE>
the transfer of global Notes), without charge except for any tax or other
governmental charge imposed in connection therewith.
Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee and any authorized agent of the Company or the Trustee may
deem and treat the registered holder hereof as the absolute owner of this Note
(whether or not this Note shall be overdue and notwithstanding any notation of
ownership or other writing hereon), for the purpose of receiving payment of, or
on account of, the principal hereof and, subject to the provisions on the face
hereof, interest hereon, and for all other purposes, and neither the Company nor
the Trustee nor any authorized agent of the Company or the Trustee shall be
affected by any notice to the contrary.
The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely in such State.
10
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------
| |
|______________________________|_________________________________
(Please print or typewrite name and address including postal zip code of
assignee) this Note and all rights thereunder hereby irrevocably constituting
and appointing ____________________ Attorney to transfer this Note on the books
of the Trustee, with full power of substitution in the premises.
Dated:___________________________________
*________________________________________
* Notice: The signature(s) on this Assignment must correspond with the name(s)
as written upon the face of this Note in every particular, without alteration or
enlargement or any change whatsoever.
11
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Company
to repay this Note (or portion hereof specified below) pursuant to its terms at
a price equal to 100% of the principal amount to be repaid, together with unpaid
interest accrued hereon to the Repayment Date, to the undersigned, at
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at its corporate trust
office in the Borough of Manhattan, The City of New York, not more than 60 nor
less than 30 calendar days prior to the Repayment Date, this Note with this
"Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of U.S.$1,000 (or, if the
Specified Currency is other than United States dollars, the minimum Authorized
Denomination specified on the face hereof)) which the holder elects to have
repaid and specify the denomination or denominations (which shall be an
Authorized Denomination) of the Notes to be issued to the holder for the portion
of this Note not being repaid (in the absence of any such specification, one
such Note will be issued for the portion not being repaid).
Principal Amount
to be Repaid: $
Date: Notice: The signature(s) on this Option
to Elect Repayment must correspond with
the name(s) as written upon the face of
this Note in every particular, without
alteration or enlargement or any change
whatsoever.
12
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this Note, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ________________________ Custodian ___________________
(Minor)
Under Uniform Gifts to Minors Act ____________________________________
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above list.
13
<PAGE>
EXHIBIT 4.3
[FORM OF FACE OF FLOATING RATE NOTE]
[Except as otherwise indicated or applicable, insert additional bracketed
language hereinafter appearing if Note is to be a Global Note]
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
IS MADE TO CEDE & CO., OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
REGISTERED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY.]
<TABLE>
<CAPTION>
<S> <C> <C>
REGISTERED No. FLR-____ REGISTERED [CUSIP] No.: __________ PRINCIPAL AMOUNT: ____________
NORTHERN INDIANA
PUBLIC SERVICE COMPANY
[GLOBAL NOTE]
[representing]
MEDIUM-TERM NOTE, SERIES E
(Floating Rate)
STATED MATURITY DATE: ORIGINAL ISSUE DATE:
__________
INTEREST RATE BASIS
OR BASES:
IF LIBOR: IF CMT RATE:
[ ] LIBOR Reuters Designated CMT Telerate Page:
If page 7052:
[ ] Weekly Average
[ ] Monthly Average
[ ] LIBOR Telerate Designated CMT Maturity Index:
DESIGNATED LIBOR
CURRENCY:
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
MATURITY: INITIAL INTEREST RATE: INTEREST PAYMENT DATE(S):
SPREAD (PLUS OR MINUS): SPREAD MULTIPLIER: INITIAL INTEREST RESET DATE:
MINIMUM INTEREST RATE: MAXIMUM INTEREST RATE: INTEREST RESET DATE(S):
______% ____%
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION
DATE: PERCENTAGE: ______% PERCENTAGE REDUCTION:
____%
OPTIONAL REPAYMENT CALCULATION AGENT:
DATE(S):
INTEREST CATEGORY: DAY COUNT CONVENTION:
[ ] Regular Floating Rate Note [ ] 30/360 for the period
[ ] Floating Rate/Fixed Rate Note from __________ to
____________
Fixed Rate Commencement Date: [ ] Actual/360 for the period
from __________ to
Fixed Interest Rate: ____% ____________
[ ] Inverse Floating Rate Note [ ] Actual/Actual for the period
Fixed Interest Rate: ____% from __________ to
___________
[ ] Original Issue Discount
Note Issue Price: ____% Applicable Interest Rate Basis:
SPECIFIED CURRENCY: AUTHORIZED
[ ] United States dollars DENOMINATION:
[ ] Other: [ ] $1,000 and integral
multiples thereof
[ ] Other:
EXCHANGE RATE AGENT:
DEFAULT RATE: ____%
ADDENDUM ATTACHED
[ ] Yes
[ ] No
OTHER/ADDITIONAL PROVISIONS:
</TABLE>
2
<PAGE>
Northern Indiana Public Service Company, an Indiana corporation (the
"Company", which term includes any successor corporation under the Indenture
ereinafter referred to), for value received, hereby promises to pay to
, or registered assigns, the principal sum of
dollars, on the Stated Maturity Date specified above (or any
Redemption Date or Repayment Date, each as defined on the reverse hereof) (each
such Stated Maturity Date, Redemption Date or Repayment Date being hereinafter
referred to as the "Maturity Date" with respect to the principal repayable on
such date) and to pay interest thereon, at a rate per annum equal to the Initial
Interest Rate specified above until the Initial Interest Reset Date specified
above and thereafter at a rate determined in accordance with the provisions
specified above and on the reverse hereof with respect to one or more Interest
Rate Bases specified above until the principal hereof is paid or duly made
available for payment, and (to the extent that the payment of such interest
shall be legally enforceable) at the Default Rate per annum specified above on
any overdue principal, premium and/or interest. The Company will pay interest in
arrears on each Interest Payment Date, if any, specified above (each, an
"Interest Payment Date"), commencing with the first Interest Payment Date next
succeeding the Original Issue Date specified above, and on the Maturity Date;
provided, however, that if the Original Issue Date occurs between a Record Date
(as defined below) and the next succeeding Interest Payment Date, interest
payments will commence on the second Interest Payment Date next succeeding the
Original Issue Date to the holder of this Note on the Record Date with respect
to such second Interest Payment Date.
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly provided
for (or from, and including, the Original Issue Date if no interest has been
paid or duly provided for) to, but excluding, the applicable Interest Payment
Date or the Maturity Date, as the case may be (each, an "Interest Period"). The
interest so pay able, and punctually paid or duly provided for, on any Interest
Payment Date will, subject to certain exceptions described herein, be paid to
the person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the fifteenth calendar day (whether or
not a Business Day, as defined on the reverse hereof) immediately preceding such
Interest Payment Date (the "Record Date"); provided, however, that interest
payable on the Maturity Date will be payable to the person to whom the principal
hereof and premium, if any, hereon shall be payable. Any such interest not so
punctually paid or duly provided for ("Defaulted Interest") will forthwith cease
to be payable to the holder on any Record Date, and shall be paid to the person
in whose name this Note is registered at the close of business on a special
record date (the "Special Record Date") for the payment of such Defaulted
Interest to be fixed by the Trustee hereinafter referred to, notice whereof
shall be given to the holder of this Note by the Trustee not less than 10
calendar days prior to such Special Record Date or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which this note may be listed, and upon such notice as may be
required by such exchange, all as more fully provided for in the Indenture.
Payment of principal, premium, if any, and interest in respect of this Note
due on the Maturity Date will be made in immediately available funds upon
presentation and surrender of this Note (and, with respect to any applicable
repayment of this Note, a duly completed election form as contemplated on the
reverse hereof) at the corporate trust office of the Trustee maintained for that
purpose in the Borough of Manhattan, The City of New York, or at such other
paying agency in the Borough of Manhattan, The City of New York, as the Company
may determine; provided, however, that if such payment is to be made in a
Specified Currency other than United States dollars as set forth below, such
payment will be made by wire transfer of immediately available funds to an
account with a bank designated by the holder hereof at least 15 calendar days
prior to the Maturity Date, provided that such bank has appropriate facilities
therefor and that this Note (and, if applicable, a duly completed repayment
election form) is presented and
3
<PAGE>
surrendered at the aforementioned office of the Trustee in time for the Trustee
to make such payment in such funds in accordance with its normal procedures.
Payment of interest due on any Interest Payment Date other than the Maturity
Date will be made at the corporate trust office of the Trustee referred to above
maintained for such purpose (or at such other paying agency referred to above)
or, at the option of the Company, by check mailed to the address of the person
entitled thereto as such address shall appear in the Security Register
maintained at the aforementioned office of the Trustee; provided, however, that
a holder of U.S.$10,000,000 (or, if the Specified Currency specified above is
other than United States dollars, the equivalent thereof in the Specified
Currency) or more in aggregate principal amount of Notes (whether having
identical or different terms and provisions) will be entitled to receive
interest payments on such Interest Payment Date by wire transfer of immediately
available funds to an account in the United States if appropriate wire transfer
instructions have been received in writing by the Trustee not less than 15
calendar days prior to such Interest Payment Date. Any such wire transfer
instructions received by the Trustee shall remain in effect until revoked by
such holder.
If any Interest Payment Date other than the Maturity Date would otherwise
be a day that is not a Business Day, such Interest Payment Date shall be
postponed to the next succeeding Business Day, except that if LIBOR is an
applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, such Interest Payment Date shall be the immediately
preceding Business Day. If the Maturity Date falls on a day that is not a
Business Day, the required payment of principal, premium, if any, and interest
shall be made on the next succeeding Business Day with the same force and effect
as if made on the date such payment was due, and no interest shall accrue with
respect to such payment for the period from and after the Maturity Date to the
date of such payment on the next succeeding Business Day.
The Company is obligated to make payment of principal, premium, if any, and
interest in respect of this Note in the Specified Currency (or, if the Specified
Currency is not at the time of such payment legal tender for the payment of
public and private debts, in such other coin or currency of the country which
issued the Specified Currency as at the time of such payment is legal tender for
the payment of such debts). If the Specified Currency is other than United
States dollars, any such amounts so payable by the Company will be converted by
the Exchange Rate Agent specified above into United States dollars for payment
to the holder of this Note; provided, however, that the holder of this Note may
elect to receive such amounts in such Specified Currency pursuant to the
provisions set forth below.
If the Specified Currency is other than United States dollars and the
holder of this Note shall not have duly made an election to receive all or a
specified portion of any payment of principal, premium, if any, and/or interest,
if any, in respect of this Note in the Specified Currency, any United States
dollar amount to be received by the holder of this Note will be based on the
highest bid quotation in The City of New York received by the Exchange Rate
Agent at approximately 11:00 A.M., New York City time, on the second Business
Day preceding the applicable payment date from three recognized foreign exchange
dealers (one of whom may be the Exchange Rate Agent) selected by the Exchange
Rate Agent and approved by the Company for the purchase by the quoting dealer of
the Specified Currency for United States dollars for settlement on such payment
date in the aggregate amount of the Specified Currency payable to all holders of
Notes scheduled to receive United States dollar payments and at which the
applicable dealer commits to execute a contract. All currency exchange costs
will be borne by the holder of this Note by deductions from such payments. If
three such bid quotations are not available, payments on this Note will be made
in the Specified Currency.
If the Specified Currency is other than United States dollars, the holder
of this Note may elect to receive all or a specified portion of any payment of
principal, premium, if any, and/or interest, if any, in respect of this Note in
the Specified Currency by submitting a written request for such payment to the
4
<PAGE>
Trustee at its corporate trust office in The City of New York on or prior to the
applicable Record Date or at least 15 calendar days prior to the Maturity Date,
as the case may be. Such written request may be mailed or hand delivered or sent
by cable, telex or other form of facsimile transmission. The holder of this Note
may elect to receive all or a specified portion of all future payments in the
Specified Currency and need not file a separate election for each payment. Such
election will remain in effect until revoked by written notice to the Trustee,
but written notice of any such revocation must be received by the Trustee on or
prior to the applicable Record Date or at least 15 calendar days prior to the
Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars or a
composite currency and the holder of this Note shall have duly made an election
to receive all or a specified portion of any payment of principal, premium, if
any, and/or interest, if any, in respect of this Note in the Specified Currency
and if the Specified Currency is not available due to the imposition of exchange
controls or other circumstances beyond the control of the Company, the Company
will be entitled to satisfy its obligations to the holder of this Note by making
such payment in United States dollars on the basis of the Market Exchange Rate
(as defined below), computed by the Exchange Rate Agent, on the second Business
Day prior to such payment date or, if such Market Exchange Rate is not then
available, on the basis of the most recently available Market Exchange Rate, or
as otherwise specified on the face hereof. The "Market Exchange Rate" for a
Specified Currency other than United States dollars means the noon dollar buying
rate in The City of New York for cable transfers for such Specified Currency as
certified for customs purposes (or, if not so certified, as otherwise
determined) by the Federal Reserve Bank of New York. Any payment made under such
circumstances in United States dollars will not constitute an Event of Default
(as defined in the Indenture).
If the Specified Currency is a composite currency and the holder of this
Note shall have duly made an election to receive all or a specified portion of
any payment of principal, premium, if any, and/or interest, if any, in respect
of this Note in the Specified Currency and if such composite currency is
unavailable due to the imposition of exchange controls or other circumstances
beyond the control of the Company, then the Company will be entitled to satisfy
its obligations to the holder of this Note by making such payment in United
States dollars on the basis of the equivalent of the composite currency in
United States dollars. The component currencies of the composite currency for
this purpose (the "Component Currencies") shall be the currency amounts that
were components of the composite currency as of the last day on which the
composite currency was used. The equivalent of the composite currency in United
States dollars shall be calculated by aggregating the United States dollar
equivalents of the Component Currencies. The United States dollar equivalent of
each of the Component Currencies shall be determined by the Exchange Rate Agent
on the basis of the Market Exchange Rate on the second Business Day prior to the
required payment or, if such Market Exchange Rate is not then available, on the
basis of the most recently available Market Exchange Rate for each such
Component Currency, or as otherwise specified on the face hereof.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
5
<PAGE>
All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holder of this Note.
Notwithstanding the foregoing, if an Addendum is attached hereto or "Other
Additional Provisions" apply to this Note as specified above, this Note shall be
subject to the terms set forth in such Addendum or such "Other Additional
Provisions."
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof and, if so specified above, in the Addendum hereto, which
further provisions shall have the same force and effect as if set forth on the
face hereof.
Unless the Certificate of Authentication hereon has been executed by the
Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, Northern Indiana Public Service Company, has caused
this Note to be duly executed.
NORTHERN INDIANA PUBLIC SERVICE COMPANY
[SEAL] By:
- -------------------------- ------------------------------------
Attest: Title:
---------------------------------
- --------------------------
Secretary
Dated:
--------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By:
---------------------------------
Authorized Officer
6
<PAGE>
[FORM OF REVERSE OF NOTE]
NORTHERN INDIANA PUBLIC SERVICE COMPANY
[GLOBAL NOTE]
[representing]
MEDIUM-TERM NOTE, SERIES E
(Floating Rate)
This Note is one of a duly authorized issue of debentures, notes or other
evidences of indebtedness of the Company (hereinafter called the "Securities")
of the series hereinafter specified, all issued or to be issued under and
pursuant to an Indenture dated as of March 1, 1988, between the Company and
Manufacturers Hanover Trust Company, as Trustee, as supplemented by a First
Supplemental Indenture dated as of December 1, 1991 (the "Indenture"), under
which The Chase Manhattan Bank, as successor to Manufacturers Hanover Trust
Company, is currently serving as Trustee (the "Trustee") to which Indenture and
all indentures supplemental thereto reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the holders of the Securities. The
Securities may be issued in one or more series, which different series may be
issued in various aggregate principal amounts, may mature at different times,
may bear interest (if any) at different rates, may be subject to different
redemption provisions (if any), may be subject to different sinking, purchase or
analogous funds (if any) and may otherwise vary as in the Indenture provided.
This Note is one of a series designated as the Medium-Term Notes, Series E, of
the Company, aggregate principal amount not to exceed $217,692,000 (the
"Notes"). The Notes are unsecured and rank pari passu with all other unsecured
and unsubordinated indebtedness of the Company. The Notes may be issued at
various times, may have different maturity dates, may bear interest at different
rates and may otherwise vary in terms.
This Note is issuable only in registered form without coupons in minimum
denominations of U.S.$1,000 and integral multiples thereof or the minimum
Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless otherwise
provided on the face hereof in accordance with the provisions of the following
two paragraphs, will not be redeemable or repayable prior to the Stated Maturity
Date.
This Note will be subject to redemption at the option of the Company on any
date on or after the Initial Redemption Date, if any, specified on the face
hereof, in whole or, from time to time in part in increments of U.S.$1,000 or
the minimum Authorized Denomination (provided that any remaining principal
amount hereof shall be at least U.S.$1,000 or such minimum Authorized
Denomination), at the Redemption Price (as defined below), together with unpaid
interest accrued thereon to the date fixed for redemption (each, a "Redemption
Date"), on written notice given no more than 60 nor less than 30 calendar days
prior to the Redemption Date and in accordance with the provisions of the
Indenture. The "Redemption Price" shall initially be the Initial Redemption
Percentage specified on the face hereof multiplied by the unpaid principal
amount of this Note to be redeemed. The Initial Redemption Percentage shall
decline at each anniversary of the Initial Redemption Date by the Annual
Redemption Percentage Reduction, if any, specified on the face hereof until the
Redemption Price is 100% of unpaid
7
<PAGE>
principal amount to be redeemed. In the event of redemption of this Note in part
only, a new Note of like tenor for the unredeemed portion hereof and otherwise
having the same terms as this Note shall be issued in the name of the holder
hereof upon the presentation and surrender hereof.
This Note will be subject to repayment by the Company at the option of the
holder hereof on the Optional Repayment Date(s), if any, specified on the face
hereof, in whole or, from time to time in part in increments of U.S.$1,000 or
the minimum Authorized Denomination (provided that any remaining principal
amount hereof shall be at least U.S.$1,000 or such minimum Authorized
Denomination), at a repayment price equal to 100% of the unpaid principal amount
to be repaid, together with unpaid interest accrued thereon to the date fixed
for repayment (each, a "Repayment Date"). For this Note to be repaid, this Note
must be received, together with the form hereon entitled "Option to Elect
Repayment" duly completed, by the Trustee at its corporate trust office not more
than 60 nor less than 30 calendar days prior to the Repayment Date. Exercise of
such repayment option by the holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note shall be issued
in the name of the holder hereof upon the presentation and surrender hereof.
If the Interest Category of this Note is specified on the face hereof as an
Original Issue Discount Note, the amount payable to the holder of this Note in
the event of redemption, repayment or acceleration of maturity of this Note will
be equal to the sum of (1) the Issue Price specified on the face hereof
(increased by any accruals of the Discount, as defined below) and, in the event
of any redemption of this Note (if applicable), multiplied by the Initial
Redemption Percentage (as adjusted by the Annual Redemption Percentage
Reduction, if applicable) and (2) any unpaid interest on this Note accrued from
the Original Issue Date to the Redemption Date, Repayment Date or date of
acceleration of maturity, as the case may be. The difference between the Issue
Price and 100% of the principal amount of this Note is referred to herein as the
"Discount."
For purposes of determining the amount of Discount that has accrued as of
any Redemption Date, Repayment Date or date of acceleration of maturity of this
Note, such Discount will be accrued so as to cause the yield on the Note to be
constant. 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 (with ratable accruals within a compounding period), a coupon rate equal
to the initial interest rate applicable to this Note and an assumption that the
maturity of this Note will not be accelerated. If the period from the Original
Issue Date to the initial Interest Payment Date (the "Initial Period") is
shorter than the compounding period for this 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 such 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 interest rate borne by this Note will be determined as follows:
(i) Unless the Interest Category of this Note is specified on the face
hereof as a "Floating Rate/Fixed Rate Note" or an "Inverse Floating
Rate Note", (or an Addendum is attached hereto or "Other/Additional
Provisions" are specified on the face hereof, in each case relating
to a different interest rate formula) this Note shall be designated
as a "Regular Floating Rate Note" and, except as set forth below or
on the face hereof, shall bear interest at the rate determined by
reference to the applicable Interest Rate Basis or Bases (a) plus or
minus the Spread, if any, and/or (b) multiplied by the Spread
Multiplier, if any, in each
8
<PAGE>
case as specified on the face hereof. Commencing on the Initial
Interest Reset Date, the rate at which interest on this Note shall
be payable shall be reset as of each Interest Reset Date specified
on the face hereof; provided, however, that the interest rate in
effect for the period, if any, from the Original Issue Date to the
Initial Interest Reset Date shall be the Initial Interest Rate.
(ii) If the Interest Category of this Note is specified on the face
hereof as a "Floating Rate/Fixed Rate Note", then, except as set
forth below or on the face hereof, this Note shall bear interest at
the rate determined by reference to the applicable Interest Rate
Basis or Bases (a) plus or minus the Spread, if any, and/or (b)
multiplied by the Spread Multiplier, if any. Commencing on the
Initial Interest Reset Date, the rate at which interest on this Note
shall be payable shall be reset as of each Interest Reset Date;
provided, however, that (y) the interest rate in effect for the
period, if any, from the Original Issue Date to the Initial Interest
Reset Date shall be the Initial Interest Rate and (z) the interest
rate in effect for the period commencing on the Fixed Rate
Commencement Date specified on the face hereof to the Maturity Date
shall be the Fixed Interest Rate specified on the face hereof or, if
no such Fixed Interest Rate is specified, the interest rate in
effect hereon on the day immediately preceding the Fixed Rate
Commencement Date.
(iii) If the Interest Category of this Note is specified on the face
hereof as an "Inverse Floating Rate Note", then, except as set forth
below or on the face hereof, this Note shall bear interest at the
Fixed Interest Rate minus the rate determined by reference to the
applicable Interest Rate Basis or Bases (a) plus or minus the
Spread, if any, and/or (b) multiplied by the Spread Multiplier, if
any; provided, however, that, unless otherwise specified on the face
hereof, the interest rate hereon shall not be less than zero.
Commencing on the Initial Interest Reset Date, the rate at which
interest on this Note shall be payable shall be reset as of each
Interest Reset Date; provided, however, that the interest rate in
effect for the period, if any, from the Original Issue Date to the
Initial Interest Reset Date shall be the Initial Interest Rate.
Unless otherwise specified on the face hereof, the rate with respect to
each Interest Rate Basis will be determined in accordance with the applicable
provisions below. Except as set forth above or on the face hereof, the interest
rate in effect on each day shall be (i) if such day is an Interest Reset Date,
the interest rate determined as of the Interest Determination Date (as defined
below) immediately preceding such Interest Reset Date or (ii) if such 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.
If any Interest Reset Date would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be postponed to the next succeeding Business
Day, except that if LIBOR is an applicable Interest Rate Basis and such Business
Day falls in the next succeeding calendar month, such Interest Reset Date shall
be the immediately preceding Business Day.
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 banking institutions
are authorized or required by law, regulation or executive order to close in The
City of New York; provided, however, that if the Specified Currency is other
than United States dollars and any payment is to be made in the Specified
Currency in accordance with the provisions hereof, such day is also not a day on
which banking institutions are authorized or required by law, regulation or
executive order to close in the Principal Financial Center (as defined below) of
the country issuing the Specified Currency (or, in the case of European Currency
Units ("ECU"), is not
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a day that appears as an ECU non-settlement day on the display designated as
"ISDE" on the Reuter Monitor Money Rates Service (or is not a day designated as
an ECU non-settlement day by the ECU Banking Association) or, if ECU non-
settlement days do not appear on that page (and are not so designated), a day
that is not a day on which payments in ECU cannot be settled in the
international interbank market); provided, further, that if LIBOR is an
applicable Interest Rate Basis, such day is also a London Business Day (as
defined below). "London Business Day" means a day on which dealings in the
Designated LIBOR Currency (as defined below) are transacted in the London
interbank market. "Principal Financial Center" means (i) the capital city of the
country issuing the Specified Currency (except as described in the immediately
preceding sentence with respect to ECU) or (ii) the capital city of the country
to which the Designated LIBOR Currency, if applicable relates (or, in the case
of ECU, Luxembourg), except, in each case, that with respect to United States
dollars, Australian dollars, Canadian dollars, Deutsche marks, Dutch guilders,
Italian lire and Swiss francs, the "Principal Financial Center" shall be The
City of New York, Sydney, Toronto, Frankfurt, Amsterdam, Milan (solely in the
case of clause (i) above) and Zurich, respectively.
The interest rate applicable to each Interest Reset Period commencing on
the related Interest Reset Date will be the rate determined (by the Calculation
Agent) as of the applicable Interest Determination Date and calculated on or
prior to the Calculation Date (as hereinafter defined), except with respect to
LIBOR and the Eleventh District Cost of Funds Rate, which will be calculated on
such Interest Determination Date. 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 immediately preceding the
applicable Interest Reset Date; the "Interest Determination Date" with respect
to the Eleventh District Cost of Funds Rate shall be the last working day of the
month immediately preceding the applicable Interest Reset Date on which the
Federal Home Loan Bank of San Francisco (the "FHLB of San Francisco") publishes
the Index (as defined below); and the "Interest Determination Date" with respect
to LIBOR shall be the second London Business Day immediately preceding the
applicable 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. The "Interest Determination Date" with respect
to the Treasury Rate shall be the day in the week in which the applicable
Interest Reset Date falls on which day Treasury Bills (as defined below) are
normally auctioned (Treasury Bills are normally sold at an auction held on
Monday of each week, unless that day is a legal holiday, in which case the
auction is normally held on the following Tuesday, except that such 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
"Interest Determination Date" shall be such preceding Friday; provided, further,
that if the Interest Determination Date would otherwise fall on an Interest
Reset Date, then such Interest Reset Date shall be postponed to the next
succeeding Business Day. If the interest rate of this Note is determined with
reference to two or more Interest Rate Bases specified on the face hereof, the
"Interest Determination Date" pertaining to this Note shall be the most recent
Business Day which is at least two Business Days prior to the applicable
Interest Reset Date on which each Interest Rate Basis is determinable. Each
Interest Rate Basis shall be determined as of such date, and the applicable
interest rate shall take effect on the related Interest Reset Date.
CD Rate. If an Interest Rate Basis for this Note is specified on the face
hereof as the CD Rate, the CD Rate shall be determined as of the applicable
Interest Determination Date (a "CD Rate Interest Determination Date") as the
rate on such date for negotiable United States dollar certificates of deposit
having the Index Maturity specified on the face hereof as published by the Board
of Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates" or any successor publication ("H.15(519)") under the
heading "CDs (Secondary Market)", or, if not published by 3:00 P.M., New York
City time, on the related Calculation Date (as defined below), the rate on such
CD Rate Interest
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Determination Date for negotiable United States dollar certificates of deposit
of the Index Maturity as published by the Federal Reserve Bank of New York in
its daily statistical release "Composite 3:30 P.M. Quotations for United States
Government Securities" or any successor publication ("Composite Quotations")
under the heading "Certificates of Deposit". If such rate is not yet published
in either H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on
the related Calculation Date, then the CD Rate on such CD Rate Interest
Determination Date will be calculated by the Calculation Agent specified on the
face hereof and will be the arithmetic mean of the secondary market offered
rates as of 10:00 A.M., New York City time, on such CD Rate Interest
Determination Date, of three leading nonbank dealers in negotiable United States
dollar certificates of deposit in The City of New York (which may include the
Agents or their affiliates) selected by the Calculation Agent for negotiable
certificates of deposit of major United States money center banks for negotiable
United States dollar certificates of deposit with a remaining maturity closest
to the Index Maturity in an amount that is representative for a single
transaction in that market at that time; provided, however, that if the dealers
so selected by the Calculation Agent are not quoting as mentioned in this
sentence, the CD Rate determined as of such CD Rate Interest Determination Date
will be the CD Rate in effect on such CD Rate Interest Determination Date.
CMT Rate. If an Interest Rate Basis for this Note is specified on the face
hereof as the CMT Rate, the CMT Rate shall be determined as of the applicable
Interest Determination Date (a "CMT Rate Interest Determination Date") as the
rate displayed on the Designated CMT Telerate Page (as defined below) 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 (as defined below) for (i) if the Designated CMT Telerate Page is
7055, the rate on such CMT Rate Interest Determination Date and (ii) if the
Designated CMT Telerate Page is 7052, the weekly or monthly average, as
specified on the face hereof, for the week or month, as applicable, ended
immediately preceding the week or the month, as applicable, in which the related
CMT Rate Interest Determination Date falls. If such rate is no longer displayed
on the relevant page or is not displayed by 3:00 P.M., New York City time, on
the related Calculation Date, then the CMT Rate for such CMT Rate Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index as published in H.15(519). If such rate is no
longer published or is not published by 3:00 P.M., New York City time, on the
related Calculation Date, then the CMT Rate on such CMT Rate Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Interest Determination Date with
respect to such 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). If such information is not provided by 3:00 P.M., New York City time,
on the related Calculation Date, then the CMT Rate on the CMT Rate Interest
Determination Date will be calculated by the Calculation Agent and will be a
yield to maturity, based on the arithmetic mean of the secondary market offered
rates side prices as of approximately 3:30 P.M., New York City time, on such CMT
Rate 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 the Agents or their affiliates) (each, a
"Reference Dealer") selected by the Calculation Agent (from five such Reference
Dealers selected by the Calculation Agent and 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. If the Calculation Agent is unable to obtain
three such Treasury Note quotations, the CMT Rate on such CMT Rate Interest
Determination Date will be calculated by the Calculation Agent and will be a
yield to maturity based on the arithmetic
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mean of the secondary market offered rates as of approximately 3:30 P.M., New
York City time, on such CMT Rate Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent and 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 U.S.$100 million. If three or four (and not
five) of such Reference Dealers are quoting as described above, then the CMT
Rate will be based on the arithmetic mean of the offered rates obtained and
neither the highest nor the lowest of such quotes will be eliminated; provided,
however, that if fewer than three Reference Dealers selected by the Calculation
Agent are quoting as mentioned herein, the CMT Rate determined as of such CMT
Rate Interest Determination Date will be the CMT Rate in effect on such CMT Rate
Interest Determination Date. If two Treasury Notes with an original maturity as
described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the Calculation Agent will
obtain quotations for the Treasury Note with the shorter remaining term to
maturity.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service (or any successor service) on the page specified on the face hereof (or
any other page as may replace such page on such service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)) for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified on the face hereof, the Designated CMT Telerate Page
shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the United States Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified on the face hereof with respect to which the CMT Rate will be
calculated. If no such maturity is specified on the face hereof, the Designated
CMT Maturity Index shall be 2 years.
Commercial Paper Rate. If an Interest Rate Basis for this Note is specified
on the face hereof as the Commercial Paper Rate, the Commercial Paper Rate shall
be determined as of the applicable Interest Determination Date (a "Commercial
Paper Rate Interest Determination Date") as the Money Market Yield (as defined
below) on such date of the rate for commercial paper having the Index Maturity
as published in H.15(519) under the heading "Commercial Paper". In the event
that such rate is not published by 3:00 P.M., New York City time, on such
Calculation Date, then the Commercial Paper Rate on such Commercial Paper Rate
Interest Determination Date will be the Money Market Yield of the rate for
commercial paper having the Index Maturity as published in Composite Quotations
under the heading "Commercial Paper" (with an Index Maturity of one month or
three months being deemed to be equivalent to an Index Maturity of 30 days or 90
days, respectively). If such rate is not yet published in either H.15(519) or
Composite Quotations by 3:00 P.M., New York City time, on such Calculation Date,
then the Commercial Paper Rate on such Commercial Paper Rate Interest
Determination Date will be calculated by the Calculation Agent and shall be the
Money Market Yield of the arithmetic mean of the offered rates at approximately
11:00 A.M., New York City time, on such Commercial Paper Rate Interest
Determination Date of three leading dealers of commercial paper in The City of
New York (which may include the Agents or their affiliates) selected by the
Calculation Agent for commercial paper having the Index Maturity placed for an
industrial issuer whose bond rating is "Aa", or the equivalent from a nationally
recognized statistical rating organization; provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Commercial Paper Rate determined as of such Commercial Paper
Rate Interest Determi nation Date will be the Commercial Paper Rate in effect on
such Commercial Paper Rate Interest Determination Date.
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"Money Market Yield" means a yield (expressed as a percentage) calculated
in accordance with the following formula:
D x 360 x 100
Money Market Yield = ---------------------
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. If an Interest Rate Basis for this
Note is specified on the face hereof as the Eleventh District Cost of Funds
Rate, the Eleventh District Cost of Funds Rate shall be determined as of the
applicable Interest Determination Date (an "Eleventh District Cost of Funds Rate
Interest Determination Date") as the rate equal to the monthly weighted average
cost of funds for the calendar month immediately preceding the month in which
such Eleventh District Cost of Funds Rate Interest Determination Date falls, as
set forth under the caption "11th District" on Telerate Page 7058 as of 11:00
A.M., San Francisco time, on such Eleventh District Cost of Funds Rate Interest
Determination Date. If such rate does not appear on Telerate Page 7058 on such
Eleventh District Cost of Funds Rate Interest Determination Date, then the
Eleventh District Cost of Funds Rate on such Eleventh District Cost of Funds
Rate Interest Determination Date shall be 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 FHLB of San
Francisco as such cost of funds for the calendar month immediately preceding
such Eleventh District Cost of Funds Rate Interest Determination Date. If the
FHLB of San Francisco fails to announce the Index on or prior to such Eleventh
District Cost of Funds Rate Interest Determination Date for the calendar month
immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date, the Eleventh District Cost of Funds Rate determined as of
such Eleventh District Cost of Funds Rate Interest Determination Date will be
the Eleventh District Cost of Funds Rate in effect on such Eleventh District
Cost of Funds Rate Interest Determination Date.
Federal Funds Rate. If an Interest Rate Basis for this Note is specified on
the face hereof as the Federal Funds Rate, the Federal Funds Rate shall be
determined as of the applicable Interest Determination Date (a "Federal Funds
Rate Interest Determination Date") as the rate on such date for United States
dollar federal funds as published in H.15(519) under the heading "Federal Funds
(Effective)" or, if not published by 3:00 P.M., New York City time, on the
Calculation Date, the rate on such Federal Funds Rate Interest Determination
Date as published in Composite Quotations under the heading "Federal
Funds/Effective Rate". If such rate is not published in either H.15(519) or
Composite Quotations by 3:00 P.M., New York City time, on the related
Calculation Date, then the Federal Funds Rate on such Federal Funds Interest
Determination Date shall be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight United States
dollar federal funds arranged by three leading brokers of federal funds
transactions in The City of New York (which may include the Agents or their
affiliates) selected by the Calculation Agent, prior to 9:00 A.M., New York City
time, on such Federal Funds Rate Interest Determination Date; provided, however,
that if the brokers so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Federal Funds Rate determined as of such Federal
Funds Rate Interest Determination Date will be the Federal Funds Rate in effect
on such Federal Funds Rate Interest Determination Date.
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LIBOR. If an Interest Rate Basis for this Note is specified on the face
hereof as LIBOR, LIBOR shall be determined by the Calculation Agent as of the
applicable Interest Determination Date (a "LIBOR Interest Determination Date")
in accordance with the following provisions:
(i) if (a) "LIBOR Reuters" is specified on the face hereof, the arithmetic
mean of the offered rates (unless the Designated LIBOR Page (as
defined below) by its terms provides only for a single rate, in which
case such single rate will be used) for deposits in the Designated
LIBOR Currency having the Index Maturity, commencing on the applicable
Interest Reset Date, that appear (or, if only a single rate is
required as aforesaid, appears) on the Designated LIBOR Page (as
defined below) as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date, or (b) "LIBOR Telerate" is specified on the face
hereof, or if neither "LIBOR Reuters" nor "LIBOR Telerate" is
specified on the face hereof as the method for calculating LIBOR, the
rate for deposits in the Designated LIBOR Currency having the Index
Maturity, commencing on such Interest Reset Date, that appears on the
Designated LIBOR Page as of 11:00 A.M., London time, on such LIBOR
Interest Determination Date. If fewer than two such offered rates so
appear, or if no such rate so appears, as applicable, LIBOR on such
LIBOR Interest Determination Date shall be determined in accordance
with the provisions described in clause (ii) below.
(ii) 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 clause (i) above, the
Calculation Agent shall request the principal London offices of each
of four major reference banks in the London interbank market, as
selected by the Calculation Agent, to provide the Calculation Agent
with its offered quotation for deposits in the Designated LIBOR
Currency for the period of the Index Maturity, commencing on the
applicable Interest Reset Date, to prime banks in the London interbank
market at approximately 11:00 A.M., London time, on such LIBOR
Interest Determination Date and in a principal amount that is
representative for a single transaction in such Designated LIBOR
Currency in such market at such time. If at least two such quotations
are so provided, then LIBOR on such LIBOR Interest Determination Date
will be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, then LIBOR on such LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M., in the applicable Principal Financial
Center, on such LIBOR Interest Determination Date by three major banks
(which may include affiliates of the Agents) in such Principal
Financial Center selected by the Calculation Agent for loans in the
Designated LIBOR Currency to leading European banks, having the Index
Maturity and in a principal amount that is representative for a single
transaction in such Designated LIBOR Currency in such market at such
time; provided, however, that if the banks so selected by the
Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined as of such LIBOR Interest Determination Date shall be LIBOR
in effect on such LIBOR Interest Determination Date.
"Designated LIBOR Currency" means the currency or composite currency
specified on the face hereof as to which LIBOR shall be calculated or, if no
such currency or composite currency is specified on the face hereof, United
States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified on the
face hereof, the display on the Reuter Monitor Money Rates Service (or any
successor service) on the page specified on the face hereof (or any other page
as may replace such page on such service) for the purpose of displaying the
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London interbank rates of major banks for the Designated LIBOR Currency, or (b)
if "LIBOR Telerate" is specified on the face hereof or neither "LIBOR Reuters"
nor "LIBOR Telerate" is specified on the face hereof as the method for
calculating LIBOR, the display on the Dow Jones Telerate Service (or any
successor service) on the page specified on the face hereof (or any other page
as may replace such page on such service) for the purpose of displaying the
London interbank rates of major banks for the Designated LIBOR Currency.
Prime Rate. If an Interest Rate Basis for this Note is specified on the
face hereof as the Prime Rate, the Prime Rate shall be determined as of the
applicable Interest Determination Date (a "Prime Rate Interest Determination
Date") as the rate on such date as such rate is published in H.15(519) under the
heading "Bank Prime Loan". If such rate is not published prior to 3:00 P.M., New
York City time, on the related Calculation Date, then the Prime Rate shall be
the arithmetic mean of the rates of interest publicly announced by each bank
that appears on the Reuters Screen USPRIME1 Page (as defined below) as such
bank's prime rate or base lending rate as in effect for such Prime Rate Interest
Determination Date. If fewer than four such rates appear on the Reuters Screen
USPRIME1 Page for such Prime Rate Interest Determination Date, the Prime Rate
shall be 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 such Prime Rate Interest Determination Date by four
major money center banks (which may include affiliates of the Agents) in The
City of New York selected by the Calculation Agent. If fewer than four such
quotations are so provided, the Prime Rate shall be the arithmetic mean of four
prime 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 such Prime Rate Interest
Determination Date as furnished in The City of New York by the major money
center banks, if any, that have provided such quotations and by a reasonable
number of substitute banks or trust companies (which may include affiliates of
the Agents) to obtain such four prime rate quotations, provided such substitute
banks or trust companies are organized and doing business under the laws of the
United States, or any State thereof, each having total equity capital of at
least U.S.$500 million and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to provide such
rate or rates; provided, however, that if the banks or trust companies so
selected by the Calculation Agent are not quoting as mentioned in this sentence,
the Prime Rate determined as of such Prime Rate Interest Determination Date will
be the Prime Rate in effect on such Prime Rate Interest Determination Date.
"Reuters Screen USPRIME1 Page" means the display on the Reuter Monitor
Money Rates Service (or any successor service) on the "USPRIME1" page (or such
other page as may replace such page on such service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
Treasury Rate. If an Interest Rate Basis for this Note is specified on the
face hereof as the Treasury Rate, the Treasury Rate shall be determined as of
the applicable Interest Determination Date (a "Treasury Rate Interest
Determination Date") as the rate from the auction held on such Treasury Rate
Interest Determination Date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the Index Maturity, as such rate is published
in H.15(519) under the heading "Treasury Bills-auction average (investment)" or,
if not published by 3:00 P.M., New York City time, on the related Calculation
Date, the auction average rate of such Treasury Bills (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) as otherwise announced by the United States Department of the
Treasury. In the event that the results of the Auction of Treasury Bills having
the Index Maturity are not reported as provided above by 3:00 P.M., New York
City time, on the related Calculation Date, or if no such Auction is held, then
the Treasury Rate shall be calculated by the Calculation Agent and shall be a
yield to maturity (expressed as a bond equivalent on the basis of a year of 365
or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean
of the secondary market bid rates, as
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of approximately 3:30 P.M., New York City time, on such Treasury Rate Interest
Determination Date, of three leading primary United States government securities
dealers (which may include the Agents or their affiliates) selected by the
Calculation Agent, for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity; provided, however, that if the dealers so
selected by the Calculation Agent are not quoting as mentioned in this sentence,
the Treasury Rate determined as of such Treasury Rate Interest Determination
Date will be the Treasury Rate in effect on such Treasury Rate Interest
Determination Date.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, in each case as specified on the face hereof. The
interest rate on this Note will in no event be higher than the maximum rate
permitted by New York law, as the same may be modified by United States law of
general application.
The Calculation Agent shall calculate the interest rate hereon on or before
each Calculation Date. The "Calculation Date", if applicable, pertaining to any
Interest Determination Date shall be the earlier of (i) the tenth calendar day
after such Interest Determination Date or, if such day is not a Business Day,
the next succeeding Business Day or (ii) the Business Day immediately preceding
the applicable Interest Payment Date or the Maturity Date, as the case may be.
At the request of the holder hereof, the Calculation Agent will provide to the
holder hereof the interest rate hereon 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.
Accrued interest hereon shall be an amount calculated by multiplying the
principal amount hereof by an accrued interest factor. Such accrued interest
factor shall be computed by adding the interest factor calculated for each day
in the applicable Interest Period. Unless otherwise specified as the Day Count
Convention on the face hereof, the interest factor for each such date shall be
computed by dividing the interest rate applicable to such day by 360 if the CD
Rate, the Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the
Federal Funds Rate, LIBOR or the Prime Rate is an applicable Interest Rate Basis
or by the actual number of days in the year if the CMT Rate or the Treasury Rate
is an applicable Interest Rate Basis. Unless otherwise specified as the Day
Count Convention on the face hereof, the interest factor for this Note, if the
interest rate is calculated with reference to two or more Interest Rate Bases,
shall be calculated in each period in the same manner as if only the Applicable
Interest Rate Basis specified on the face hereof applied.
All percentages resulting from any calculation on this Note shall be
rounded to the nearest one hundred-thousandth of a percentage point, with five
one-millionths of a percentage point rounded upwards, and all amounts used in or
resulting from such calculation on this Note shall be rounded, in the case of
United States dollars, to the nearest cent or, in the case of a Specified
Currency other than United States dollars, to the nearest unit (with one-half
cent or unit being rounded upwards).
If an Event of Default, as defined in the Indenture, shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture provides that the Company and the Trustee may enter into
supplemental indentures for certain purposes. The Indenture also contains
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than a majority in aggregate principal amount of the
Securities at the time outstanding of each series to be affected (each such
series voting as a single class), evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Securities of each such series; provided, that no
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such supplemental indenture shall, without the consent of the holder of each
outstanding Security to be affected, (i) change the Stated Maturity of the
principal of, or of any installment of principal of or interest on, any
Security, or reduce the principal amount thereof or the interest rate thereon or
any premium payable upon the redemption thereof, or change the method of
calculating the rate of interest thereon, or change any obligation of the
Company to pay certain additional amounts pursuant to the Indenture or reduce
the amount of the principal of an Original Issue Discount Security (as defined
in the Indenture) that would be due and payable upon a declaration of
acceleration of the Maturity thereof or change any Place of Payment in the
United States where, or the coin or currency in which, any Security or any
premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the State Maturity
thereof (or, in the case of redemption, on or after the Redemption Date), (ii)
reduce the percentage in principal amount of the Outstanding Securities of any
series, the consent of whose holders is required for any such supplemental
indenture, or the consent of whose holders is required for any waiver (of
compliance with certain provisions of the Indenture or certain defaults
thereunder and their consequences) provided for in the Indenture, or reduce the
requirements of the Indenture for quorum or voting, (iii) change any obligation
of the Company to maintain an office or agency in each Place of Payment and, in
certain instances as set forth in the Indenture, outside the United States or
(iv) modify certain provisions of the Indenture relating to the above and waiver
of certain Defaults (as defined in the Indenture) and covenants (other than to
increase any such percentage or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the holder of each
Outstanding Security affected thereby). It is also provided in the Indenture
that, with respect to certain Defaults or Events of Default regarding the
Securities of any series, prior to any declaration accelerating the maturity of
such Securities, the holders of a majority in aggregate principal amount
outstanding of the Securities of such series (or, in the case of certain
Defaults or Events of Default, all of the Securities ) may on behalf of the
holders of all the Securities of such series (or all of the Securities, as the
case may be) waive any such past Default or Event of Default of its
consequences. The preceding sentence shall not, however, apply to a Default in
the payment of principal of (or premium, if any) or interest on any of the
Securities or in respect of a covenant or provision of the Indenture that cannot
be modified or amended without the consent of the holder of each Security
affected. Any such consent or waiver by the holder of this Note (unless revoked
as provided in the Indenture) shall be conclusive and binding upon such holder
and upon all future holders and owners of this Note and any Notes which may be
issued in exchange or substitution herefor, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay principal, premium, if any, and interest in
respect of this Note at the times, places and rate or formula, and in the coin
or currency, herein prescribed.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, the City of New
York, State of New York, a new Note or Notes of authorized denominations for an
equal aggregate principal amount will be issued to the transferee in exchange
herefor, subject to the limitations provided in the Indenture (which include
restrictions on the transfer of global Notes), without charge except for any tax
or other governmental charge imposed in connection therewith.
Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee and any authorized agent of the Company or the Trustee may
deem and treat the registered holder hereof as the absolute owner of this Note
(whether or not this Note shall be overdue and notwithstanding any notation of
ownership or other writing hereon), for the purpose of receiving payment of, or
on account of, the
17
<PAGE>
principal hereof and, subject to the provisions on the face hereof, interest
hereon, and for all other purposes, and neither the Company nor the Trustee nor
any authorized agent of the Company or the Trustee shall be affected by any
notice to the contrary.
The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely in such State.
18
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this Note, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - Custodian
----------------------- ----------------------
(Minor)
Under Uniform Gifts to Minors Act
--------------------------------
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants
in common
Additional abbreviations may also be used though not in the above list.
19
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
| |
|______________________________|_________________________________
(Please print or typewrite name and address including postal zip code of
assignee) this Note and all rights thereunder hereby irrevocably constituting
and appointing _______________________ Attorney to transfer this Note on the
books of the Trustee, with full power of substitution in the premises.
Dated:___________________________________
*_______________________________________
* Notice: The signature(s) on this Assignment must correspond with the name(s)
as written upon the face of this Note in every particular, without alteration or
enlargement or any change whatsoever.
20
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Company
to repay this Note (or portion hereof specified below) pursuant to its terms at
a price equal to 100% of the principal amount to be repaid, together with unpaid
interest accrued hereon to the Repayment Date, to the undersigned, at
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at its corporate trust
office in the Borough of Manhattan, The City of New York, not more than 60 nor
less than 30 calendar days prior to the Repayment Date, this Note with this
"Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of U.S.$1,000 (or, if the
Specified Currency is other than United States dollars, the minimum Authorized
Denomination specified on the face hereof)) which the holder elects to have
repaid and specify the denomination or denominations (which shall be an
Authorized Denomination) of the Notes to be issued to the holder for the portion
of this Note not being repaid (in the absence of any such specification, one
such Note will be issued for the portion not being repaid).
Principal Amount
to be Repaid: $
------------------ -----------------------------------
Date:
----------------------------- Notice: The signature(s) on this
Option to Elect Repayment must
correspond with the name(s) as
written upon the face of this Note in
every particular, without alteration
or enlargement or any change
whatsoever.
21
<PAGE>
EXHIBIT 5
[SCHIFF HARDIN & WAITE LETTERHEAD]
May 9, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Northern Indiana Public Service Company Registration Statement on Form
S-3
Ladies and Gentlemen:
We are acting as counsel to Northern Indiana Public Service Company,
an Indiana corporation (the "Company"), in connection with the registration by
the Company of $217,692,000 principal amount of its Medium-Term Notes, Series E
(the "Notes"), as more fully described in the Company's Registration Statement
on Form S-3 (the "Registration Statement") to which this opinion is an exhibit.
The Notes are to be issued under an Indenture dated as of March 1, 1988 between
the Company and Manufacturers Hanover Trust Company, as Trustee, under which The
Chase Manhattan Bank, as successor to Manufacturers Hanover Trust Company, is
currently serving as Trustee (the "Trustee"), as supplemented by a First
Supplemental Indenture dated as of December 1, 1991 (the "Indenture"). In
connection with this opinion, we have examined the Articles of Incorporation and
By-Laws of the Company and the Indenture, and we have reviewed such other
corporate records, certificates and other documents, and have made such other
factual and legal investigation, as we have deemed necessary or appropriate for
the purposes of this opinion.
Based on the foregoing, it is our opinion that the Notes will be
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws affecting the enforceability of creditors' rights
generally and by general principles of equity and entitled to the benefits of
the Indenture, in accordance with the terms thereof, at such time as:
1. The Board of Directors of the Company shall have established by
resolution, not inconsistent with the Indenture, the terms of the Notes, and
such terms shall have been set forth or determined in accordance with the
requirements of the Indenture;
2. Such Notes shall have been duly executed by the Company, duly
authenticated by the Trustee pursuant to the terms of the Indenture, registered
by the registrar therefor, and delivered to the purchasers thereof upon payment
of the agreed consideration therefor; and
<PAGE>
Northern Indiana Public Service Company
May 9, 1997
Page 2
3. The Registration Statement shall have become effective under the
Securities Act of 1933, as amended, and the Notes shall have been issued as
contemplated by the Registration Statement and the procedures for sales of
securities pursuant to Rule 415 under such Act.
We do not express any opinion herein concerning any laws other than
the laws of the State of Indiana and the federal law of the United States.
We hereby consent to the filing of this opinion as Exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Opinions" in the Prospectus contained in the Registration Statement.
Respectfully Submitted,
SCHIFF HARDIN & WAITE
By: /s/ ANDREW A. KLING
--------------------------------
<PAGE>
EXHIBIT 12
Northern Indiana Public Service Company
Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Year Ended December 31,
------------ ------------ ------------ ------------ ------------
1992 1993 1994 1995 1996
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Earnings as defined in item
503(d) of Regulation S-K:
Income before interest
charges...................... $244,327,204 $257,955,210 $263,821,268 $279,174,690 $281,582,166
Adjustments-
Federal income taxes......... 60,473,904 87,723,405 99,002,295 102,046,190 77,946,521
State income tax............. 11,528,916 12,877,575 15,139,090 15,210,425 12,313,504
Deferred investment tax
credit, net................. (7,415,688) (7,363,716) (6,416,483) (7,436,556) (7,327,378)
Deferred income taxes, net... 14,503,060 1,689,174 (11,468,152) (3,246,618) 26,117,800
Federal and state income
taxes included in other
income...................... (457,234) (404,976) (10,290,622) (3,215,893) (935,215)
------------ ------------ ------------ ------------ ------------
$322,960,162 $352,476,672 $349,787,396 $382,532,238 $389,697,398
============ ============ ============ ============ ============
Fixed charges as defined in
item 503(d) of Regulation
S-K:
Interest on long-term debt.... $ 83,708,749 $ 75,343,699 $ 70,771,016 $ 72,338,838 $ 68,797,905
Other interest................ 7,956,387 7,212,618 9,550,567 8,395,030 11,224,693
Amortization of premium,
reacquisition premium,
discount and expense
on debt, net................. 3,207,700 3,294,763 3,597,316 4,119,220 4,249,708
Interest portion of rent
expense...................... 2,161,202 2,696,098 2,993,998 3,206,302 3,031,771
------------ ------------ ------------ ------------ ------------
$97,034,038 $ 88,547,178 $ 86,912,897 $ 88,059,390 $ 87,304,077
============ ============ ============ ============ ============
Plus preferred stock dividends:
Preferred dividend
requirements................. 10,658,424 10,341,006 9,912,759 9,046,207 8,711,985
Preferred dividend
requirements factor.......... 1.52 1.54 1.47 1.54 1.54
------------ ------------ ------------ ------------ ------------
Preferred dividend
requirements................. 16,200,804 15,925,149 14,571,756 13,931,159 13,416,457
Fixed charges................. 97,034,038 88,547,178 86,912,897 88,059,390 87,304,077
------------ ------------ ------------ ------------ ------------
$113,234,842 $104,472,327 $101,484,653 $101,990,549 $100,720,534
============ ============ ============ ============ ============
Ratio of earnings to fixed
charges....................... 2.85 3.37 3.45 3.75 3.87
</TABLE>
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our reports dated January 28, 1997,
included in the annual report on Form 10-K for Northern Indiana Public Service
Company for the year ended December 31, 1996 and to all references made to our
Firm included in this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois
May 9, 1997
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Steven C. Beering, hereby
constitute and appoint Jerry M. Springer and Arthur A. Paquin, or either of
them, my true and lawful attorneys and agents, with full power of substitution
and resubstitution, to execute in my name and on my behalf, in all capacities as
a Director of Northern Indiana Public Service Company ("Corporation"), a
Registration Statement on Form S-3 and any amendments thereto (including,
without limitation, post-effective amendments pursuant to Rule 462(b) under the
Securities Act of 1933, as amended) to be filed with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1933,
as amended, of up to $217,692,000 aggregate principal amount of Medium Term
Notes, Series E, to file such Registration Statement with the Securities and
Exchange Commission and to comply with the undertakings of the Corporation made
in connection with such Registration Statement; and I hereby ratify and confirm
all that said attorneys, or either of them, have done or shall lawfully do by
virtue of this Power of Attorney.
DATED: JANUARY 30, 1997 /s/ STEVEN C. BEERING
------------------ -------------------------
Steven C. Beering
<PAGE>
EXHIBIT 24.2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Arthur J. Decio, hereby constitute
and appoint Jerry M. Springer and Arthur A. Paquin, or either of them, my true
and lawful attorneys and agents, with full power of substitution and
resubstitution, to execute in my name and on my behalf, in all capacities as a
Director of Northern Indiana Public Service Company ("Corporation"), a
Registration Statement on Form S-3 and any amendments thereto (including,
without limitation, post-effective amendments pursuant to Rule 462(b) under the
Securities Act of 1933, as amended) to be filed with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1933,
as amended, of up to $217,692,000 aggregate principal amount of Medium Term
Notes, Series E, to file such Registration Statement with the Securities and
Exchange Commission and to comply with the undertakings of the Corporation made
in connection with such Registration Statement; and I hereby ratify and confirm
all that said attorneys, or either of them, have done or shall lawfully do by
virtue of this Power of Attorney.
DATED: JANUARY 30, 1997 /s/ ARTHUR J. DECIO
------------------ -------------------------
Arthur J. Decio
<PAGE>
EXHIBIT 24.3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Ernestine M. Raclin, hereby
constitute and appoint Jerry M. Springer and Arthur A. Paquin, or either of
them, my true and lawful attorneys and agents, with full power of substitution
and resubstitution, to execute in my name and on my behalf, in all capacities as
a Director of Northern Indiana Public Service Company ("Corporation"), a
Registration Statement on Form S-3 and any amendments thereto (including,
without limitation, post-effective amendments pursuant to Rule 462(b) under the
Securities Act of 1933, as amended) to be filed with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1933,
as amended, of up to $217,692,000 aggregate principal amount of Medium Term
Notes, Series E, to file such Registration Statement with the Securities and
Exchange Commission and to comply with the undertakings of the Corporation made
in connection with such Registration Statement; and I hereby ratify and confirm
all that said attorneys, or either of them, have done or shall lawfully do by
virtue of this Power of Attorney.
DATED: JANUARY 30, 1997 /s/ ERNESTINE M. RACLIN
------------------ -------------------------
Ernestine M. Raclin
<PAGE>
EXHIBIT 24.4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Denis E. Ribordy, hereby
constitute and appoint Jerry M. Springer and Arthur A. Paquin, or either of
them, my true and lawful attorneys and agents, with full power of substitution
and resubstitution, to execute in my name and on my behalf, in all capacities as
a Director of Northern Indiana Public Service Company ("Corporation"), a
Registration Statement on Form S-3 and any amendments thereto (including,
without limitation, post-effective amendments pursuant to Rule 462(b) under the
Securities Act of 1933, as amended) to be filed with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1933,
as amended, of up to $217,692,000 aggregate principal amount of Medium Term
Notes, Series E, to file such Registration Statement with the Securities and
Exchange Commission and to comply with the undertakings of the Corporation made
in connection with such Registration Statement; and I hereby ratify and confirm
all that said attorneys, or either of them, have done or shall lawfully do by
virtue of this Power of Attorney.
DATED: JANUARY 30, 1997 /s/ DENIS E. RIBORDY
------------------ -------------------------
Denis E. Ribordy
<PAGE>
EXHIBIT 24.5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Ian M. Rolland, hereby constitute
and appoint Jerry M. Springer and Arthur A. Paquin, or either of them, my true
and lawful attorneys and agents, with full power of substitution and
resubstitution, to execute in my name and on my behalf, in all capacities as a
Director of Northern Indiana Public Service Company ("Corporation"), a
Registration Statement on Form S-3 and any amendments thereto (including,
without limitation, post-effective amendments pursuant to Rule 462(b) under the
Securities Act of 1933, as amended) to be filed with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1933,
as amended, of up to $217,692,000 aggregate principal amount of Debt Securities
of Medium Term Notes, Series E, to file such Registration Statement with the
Securities and Exchange Commission and to comply with the undertakings of the
Corporation made in connection with such Registration Statement; and I hereby
ratify and confirm all that said attorneys, or either of them, have done or
shall lawfully do by virtue of this Power of Attorney.
DATED: JANUARY 30, 1997 /s/ IAN M. ROLLAND
------------------ -------------------------
Ian M. Rolland
<PAGE>
EXHIBIT 24.6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Edmund A. Schroeder, hereby
constitute and appoint Jerry M. Springer and Arthur A. Paquin, or either of
them, my true and lawful attorneys and agents, with full power of substitution
and resubstitution, to execute in my name and on my behalf, in all capacities as
a Director of Northern Indiana Public Service Company ("Corporation"), a
Registration Statement on Form S-3 and any amendments thereto (including,
without limitation, post-effective amendments pursuant to Rule 462(b) under the
Securities Act of 1933, as amended) to be filed with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1933,
as amended, of up to $217,692,000 aggregate principal amount of Debt Securities
of Medium Term Notes, Series E, to file such Registration Statement with the
Securities and Exchange Commission and to comply with the undertakings of the
Corporation made in connection with such Registration Statement; and I hereby
ratify and confirm all that said attorneys, or either of them, have done or
shall lawfully do by virtue of this Power of Attorney.
DATED: JANUARY 31, 1997 /s/ EDMUND A. SCHROER
------------------ -------------------------
Edmund A. Schroer
<PAGE>
EXHIBIT 24.7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, John W. Thompson, hereby
constitute and appoint Jerry M. Springer and Arthur A. Paquin, or either of
them, my true and lawful attorneys and agents, with full power of substitution
and resubstitution, to execute in my name and on my behalf, in all capacities as
a Director of Northern Indiana Public Service Company ("Corporation"), a
Registration Statement on Form S-3 and any amendments thereto (including,
without limitation, post-effective amendments pursuant to Rule 462(b) under the
Securities Act of 1933, as amended) to be filed with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1933,
as amended, of up to $217,692,000 aggregate principal amount of Medium Term
Notes, Series E, to file such Registration Statement with the Securities and
Exchange Commission and to comply with the undertakings of the Corporation made
in connection with such Registration Statement; and I hereby ratify and confirm
all that said attorneys, or either of them, have done or shall lawfully do by
virtue of this Power of Attorney.
DATED: JANUARY 30, 1997 /S/ JOHN W. THOMPSON
------------------ -------------------------
John W. Thompson
<PAGE>
EXHIBIT 24.8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, John J. Welsh, hereby constitute
and appoint Jerry M. Springer and Arthur A. Paquin, or either of them, my true
and lawful attorneys and agents, with full power of substitution and
resubstitution, to execute in my name and on my behalf, in all capacities as a
Director of Northern Indiana Public Service Company ("Corporation"), a
Registration Statement on Form S-3 and any amendments thereto (including,
without limitation, post-effective amendments pursuant to Rule 462(b) under the
Securities Act of 1933, as amended) to be filed with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1933,
as amended, of up to $217,692,000 aggregate principal amount of Medium Term
Notes, Series E, to file such Registration Statement with the Securities and
Exchange Commission and to comply with the undertakings of the Corporation made
in connection with such Registration Statement; and I hereby ratify and confirm
all that said attorneys, or either of them, have done or shall lawfully do by
virtue of this Power of Attorney.
DATED: JANUARY 30, 1997 /s/ ROBERT J. WELSH
------------------ -------------------------
Robert J. Welsh
