<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 25, 1997
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
NIPSCO CAPITAL MARKETS, INC. NIPSCO INDUSTRIES, INC.
AS ISSUER AND REGISTRANT OF AS ISSUER AND REGISTRANT OF OBLIGATIONS
DEBT SECURITIES PURSUANT TO THE SUPPORT AGREEMENT
(EXACT NAME OF REGISTRANT AS SPECIFIED (EXACT NAME OF REGISTRANT AS SPECIFIED
IN ITS CHARTER) IN ITS CHARTER)
INDIANA INDIANA
(STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION)
35-1762940 35-1719974
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
5265 HOHMAN AVENUE
HAMMOND, INDIANA 46320
(219) 853-5200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
--------------
JERRY M. SPRINGER
NIPSCO INDUSTRIES, INC.
5265 HOHMAN AVENUE
HAMMOND, INDIANA 46320
(219) 853-5353
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES OF COMMUNICATIONS TO:
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) 876-1000 (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. [X]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities.................... $300,000,000 100% $300,000,000 $90,909.09
- ----------------------------------------------------------------------------------------------------
Obligations Pursuant to the Support
Agreement......................... (1)
</TABLE>
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(1) No separate consideration will be received for the obligations pursuant to
the Support Agreement.
--------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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 STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1997
$300,000,000
NIPSCO CAPITAL MARKETS, INC.
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
-----------
ENTITLED TO THE BENEFIT OF A SUPPORT AGREEMENT
PROVIDING FOR THE PAYMENT OF PRINCIPAL AND INTEREST BY
NIPSCO INDUSTRIES, INC.
-----------
NIPSCO Capital Markets, Inc. (the "Company") may offer from time to time up
to $300,000,000 aggregate principal amount, or the equivalent thereof in one or
more foreign or composite currencies, of its Medium-Term Notes due nine months
or more from date of issue (the "Notes"). Such aggregate principal amount is
subject to
(Continued on following page)
-----------
SEE "RISK FACTORS" COMMENCING ON PAGE S-3 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 SUPPLEMENT, THE PROSPECTUS OR ANY
SUPPLEMENT HERETO. 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% .125%-.750% 99.875%-99.250%
Total(4).......... $300,000,000 $375,000--$2,250,000 $299,625,000--$297,750,000
</TABLE>
- -----
(1) Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Morgan Stanley & Co. Incorporated (the "Agents"),
individually or in a syndicate, may purchase Notes, as principal, from the
Company 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. 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 (as described below)
of a Note of identical maturity. If agreed to by the Company and an Agent,
such Agent may 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 .125% to .750% of
the principal amount of a Note, depending upon its stated maturity, sold
through an Agent. Commissions with respect to Notes with stated maturities
in excess of 30 years that are sold through such Agent will be negotiated
between the Company and such Agent at the time of such sale. See "Plan of
Distribution."
(2) The Company has agreed to indemnify the Agents against, and to provide
contribution with respect to, certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Plan of Distribution."
(3) Before deducting expenses payable by the Company estimated at $255,400.
(4) Or the equivalent thereof in one or more foreign or composite currencies.
-----------
The Notes are being offered on a continuing basis by the Company to or
through the Agents. Unless otherwise specified in the applicable Pricing
Supplement, the Notes will not be listed on any securities exchange. There is
no assurance that the Notes offered hereby will be sold or, if sold, that there
will be a secondary market for the Notes or liquidity in the secondary market
if one develops. The Company reserves the right to cancel or modify the offer
made hereby without notice. The Company or an Agent, if it solicits the offer
on an agency basis, may reject any offer to purchase Notes in whole or in part.
See "Plan of Distribution."
-----------
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
-----------
The date of this Prospectus Supplement is , 1997.
<PAGE>
(Continued from previous page)
reduction as a result of the sale by the Company of other Debt Securities
described in the accompanying Prospectus. Each Note will mature on any day
nine months or more from the date of issue, as specified in the applicable
pricing supplement hereto (each, a "Pricing Supplement"), and may be subject
to redemption at the option of the Company or repayment at the option of the
Holder thereof, in each case, in whole or in part, prior to its Stated
Maturity Date, if specified in the applicable Pricing Supplement. In addition,
each Note will be denominated and/or payable in United States dollars or a
foreign or composite currency, as specified in the applicable Pricing
Supplement. The Notes, other than Foreign Currency Notes, will be issued in
minimum denominations of $1,000 and integral multiples thereof, unless
otherwise specified in the applicable Pricing Supplement, while Foreign
Currency Notes will be issued in the minimum denominations specified in the
applicable Pricing Supplement.
The Company may issue Notes that bear interest at fixed rates ("Fixed Rate
Notes") or at floating rates ("Floating Rate Notes"). The applicable Pricing
Supplement will specify whether a Floating Rate Note is a Regular Floating
Rate Note, a Floating Rate/Fixed Rate Note or an Inverse Floating Rate Note
and whether the rate of interest thereon is determined by reference to one or
more of the CD Rate, the CMT Rate, the Commercial Paper Rate, the Eleventh
District Cost of Funds Rate, the Federal Funds Rate, LIBOR, the Prime Rate or
the Treasury Rate (each, an "Interest Rate Basis"), or any other interest rate
basis or formula, as adjusted by any Spread and/or Spread Multiplier. Interest
on each Floating Rate Note will accrue from its date of issue and, unless
otherwise specified in the applicable Pricing Supplement, will be payable
monthly, quarterly, semiannually or annually in arrears, as specified in the
applicable Pricing Supplement, and on the Maturity Date. Unless otherwise
specified in the applicable Pricing Supplement, the rate of interest on each
Floating Rate Note will be reset daily, weekly, monthly, quarterly,
semiannually or annually, as specified in the applicable Pricing Supplement.
Interest on each Fixed Rate Note will accrue from its date of issue and,
unless otherwise specified in the applicable Pricing Supplement, will be
payable semiannually in arrears on March 15 and September 15 of each year and
on the Maturity Date. The Company may also issue Discount Notes, Indexed Notes
and Amortizing Notes.
The interest rate, or formula for the determination of the interest rate, if
any, applicable to each Note and the other variable terms thereof will be
established by the Company on the date of issue of such Note and will be
specified in the applicable Pricing Supplement. Interest rates or formulas and
other terms of Notes are subject to change by the Company, 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 in book-entry form (a "Book-Entry Note") or in
fully registered certificated form (a "Certificated Note"), as specified in
the applicable Pricing Supplement. Each Book-Entry Note will be represented by
one or more fully registered global securities (the "Global Securities")
deposited with or on behalf of The Depository Trust Company (or such other
depositary identified in the applicable Pricing Supplement) (the "Depositary")
and registered in the name of the Depositary or the Depositary's nominee.
Interests in the Global Securities will be shown on, and transfers thereof
will be effected only through, records maintained by the Depositary (with
respect to its participants) and the Depositary's participants (with respect
to beneficial owners). Except in limited circumstances, Book-Entry Notes will
not be exchangeable for Certificated Notes.
S-2
<PAGE>
IN CONNECTION WITH AN OFFERING OF NOTES PURCHASED BY ONE OR MORE AGENTS AS
PRINCIPAL ON A FIXED OFFERING PRICE BASIS, SUCH AGENT(S) MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
RISK FACTORS
This Prospectus Supplement does not describe all of the risks of an
investment in Notes, whether resulting from such 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 Supplement 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 such Notes and the suitability of
investing in such Notes in light of their particular circumstances. Such Notes
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 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 that expected by the holders of 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 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 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
S-3
<PAGE>
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 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 (as defined under "Description of
Notes--General") 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.
S-4
<PAGE>
DESCRIPTION OF NOTES
The Notes will be issued as a series of Debt Securities under an Indenture,
dated as of February 14, 1997, as amended or modified from time to time (the
"Indenture"), between the Company and The Chase Manhattan Bank, as trustee
(the "Trustee"). The Indenture is subject to, and governed by, the Trust
Indenture Act of 1939, as amended. The following summary of certain provisions
of the Notes and the Indenture does not purport to be complete and is
qualified in its entirety by reference to the actual provisions of the Notes
and the Indenture. Capitalized terms used but not defined herein shall have
the meanings given to them in the accompanying Prospectus, the Notes or the
Indenture, as the case may be. The term "Debt Securities," as used in this
Prospectus Supplement, refers to all debt securities, including the Notes,
issued and issuable from time to time under the Indenture. The following
description of Notes will apply to each Note offered hereby unless otherwise
specified in the applicable Pricing Supplement.
GENERAL
All Debt Securities, including the 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 Debt Securities that may be issued thereunder
and Debt Securities 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 Notes or other Debt
Securities under the Indenture in addition to the $300,000,000 aggregate
principal of Notes offered hereby.
The Notes are currently limited to up to $300,000,000 aggregate principal
amount, or the equivalent thereof in one or more foreign or composite
currencies. Each Note will mature on any day nine months or more 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,
if any, and Interest, if any." 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").
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
S-5
<PAGE>
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 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 Securities 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
S-6
<PAGE>
the country issuing the Specified Currency (unless the Specified Currency is
European Currency Units ("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 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 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).
REDEMPTION AT THE OPTION OF THE COMPANY
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. The Notes will be redeemable at the
option of the Company prior to the Stated Maturity Date only if an Initial
Redemption Date is specified in the applicable Pricing Supplement. If so
specified, the Notes will be subject to redemption at the option of the
Company on any date on and after the applicable Initial Redemption Date in
whole or from time to time in part in increments of $1,000 or such other
minimum denomination specified in such Pricing Supplement (provided that any
remaining principal amount thereof shall be at least $1,000 or such minimum
denomination), at the applicable Redemption Price (as hereinafter defined),
together with unpaid interest accrued thereon to the date of redemption, on
written notice given to the Holders thereof not more than 60 nor less than 30
calendar days prior to the date of redemption and in accordance with the
provisions of the Indenture. "Redemption Price", with respect to a Note, means
an amount equal to the Initial Redemption Percentage specified in the
applicable Pricing Supplement (as adjusted by the Annual Redemption Percentage
Reduction, if applicable) multiplied by the unpaid principal amount to be
redeemed. The Initial Redemption Percentage, if any, applicable to a Note
shall decline at each anniversary of the Initial Redemption Date by an amount
equal to the applicable Annual Redemption Percentage Reduction, if any, until
the Redemption Price is equal to 100% of the unpaid principal amount to be
redeemed. For a discussion of the redemption of Discount Notes, see "--
Discount Notes."
REPAYMENT AT THE OPTION OF THE HOLDER
The Notes will be repayable by the Company at the option of the Holders
thereof prior to the Stated Maturity Date only if one or more Optional
Repayment Dates are specified in the applicable Pricing Supplement. If so
specified, the Notes will be subject to repayment at the option of the Holders
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thereof on any Optional Repayment Date in whole or from time to time in part
in increments of $1,000 or such other minimum denomination specified in the
applicable Pricing Supplement (provided that any remaining principal amount
thereof shall be at least $1,000 or such other minimum 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 of repayment. For
any Note to be repaid, such Note must be received, together with the form
thereon entitled "Option to Elect Repayment" duly completed, by the Trustee at
its office maintained for such purpose in the Borough of Manhattan, The City
of New York, currently the corporate trust office of the Trustee, not more
than 60 nor less than 30 calendar days prior to the date of repayment.
Exercise of such repayment option by the Holder will be irrevocable. For a
discussion of the repayment of Discount Notes, see "--Discount Notes."
Only the Depositary may exercise the repayment option in respect of Global
Securities representing Book-Entry Notes. Accordingly, Beneficial Owners (as
hereinafter defined) of Global Securities that desire to have all or any
portion of the Book-Entry Notes represented by such Global Securities repaid
must instruct the Participant (as hereinafter defined) through which they own
their interest to direct the Depositary to exercise the repayment option on
their behalf by delivering the related Global Security and duly completed
election form to the Trustee as aforesaid. In order to ensure that such Global
Security and election form are received by the Trustee on a particular day,
the applicable Beneficial Owner must so instruct the Participant through which
it owns its interest before such Participant's deadline for accepting
instructions for that day. Different firms may have different deadlines for
accepting instructions from their customers. Accordingly, Beneficial Owners
should consult the Participants through which they own their interest for the
respective deadlines for such Participants. All instructions given to
Participants from Beneficial Owners of Global Securities relating to the
option to elect repayment shall be irrevocable. In addition, at the time such
instructions are given, each such Beneficial Owner shall cause the Participant
through which it owns its interest to transfer such Beneficial Owner's
interest in the Global Security or Securities representing the related Book-
Entry Notes, on the Depositary's records, to the Trustee. See "--Book-Entry
Notes."
If applicable, the Company will comply with the requirements of Section
14(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules promulgated thereunder, and any other securities laws or
regulations in connection with any such repayment.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may, at the
discretion of the Company, be held, resold or surrendered to the Trustee for
cancellation.
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
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(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" 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
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(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 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 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 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
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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 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
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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 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
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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 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
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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 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.
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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 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
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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 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 Reuter 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
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<PAGE>
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
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 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. 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
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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.
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." 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."
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<PAGE>
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 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
The Company has established a depositary arrangement with The Depository
Trust Company with respect to the Book-Entry Notes, the terms of which are
summarized below. Any additional or differing terms of the depositary
arrangement with respect to the Book-Entry Notes will be described in the
applicable Pricing Supplement.
Upon issuance, all Book-Entry Notes of like tenor and terms up to
$200,000,000 aggregate principal amount will be represented by a single Global
Security. Each Global Security representing Book-Entry Notes will be deposited
with, or on behalf of, the Depositary and will be registered in the name of
the Depositary or a nominee of the Depositary. No Global Security may be
transferred except as a whole by a nominee of the Depositary to the Depositary
or to another nominee of the Depositary, or by the Depositary or such nominee
to a successor of the Depositary or a nominee of such successor.
So long as the Depositary or its nominee is the registered owner of a Global
Security, the Depositary or its nominee, as the case may be, will be the sole
Holder of the Book-Entry Notes represented thereby for all purposes under the
Indenture. Except as otherwise provided below, the Beneficial Owners of the
Global Security or Securities representing Book-Entry Notes will not be
entitled to receive physical delivery of Certificated Notes and will not be
considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing Book-Entry Notes shall be exchangeable or
transferable. Accordingly, each Beneficial Owner must rely on the procedures
of the Depositary and, if such Beneficial Owner is not a Participant, on the
procedures of the Participant through which such Beneficial Owner owns its
interest in order to exercise any rights of a Holder under such Global
Security or the Indenture. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such limits and laws may impair the ability to transfer
beneficial interests in a Global Security representing Book-Entry Notes.
Unless otherwise specified in the applicable Pricing Supplement, each Global
Security representing Book-Entry Notes will be exchangeable for Certificated
Notes of like tenor and terms and of differing authorized denominations in a
like aggregate principal amount, only if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for the
Global Securities or the Company becomes aware that the Depositary has ceased
to be a clearing agency registered under the Exchange Act and, in any such
case, the Company shall not have appointed a successor to the Depositary
within 90 days thereafter, (ii) the Company, in its sole discretion,
determines that the Global Securities shall be exchangeable for Certificated
Notes or (iii) an Event of Default (or event which with the giving of notice
or lapse of time would constitute an Event of Default) shall have occurred and
be continuing with respect to the Notes under the Indenture. Upon any such
exchange, the Certificated Notes shall be registered in the names of the
Beneficial Owners of the Global Security or Securities representing Book-Entry
Notes, which names shall be provided by the Depositary's relevant Participants
(as identified by the Depositary) to the Trustee.
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<PAGE>
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 Security 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
Security will be issued with respect to each $200,000,000 of principal
amount and an additional Global Security 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 Securities and Exchange Commission.
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
Security ("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 purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their
holdings, from the Direct Participants or Indirect Participants through
which such Beneficial Owner entered into the transaction. Transfers of
ownership interests in a Global Security representing Book-Entry Notes are
to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners of a Global Security
representing Book-Entry Notes will not receive Certificated Notes
representing their ownership interests therein, except in the event that
use of the book-entry system for such Book-Entry Notes is discontinued.
To facilitate subsequent transfers, all Global Securities 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 Securities 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 Securities 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
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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 Securities 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 Securities 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
Security or Securities 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 Security or
Securities representing such Book-Entry Notes are transferred by Direct
Participants on the Depositary's records.
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.
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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
Supplement 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.
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 Security or Securities which elects to receive payments of
principal, premium, if any, and/or interest, if any, in the Specified Currency
must
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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 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.
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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") 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
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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 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
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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 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
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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 (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.
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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 substantially differ from the timing and character of
income, gain or loss reported on a contingent payment debt instrument under
general principles of current United States Federal income tax law.
Specifically, the CPDI Regulations generally require a U.S. Holder of such an
instrument to include future contingent and noncontingent 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 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
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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
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.
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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 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.
S-30
<PAGE>
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
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
S-31
<PAGE>
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 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 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)
S-32
<PAGE>
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.
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 .125% to .750% of the principal amount of each Note, depending
upon its stated maturity, sold through such Agent as an agent of the Company.
Commissions with respect to Notes with stated maturities in excess of 30 years
that are sold through an Agent as an agent of the Company will be negotiated
between the Company and such Agent at the time of such sale. The Company may
also sell Notes directly to purchasers in those jurisdictions in which it is
permitted to do so and 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 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.
S-33
<PAGE>
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.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (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.
From time to time, the Company may issue and sell other Debt Securities
described in the accompanying Prospectus, and the amount of Notes offered
hereby is subject to reduction as a result of such sales.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for the Company
by Schiff Hardin & Waite, Chicago, Illinois. See "Legal Opinions" in the
Prospectus. Certain legal matters relating to the Notes offered hereby will be
passed upon for the Agents by Sonnenschein Nath & Rosenthal, Chicago,
Illinois.
S-34
<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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED , 1997
$300,000,000
NIPSCO CAPITAL MARKETS, INC.
DEBT SECURITIES
ENTITLED TO THE BENEFIT OF A SUPPORT AGREEMENT
PROVIDING FOR THE PAYMENT OF PRINCIPAL AND INTEREST BY
NIPSCO INDUSTRIES, INC.
NIPSCO Capital Markets, Inc., an Indiana corporation ("Capital"), may offer
from time to time up to $300,000,000 aggregate initial offering price, or the
equivalent thereof in one or more foreign or composite currencies, of its
unsecured debt securities (the "Debt Securities"). The Debt Securities offered
pursuant to this Prospectus may be issued in one or more series or in amounts,
at prices and on terms to be determined at or prior to the time of sale and set
forth in one or more supplements to this Prospectus (each, a "Prospectus
Supplement"). The Debt Securities are entitled to the benefits of a Support
Agreement, dated as of April 4, 1989 (as amended, the "Support Agreement"),
between Capital and its parent company, NIPSCO Industries, Inc. ("Industries"),
providing for the payment of principal and interest, if any, on the Debt
Securities in the event of default of Capital.
Certain specific terms of the particular Debt Securities in respect of which
this Prospectus is being delivered will be set forth in the accompanying
Prospectus Supplement, including, where applicable, the initial public offering
price of the Debt Securities, the net proceeds thereof to Capital, any listing
of such Debt Securities on a securities exchange and any other special terms.
The Prospectus Supplement will set forth with regard to the Debt Securities
being offered, without limitation, the specific designation, priority of
payment, aggregate principal amount, authorized denominations, maturity, any
interest rate (which may be fixed or variable) or method of calculation of
interest and date or dates of payment of any interest, any premium, the place
or places where principal of, premium, if any, and any interest on the Debt
Securities will be payable, any terms of redemption at the option of Capital or
the holder of any Debt Securities, any terms for sinking fund payments, the
currency or currencies, composite currency, currency unit or currency units
(collectively, the "Currency") of denomination and payment, any terms for
conversion or exchange and any other terms in connection with the offering and
sale of Debt Securities in respect of which this Prospectus is delivered.
-----------
THESE DEBT 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.
-----------
Capital may sell the Debt Securities directly to other purchasers or through
agents and may also sell the Debt Securities to or through underwriters or
dealers. See "Plan of Distribution." The Prospectus Supplement will set forth
the names of any agents, underwriters or dealers involved in the sale of the
Debt Securities in respect of which this Prospectus is being delivered and any
applicable fee, commission and discount arrangements with them. See "Plan of
Distribution" for a description of possible indemnification arrangements among
Capital and Industries and any agents, underwriters or dealers.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF THE DEBT SECURITIES
WITHOUT DELIVERY OF ONE OR MORE PROSPECTUS SUPPLEMENTS.
-----------
The date of this Prospectus is , 1997.
<PAGE>
AVAILABLE INFORMATION
Capital and Industries have filed with the Securities and Exchange
Commission (the "Commission") 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 Debt
Securities. 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 Commission.
Statements made in this Prospectus as to the contents 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.
Industries 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
Commission. Reports, proxy statements and other information filed by
Industries with the Commission may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission'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 Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
material also may be accessed electronically by means of the Commission's home
page on the Internet at http://www.sec.gov. Such reports, proxy statements and
other information concerning Industries may also be inspected at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005, the
Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois 60605, and
the Pacific Stock Exchange, 301 Pine Street, San Francisco, California 94104,
on which exchanges certain of Industries' securities are listed.
On September 25, 1992, the staff of the Commission informed Industries and
Capital by letter that it would not recommend enforcement action to the
Commission if Capital did not file periodic reports pursuant to Sections 13
and 15(d) of the Exchange Act, subject to Industries' compliance with the
conditions set forth therein. In reliance upon such letter, no documents have
been filed or will be filed by Capital under the Exchange Act. Capital does
not intend to issue any periodic or other reports to holders of the Debt
Securities. Capital has been advised by the Commission's staff that financial
information regarding Capital need not be included in any registration
statement on Form S-3 filed by Capital and Industries with respect to the Debt
Securities and the Support Agreement.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by Industries with the Commission are
incorporated herein by reference:
(a) Industries' Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
(b) Industries' Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996; and
(c) Industries' Current Report on Form 8-K as filed on February 14, 1997.
All documents subsequently filed by Industries pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering of the Debt Securities shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or
2
<PAGE>
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
INDUSTRIES WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, ON THE
WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS
REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED IN THIS PROSPECTUS BY
REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY
INCORPORATED BY REFERENCE INTO THE INFORMATION THAT THE PROSPECTUS
INCORPORATES. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO NINA M. RAUSCH,
SECRETARY, NIPSCO INDUSTRIES, INC., 5265 HOHMAN AVENUE, HAMMOND, INDIANA 46320,
TELEPHONE NUMBER (219) 853-5199.
THE COMPANIES
CAPITAL
Capital was incorporated in Indiana in 1989. Capital was organized by
Industries to engage in financing activities that provide funds for use in
Industries' business operations and those of its direct and indirect wholly-
owned subsidiaries, excluding Northern Indiana Public Service Company
("Northern Indiana"). Industries owns all of the 1,000 authorized capital
shares of Capital.
On April 4, 1989, Capital and Industries entered into the Support Agreement,
which subsequently was amended as of May 15, 1989, December 10, 1990, and
February 14, 1991. Under the Support Agreement, Industries has agreed, among
other things, to ensure the timely payment of principal, premium, if any, and
interest owed on any debt securities issued by Capital, with the limitation
that no holder of such debt securities will have recourse to or against the
stock or assets of Northern Indiana, or any interest of Industries or Capital
therein. See "Description of the Support Agreement."
On March 27, 1991, the Commission issued an order pursuant to Section 6(c) of
the Investment Company Act of 1940, as amended (the "Investment Company Act"),
granting an exemption to Capital from all of the provisions of the Investment
Company Act, subject to Capital's compliance with the conditions set forth
therein.
The principal executive offices of Capital are located at 5265 Hohman Avenue,
Hammond, Indiana 46320. Its telephone number is (219) 853-5200.
INDUSTRIES
Industries is an Indiana corporation, incorporated in 1987, which serves as
the holding company for a number of wholly-owned subsidiaries, including three
public utility operating companies: Northern Indiana, Kokomo Gas and Fuel
Company ("Kokomo Gas") and Northern Indiana Fuel and Light Company, Inc.
("NIFL"). In addition to Capital, Industries has two other major non-utility
subsidiaries, NIPSCO Development Company, Inc. and NIPSCO Energy Services, Inc.
The principal executive offices of Industries are located at 5265 Hohman
Avenue, Hammond, Indiana 46320, and its telephone number is (219) 853-5200.
Northern Indiana, Industries' largest and dominant subsidiary, was
incorporated in Indiana in 1912 and supplies electricity 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, it supplied approximately 411,500 customers with electricity and
approximately 653,000 customers with natural gas. For the fiscal year ended
December 31, 1996, about 58% of its revenues were derived from the sale of
electricity and about 42% from the sale and transportation of
3
<PAGE>
natural gas. Kokomo Gas, which was incorporated in Indiana in 1917, and NIFL,
which was incorporated in Indiana in 1906, are both engaged in supplying
natural gas to the public in service territories contiguous to Northern
Indiana's service territory. At December 31, 1996, Kokomo Gas and NIFL served
approximately 32,900 and 32,400 customers, respectively.
Industries expects to complete the acquisition of IWC Resources Corporation,
an Indiana corporation ("IWC Resources"), on or about March 31, 1997 for
approximately $290,000,000. See "Use of Proceeds" below. IWC Resources is a
holding company which owns and operates seven subsidiaries, including two
regulated water utility companies which supply water to approximately 240,000
customers for residential, commercial and industrial uses, and fire protection
service, in Indianapolis, Indiana, and surrounding areas. Upon completion of
the acquisition, IWC Resources will be a wholly-owned subsidiary of Industries.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth Industries' 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. 3.21x 3.30x 3.10x 3.00x 2.74x
</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, the percentage of rental expense on operating leases deemed
representative of the interest factor, and preferred stock dividend
requirements of majority-owned subsidiaries.
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
Unless otherwise specified in the applicable Prospectus Supplement, Capital
will advance the net proceeds of this offering to Industries promptly after
completion of the offering. In the interim, Capital will invest any funds held
by it only in the manner permitted by Rule 3a-5 under the Investment Company
Act of 1940, as amended. Industries will use substantially all of the funds
received to repurchase common stock granted in connection with the pending
acquisition of IWC Resources. Industries will use most of the remaining
proceeds received for the repayment of indebtedness, and any remaining balance
will be used for general corporate purposes. Pending application of such net
proceeds for specific purposes, such proceeds may be invested in short-term or
marketable securities. Specific allocations of proceeds to a particular purpose
that have been made at the date of any Prospectus Supplement will be described
therein.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an Indenture, dated as of February
14, 1997 (the "Indenture"), among Capital, Industries and The Chase Manhattan
Bank, as trustee (the "Trustee"), which shall act as indenture trustee for the
purposes of the Trust Indenture Act of 1939, as amended. The forms of the
Indenture and the Debt Securities are filed as exhibits to the Registration
Statement. Capitalized terms used in this section which are not otherwise
defined in this Prospectus shall have the meanings set forth in the Indenture.
4
<PAGE>
The following summaries of certain provisions of the Debt Securities and the
Indenture do not purport to be complete and are subject to, and are qualified
in their entirety by express reference to, all the provisions of the Debt
Securities and the Indenture, including the definitions therein of certain
terms.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder. The Debt Securities may be issued
from time to time in one or more series up to the aggregate principal amount
which may be authorized therefor from time to time by Capital.
The Indenture does not contain provisions to afford the Holders of Debt
Securities protection in the event of a highly leveraged transaction or a
takeover attempt nor do they contain provisions requiring the repurchase of
any Debt Securities upon a change in control of Capital. In addition, the
Indenture does not contain any provisions that would limit the ability of
Capital and its subsidiaries to incur unsecured indebtedness.
The Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a discount below their principal
amount. United States federal income tax, accounting and other special
considerations applicable to any such Original Issue Discount Securities will
be described in any Prospectus Supplement relating thereto. "Original Issue
Discount Security" means any security that provides for an amount less than
the principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof as a result of the occurrence of an Event
of Default and the continuation thereof. In addition, the Debt Securities may,
for United States federal income tax purposes, be deemed to have been issued
with "original issue discount" ("OID") even if such securities are offered and
sold at an amount equal to their stated principal amount. The United States
federal income tax consequences of Debt Securities deemed to be issued with
OID will be described in any Prospectus Supplement relating thereto.
REGISTRATION AND TRANSFER
The Debt Securities may be issued as Registered Securities or Bearer
Securities. At the option of the Holder, Registered Securities of any series
(except a Global Security representing all or a portion of such series) may be
exchanged for Registered Securities of the same series, Stated Maturity and
original issue date, of any authorized denominations and of like tenor and
aggregate principal amount, upon surrender of the Debt Securities to be
exchanged at the office or agency in a Place of Payment maintained for such
purpose for such series. At the option of the Holder, Bearer Securities of any
series may be exchanged for Registered Securities of the same series, Stated
Maturity and original issue date, of any authorized denominations and of like
tenor and aggregate principal amount, upon surrender of the Bearer Securities
to be exchanged at any such office or agency, with all unmatured coupons and
all matured coupons in default thereto appertaining. If the Holder of a Bearer
Security is unable to produce any such unmatured coupon or coupons or matured
coupon or coupons in default, such exchange may be effected if the Bearer
Securities are accompanied by payment in funds acceptable to Capital and the
Trustee in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons may be waived by
Capital and the Trustee if there be furnished to them such security or
indemnity as they may require to save each of them and any Paying Agent
harmless.
The Debt Securities may be presented for exchange as described above, and
Registered Securities may be presented for registration of transfer (duly
endorsed or accompanied by a written instrument of transfer), at the Corporate
Trust Office of the Trustee or at the office of any transfer agent designated
by Capital for such purpose with respect to any series of Debt Securities and
referred to in the Prospectus Supplement applicable thereto. No service charge
will be made for any transfer or exchange of Debt Securities, but Capital may
require payment of a sum sufficient to cover any tax or
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other governmental charge payable in connection therewith. If any Prospectus
Supplement refers to any transfer agent (in addition to the Trustee) initially
designated by Capital with respect to any series of Debt Securities, Capital
may at any time rescind the designation of any such transfer agent or approve
a change in the location at which any such transfer agent acts, except that,
if Debt Securities of a series are issuable solely as Registered Securities,
Capital will be required to maintain a transfer agent in each Place of Payment
for such series and, if Debt Securities of a series may be issuable both as
Registered Securities and as Bearer Securities, Capital will be required to
maintain (in addition to the Trustee) a transfer agent in a Place of Payment
for such series located outside the United States. Capital may at any time
designate additional transfer agents with respect to any series of Debt
Securities.
In the event of any redemption of Debt Securities of any series, Capital
shall not be required (i) to issue, to register the transfer of, or to
exchange Debt Securities of any series during a period of 15 Business Days
immediately preceding the date notice is given identifying the serial numbers
of the Debt Securities of that series called for redemption, or (ii) to issue,
to register the transfer of or to exchange any Registered Security so selected
for redemption in whole or in part, except the unredeemed portion of any Debt
Security being redeemed in part, or (iii) to exchange any Bearer Security so
selected for redemption except that such a Bearer Security may be exchanged
for a Registered Security of that series, provided that such Registered
Security shall be immediately surrendered for redemption with written
instruction for payment consistent with the provisions of the Indenture.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities (as such term is defined below), which
will be deposited with, or on behalf of, a depositary ("Depositary") or its
nominee identified in the applicable Prospectus Supplement. In such case, one
or more Global Securities will be issued in a denomination or aggregate
denomination equal to the portion of the aggregate principal amount of
outstanding Debt Securities of the series to be represented by such Global
Security or Global Securities. Unless and until it is exchanged in whole or in
part for the individual Debt Securities represented thereby, a Global Security
may not be registered for transfer or exchange except (i) as a whole by the
Depositary for such Global Security to a nominee of such Depositary, by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or a nominee of such Depositary to a
successor Depositary or a nominee of such successor Depositary, and (ii) in
any other circumstances described in the Prospectus Supplement applicable
thereto. The term "Global Security," when used with respect to any series of
Debt Securities, means a Debt Security that is executed by Capital and
authenticated and delivered by the Trustee to the Depositary or pursuant to
the Depositary's instruction, which shall be registered in the name of the
Depositary or its nominee and which shall represent, and shall be denominated
in an amount equal to the aggregate principal amount of, all of the
Outstanding Debt Securities of such series or any portion thereof, in either
case having the same terms, including, without limitation, the same original
issue date, date or dates on which principal is due, and interest rate or
method of determining interest.
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Global Security will be
described in the Prospectus Supplement applicable thereto. Capital expects
that the following provisions will apply to depositary arrangements.
Debt Securities that are to be represented by a Global Security to be
deposited with or on behalf of a Depositary will be represented by a Global
Security registered in the name of such Depositary or its nominee. Upon the
issuance of such Global Security, and the deposit of such Global Security with
or on behalf of the Depositary for such Global Security, the Depositary will
credit on its book-entry registration and transfer system the respective
principal amounts of the Debt Securities represented
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by such Global Security to the accounts of institutions that have accounts
with such Depositary or its nominee ("participants"). The accounts to be
credited will be designated by the underwriters or agents of such Debt
Securities or, if such Debt Securities are offered and sold directly by
Capital, by Capital. Ownership of beneficial interests in such Global Security
will be limited to participants or Persons that may hold interests through
participants. Ownership of beneficial interests by participants in such Global
Security will be shown only on, and the transfer of that ownership interest
will be effected only through, records maintained by the Depositary or its
nominee or any such participant (with respect to interests of persons held by
such participants on their behalf) for such Global Security. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in certificated form. The foregoing limitations
and such laws may impair the ability to transfer beneficial interests in such
Global Securities.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner and the Holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Unless otherwise specified in the applicable Prospectus Supplement,
owners of beneficial interests in such Global Security will not be entitled to
have Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in certificated form and will not
be considered the Holders thereof for any purposes under the Indenture.
Accordingly, each Person owning a beneficial interest in such Global Security
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 of Debt Securities under
the Indenture. Capital understands that under existing industry practices, if
Capital requests any action of Holders or an owner of a beneficial interest in
such Global Security desires to give any notice or take any action a Holder is
entitled to give or take under the Indenture, then the Depositary would
authorize the participants to give such notice or take such action, and
participants would authorize beneficial owners owning through such
participants to give such notice or take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
CERTAIN COVENANTS OF THE COMPANY
Although the Indenture contains certain covenants, described below, with
respect to limitations on liens and merger or consolidation, these covenants
do not focus on the debt incurred in many types of transactions and do not
otherwise afford protection to Holders of Debt Securities in the event of a
highly leveraged transaction that is not in violation of the covenants.
Capital does not currently intend to include any covenants or other provisions
affording such protection in the Debt Securities or any series thereof. If
Capital determines in the future that it is desirable to include covenants or
other provisions of this type in any series of securities, they will be
described in the Prospectus Supplement for that series.
CONSOLIDATION, MERGER AND SALE
Under the terms of the Indenture, neither Capital nor Industries may merge
or consolidate with or into any other Corporation, or convey, transfer or
lease their properties and assets substantially as an entirety unless (i) the
Corporation formed by any such consolidation or into which it is merged or the
Person which acquires by conveyance or transfer, or which leases, its
properties and assets substantially as an entirety shall be a Corporation
organized and existing under the laws of any domestic jurisdiction and shall
expressly assume, in the case of Capital, its obligations under the Debt
Securities and the Indenture and, in the case of Industries, its obligations
under the Indenture and the
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Support Agreement, (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 occurred and be continuing, and (iii)
Capital or Industries, as applicable, shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease complies with the
Indenture and that all conditions precedent therein provided for relating to
such transaction have been complied with.
LIMITATION ON LIENS
Neither Capital nor Industries will, nor will Industries permit any
Subsidiary other than a Utility, to, issue, assume or guarantee any debt for
money borrowed (for purposes of this paragraph, "Debt"), secured by any
mortgage, security interest, pledge, lien or other encumbrance (herein
referred to as "mortgage") upon any property of Capital, Industries or any
such Subsidiary (other than a Utility), except indebtedness issued by any such
Subsidiary and owned by Industries or any other such Subsidiary (whether such
property or indebtedness is 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 restrictions do not apply to (i) mortgages
on any property, acquired, constructed or improved by Industries or any of the
Subsidiaries other than the Utilities after the date of the Indenture which
are created or assumed contemporaneously with, or 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 arranged with a
lender or investor within such 120-day period, to secure or provide for the
payment of all or any part of the purchase price of such property or the cost
of such construction or improvement incurred after the date of the Indenture,
or, in addition to mortgages contemplated by clauses (ii) and (iii) below,
mortgages on any property existing at the time of acquisition thereof,
provided that the mortgages shall not apply to any property theretofore owned
by Industries or any such Subsidiary other than, in the case of any such
construction or improvement, any theretofore unimproved real property on which
the property so constructed or the improvement is located; (ii) existing
mortgages on any property or indebtedness of a corporation which is merged
with or into or consolidated with Industries or a Subsidiary; (iii) mortgages
on property or indebtedness of a corporation existing at the time such
corporation becomes a Subsidiary; (iv) mortgages to secure Debt of a
Subsidiary to Industries or to another Subsidiary other than a Utility; (v)
mortgages in favor of the United States of America, any State, any foreign
country or any department, agency or instrumentality or political subdivision
of any such jurisdiction, to secure partial, progress, advance or other
payments pursuant to any contract or statute or to secure any indebtedness
incurred for the purpose of financing all or any part of the purchase price of
the cost of constructing or improving the property subject to such mortgages,
including, without limitation, mortgages to secure Debt of the pollution
control or industrial revenue bond type; (vi) mortgages to secure loans to
Industries or any Subsidiary other than a Utility maturing within 12 months
from the creation thereof and made in the ordinary course of business; (vii)
mortgages on any property (including any natural gas, oil or other mineral
property) to secure all or part of the cost of exploration, drilling or
development thereof or to secure Debt incurred to provide funds for any such
purpose; (viii) mortgages existing on the date of the Indenture; and (ix)
mortgages for the sole purposes of extending, renewing or replacing in whole
or in part Debt secured by any mortgage referred to in the foregoing clauses
(i) to (viii), inclusive, or this clause (ix); 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 such extension, renewal or replacement shall be limited to all or a part
of the property or indebtedness which secured the mortgage so extended,
renewed or replaced (plus improvements on such property). Furthermore, such
restrictions do not apply to the issuance, assumption or guarantee by
Industries 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 percent of
consolidated net tangible assets of Industries and the Subsidiaries (other
than the Utilities), determined in accordance with generally
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accepted accounting principles and as of a date not more than 90 days prior to
the happening of the event for which such determination is being made. For
purposes of the foregoing, "consolidated net tangible assets" means the total
amount of assets appearing on a consolidated balance sheet of Industries and
the Subsidiaries (other than the Utilities), less, without duplication, (i)
all current liabilities (excluding any thereof which are by their terms
extendable or renewable at the sole option of the obligor thereon without
requiring the consent of the obligee to a date more than 12 months after the
date on which the determination of consolidated net tangible assets is made),
(ii) all reserves for depreciation and other asset valuation reserves but
excluding any reserves for deferred Federal income taxes arising from
accelerated amortization or otherwise, (iii) all intangible assets such as
goodwill, trademarks, trade names, patents and unamortized debt discount and
expense carried as an asset on said balance sheet, and (iv) all appropriate
adjustments on account of minority interests of other persons holding common
shares or stock in any Subsidiary.
EVENTS OF DEFAULT
The Indenture provides, with respect to any series of Debt Securities
outstanding thereunder, that any one or more of the following events that has
occurred and is continuing shall constitute an Event of Default: (i) default
in the payment of any interest upon any Debt Security of that series, when the
same becomes due and payable and the continuance of such default for 30 days;
(ii) default in the payment of the principal of or any premium, if any, on any
Debt Security of that series when due, whether at maturity, upon redemption,
by declaration or otherwise and continuance of such default for a period of
three Business Days thereafter; (iii) default in the deposit of any sinking
fund payment, when and as due by the terms of any Debt Securities of that
series and the continuance of such default for three Business Days thereafter;
(iv) default in the performance or breach of any covenant or agreement of
Capital or Industries in the Indenture or the Support Agreement (other than
those referred to in (i), (ii) and (iii) above) and the continuance thereof
for 60 days after there shall have been given, by registered or certified
mail, to Capital and Industries from the Trustee or from the Holders of at
least 25 percent of the Outstanding Debt Securities of that series written
notice specifying such default and stating that such notice is a "Notice of
Default"; (v) certain events in bankruptcy, insolvency or reorganization of
Capital, Industries or Northern Indiana; (vi) a default under any bond,
debenture, note or other evidence of indebtedness for money borrowed by
Capital (including a default with respect to Debt Securities of any series
other than that series) or under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by Capital (including this Indenture), whether
such indebtedness now exists or shall hereafter be created, which default
shall constitute a failure to pay in excess of $5,000,000 of the principal or
interest of such indebtedness when due and payable after the expiration of any
applicable grace period with respect thereto or shall have resulted in such
indebtedness in an amount in excess of $5,000,000 becoming or being declared
due and payable prior to the date on which it would otherwise have become due
and payable, without such indebtedness having been discharged, or such
acceleration having been rescinded or annulled within a period of 90 days
after there shall have been given, by registered or certified mail, to Capital
by the Trustee or to Capital and the Trustee by the Holders of at least 25
percent in principal amount of the Outstanding Debt Securities of that series
written notice specifying such default and stating that such notice is a
"Notice of Default"; and (vii) any other Event of Default provided with
respect to Debt Securities of that series.
Each of Capital and Industries will be required to furnish annually to the
Trustee a statement as to the performance by it of certain of its obligations
under the Indenture and as to any default in such performance.
The Holders of not less than a majority in principal amount of the Debt
Securities may, on behalf of the Holders of all the Debt Securities, waive any
past default under the Indenture with respect to the Debt Securities and its
consequences, except a default (i) in the payment of the principal of or
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interest on any Debt Securities or (ii) in respect of a covenant or provision
that cannot be modified or amended without the consent of the Holder of each
outstanding Debt Securities affected thereby.
ACCELERATION OF MATURITY
If an Event of Default occurs and is continuing with respect to Debt
Securities of a particular series, the Trustee or the Holders of not less than
33 percent in principal amount of Outstanding Debt Securities of that series
may declare the Outstanding Debt Securities of that series due and payable
immediately.
At any time after a declaration of acceleration with respect to Debt
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee therefor, the
Holders of a majority in principal amount of the Outstanding Debt Securities
of that series by written notice to Capital, Industries and such Trustee, may
rescind and annul such declaration and its consequences if: (i) Capital or
Industries has paid or deposited with the Trustee a sum sufficient to pay: (a)
all overdue interest on all Debt Securities of that series, (b) the principal
of (and premium, if any, on) any such Debt Securities which has become due
otherwise than by such declaration of acceleration, and interest on such
unpaid principal at the rate or rates prescribed therefor in such Debt
Securities, (c) to the extent lawful, interest on overdue interest at the rate
or rates prescribed therefor in such Debt Securities, and (d) all sums paid or
advanced by such Trustee and the reasonable compensation, expenses,
disbursements and advances of such Trustee, its agents and counsel, and any
other amounts due the Trustee under the Indenture; and (2) all Events of
Default with respect to Debt Securities of that series, other than the non-
payment of the principal of such Debt Securities which have become due solely
by such declaration of acceleration, have been cured or waived. No such
rescission and annulment shall affect any subsequent default or impair any
right consequent thereon.
The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may, on behalf of the Holders of all
the Debt Securities of such series and any related Coupons, waive any past
default under the Indenture with respect to such series and its consequences,
except a default (i) in the payment of the principal of (or premium, if any)
or interest on any Debt Security of such series, or (ii) in respect of a
covenant or provision that cannot be modified or amended without the consent
of the Holder of each Outstanding Debt Security of such series affected
thereby.
Subject to the provisions in the Indenture relating to the duties of the
Trustee thereunder, if an Event of Default with respect to Debt Securities of
a particular series occurs and is continuing, such Trustee shall 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 of Debt Securities of such series,
unless such Holders shall have offered to such Trustee reasonable indemnity or
security against the costs, expenses and liabilities that might be incurred by
it in compliance with such request or direction. Subject to such provisions
for the indemnification of the Trustee, the Holders of a majority in principal
amount of the Outstanding Debt Securities of such series shall have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee under the Indenture, or exercising any trust
or power conferred on the Trustee with respect to the Debt Securities of that
series; provided, that such direction shall not be in conflict with any rule
of law or the Indenture, expose the Trustee to personal liability or be unduly
prejudicial to Holders not joining therein, and the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction.
MODIFICATION OR WAIVER
Modification and amendment of the Indenture may be made by Capital,
Industries and the Trustee with the consent of the Holders of not less than a
majority in principal amount of all Outstanding Debt
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Securities thereunder of any series that are affected by such modification or
amendment; provided that no such modification or amendment may, without the
consent of the Holder of each Outstanding Debt Security of such series: (i)
change the Stated Maturity of the principal of or any installment of principal
of or interest on any Debt Security (except as otherwise provided in the
Indenture) of such series, (ii) reduce the principal amount or the rate of
interest on, or any premium payable upon the redemption of, any Debt Security
of such series, (iii) change any obligation of Capital to pay additional
amounts in respect of any Debt Security of such series (except as otherwise
provided in the Indenture), (iv) reduce the amount of principal of a Debt
Security of such series that is an Original Issue Discount Security that would
be due and payable upon a declaration of acceleration of the Stated Maturity
thereof, (v) change the place or currency of payment of principal of, or any
premium or interest on, any Debt Security of such series, (vi) impair the
right to institute suit for the enforcement of any such payment on or after
the Stated Maturity thereof or any Redemption Date therefor, (vii) reduce the
above-stated percentage of Holders of Outstanding Debt Securities of such
series necessary to modify or amend the Indenture or to consent to any waiver
thereunder or reduce the requirements for voting or quorum described below,
(viii) change any obligation of Capital to maintain an office or agency in any
requisite place of payment or an obligation of Capital to maintain an office
or agency outside the United States of America (to the extent required
pursuant to the terms of the Indenture), or (ix) modify the foregoing
requirements or reduce the percentage of Outstanding Debt Securities of such
series necessary to waive any past default.
Modification and amendment of the Indenture may be made by Capital,
Industries and the Trustee without the consent of any Holder, for any of the
following purposes: (i) to evidence the succession of another Corporation to
Capital or Industries; (ii) to add to the covenants of Capital and Industries
for the benefit of the Holders of all or any series of Debt Securities (and if
such covenants are to be for the benefit of less than all of any series of
Debt Securities, stating that such covenants are expressly being included
solely for the benefit of such portion of such series) or to surrender any
right or power herein conferred upon Capital; (iii) to add any additional
Events of Default; (iv) to add or change any provisions of the Indenture to
facilitate the issuance of Bearer Securities; (v) to change or eliminate any
provisions of the Indenture, provided that any such change or elimination
shall become effective only when there are no Outstanding Debt Securities of
any series created prior thereto that is entitled to the benefit of such
provision; (vi) to establish the form or terms of Debt Securities of any
series; (vii) to secure the Debt Securities; (viii) to provide for the
acceptance of appointment by a successor Trustee or facilitate the
administration of the trusts under the Indenture by more than one Trustee;
(ix) to cure any ambiguity, defect or inconsistency in the Indenture or to
make any other provisions with respect to matters or questions arising under
the Indenture, provided such action does not adversely affect the interests of
Holders of Debt Securities of any series under the Indenture in any material
respect; (x) to effect assumption by Industries or one of its subsidiaries of
Capital's obligations as contemplated by the Indenture; and (xi) to conform
the Indenture to any amendments to the Trust Indenture Act.
The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series. Such a meeting may be called at any time by the
Trustee at its discretion for certain purposes set forth in the Indenture
relating to Bearer Securities or by the Trustee pursuant to a request made to
the Trustee by Capital or the Holders of at least 10% in principal amount of
the Outstanding Debt Securities of any series under the Indenture, but in any
case, notice shall be given as provided in the Indenture. Except for any
consent that must be given by the Holder of each Debt Security affected
thereby, as described above, any resolution presented at a meeting or
adjourned meeting duly reconvened at which a quorum is present may be adopted
by the affirmative vote of the Holders of a majority in principal amount of
the Debt Securities of that series Outstanding; provided, however, that, any
resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that may be made, given or taken by
the Holders of a specified percentage that is less than a majority in
principal amount of Debt Securities of a series Outstanding may be adopted at
a
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meeting or adjourned meeting, duly reconvened and at which a quorum is
present, by the affirmative vote of the Holders of such specified percentage
in principal amount of the Debt Securities of that series Outstanding. Any
resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with the Indenture will be
binding on all Holders of Debt Securities of that series, whether or not
present or represented at the meeting. The quorum at any meeting called to
adopt a resolution, and at any reconvened meeting, will consist of Persons
entitled to vote a majority in principal amount of the Debt Securities of a
series Outstanding.
INFORMATION CONCERNING THE TRUSTEE
Except during the continuance of an Event of Default with respect to Debt
Securities of any series, the Trustee undertakes to perform, with respect to
Debt Securities of such series, only such duties of the Trustee as are
specifically set forth in the Indenture, and no implied covenants or
obligations shall be read into the Indenture against the Trustee, and in the
absence of bad faith on its part, the Trustee may, with respect to Debt
Securities of such series, conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of the Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of the
Indenture. In case an Event of Default with respect to Debt Securities of any
series has occurred and is continuing, the Trustee shall exercise, with
respect to Debt Securities of such series, such of the rights and powers
vested in it by the Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York.
MISCELLANEOUS
Industries or a Subsidiary may directly assume, by a supplemental indenture,
the performance of every covenant of the Indenture on the part of Capital to
be performed or observed. Upon any such assumption, Industries or such
Subsidiary shall succeed to and be substituted for and may exercise every
right and power of Capital under the Indenture with the same effect as if
Industries or such Subsidiary had been named as Capital therein and Capital
shall be released from its liability as obligor on the Debt Securities;
provided that, in the case of such assumption by a Subsidiary, the Support
Agreement is modified so that references to Capital and its Debt therein are
changed to, or modified to include, references to such Subsidiary and its Debt
(including the Debt Securities). No such assumption shall be permitted unless
Industries has delivered to the Trustee an Officers' Certificate of Industries
and an Opinion of Counsel for Industries, each stating that such assumption
and supplemental indenture comply with the Indenture that all conditions
precedent therein provided for relating to such transaction have been complied
with and, in the event of assumption by a Subsidiary, that Industries'
obligations under the Indenture and the Support Agreement (modified as
aforesaid) remain in full force and effect.
DESCRIPTION OF THE SUPPORT AGREEMENT
The Support Agreement between Capital and Industries provides that, during
the term thereof, (i) Industries will own all of the voting stock of Capital,
(ii) Industries will cause Capital to have at all times a positive net worth
(net assets less intangible assets, if any), as determined in accordance with
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generally accepted accounting principles, and (iii) if Capital is unable to
make timely payment of principal of or any premium or interest on any Debt (as
defined below) issued by Capital, Industries will, at the request of Capital
or any Lender (as defined below), provide funds to Capital to make such
payments. The Support Agreement also provides that any Lender to Capital shall
have the right to demand that Capital enforce its rights against Industries
under the Support Agreement as described in the previous sentence, and, in the
event that Capital fails to require Industries to perform such obligations or
Capital defaults in the timely payment of principal of or any premium or
interest on any Debt owed to a Lender, such Lender may proceed directly
against Industries to enforce Capital's rights against Industries under the
Support Agreement or to obtain payment of such defaulted principal, premium or
interest owed to such Lender.
The Support Agreement provides that in no event may any Lender, on default
of Capital or Industries or upon failure by Capital or Industries to comply
with the Support Agreement, have recourse to or against the stock or assets of
Northern Indiana, or any interest of Capital or Industries therein.
Notwithstanding this limitation, the Support Agreement provides that funds
available to Industries to satisfy any obligations under the Support Agreement
will include cash dividends paid by Northern Indiana to Industries. In
addition to the cash dividends paid to Industries by any Subsidiary, the
assets of Industries other than the stock and assets of Northern Indiana are
available as recourse to holders of Capital's Debt. The carrying value of such
assets reflected in Industries' consolidated balance sheet at December 31,
1996 is approximately $519 million. The term "Debt" is defined in the Support
Agreement as debt securities or other obligations, and includes the Debt
Securities. The term "Lender" is defined in the Support Agreement as any
person, firm or corporation to which Capital is indebted for money borrowed or
to which Capital otherwise owes any Debt or which is acting as trustee or
authorized representative on behalf of such person, firm or corporation. The
Indenture provides that each Holder of a Subordinated Debenture, as well as
the Trustee, shall be considered a "Lender" for purposes of the Support
Agreement.
Funds to pay the principal of and interest on the Debt Securities pursuant
to the Support Agreement would come from earnings in the form of dividends
paid to Industries by Northern Indiana, Kokomo Gas and NIFL, the earnings of
other businesses of Industries and its subsidiaries or the proceeds of
refinancing transactions. During the next few years, it is expected that the
majority of Industries' earnings that would ultimately be available to pay the
principal of and interest on the Debt Securities will depend upon dividends
paid to Industries by Northern Indiana. Northern Indiana's Indenture of
Mortgage provides that Northern Indiana will not declare or pay any dividends
on any class of capital stock (other than preferred or preference stock)
except out of earned surplus or net profits of Northern Indiana. At December
31, 1996, Northern Indiana had approximately $146 million of retained earnings
(earned surplus) available for the payment of dividends. Future dividends
payable by Northern Indiana to Industries will depend upon adequate retained
earnings, adequate future earnings and the absence of adverse developments. In
addition, since Industries is a holding company, the right of its creditors,
including Holders of the Debt Securities pursuant to the Support Agreement, to
participate in any distribution of the assets of any subsidiary other than
Capital upon its liquidation or reorganization or otherwise is necessarily
subject to the prior claims of creditors of the subsidiary, except to the
extent claims of Industries as a creditor may be recognized. The Indenture
does not limit the amount of indebtedness that Capital, Industries or any of
Industries' other subsidiaries may incur.
The Support Agreement may be amended or terminated at any time by agreement
of Industries and Capital, provided that (i) no amendment regarding the terms
described above may be made unless all Lenders consent in advance and in
writing to such amendment; (ii) no amendment regarding any other term of the
Support Agreement may be made in a manner that adversely affects the rights of
Lenders unless all affected Lenders consent in advance and in writing to such
amendment; and (iii) no termination shall be effective until such time as all
Debt (including the Debt Securities) shall have been paid in full.
13
<PAGE>
PLAN OF DISTRIBUTION
Capital may sell the Debt Securities in any of the following ways: (i)
through underwriters or dealers; (ii) directly to purchasers; (iii) through
agents; or (iv) through any combination of the above. The Prospectus
Supplement with respect to the Debt Securities will set forth the terms of the
offering, the purchase price of the Debt Securities and the proceeds to
Capital from such sale, any underwriters, dealers or agents, any fees,
underwriting discounts and other items constituting underwriters' compensation
and any discounts or concessions allowed or reallowed or paid to dealers or
agents.
If underwriters are involved in the sale, the Debt Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
sale. The Debt Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more firms acting as underwriters. The underwriter or
underwriters with respect to a particular underwritten offering of the Debt
Securities will be named in the Prospectus Supplement relating to such
offering or, if an underwriting syndicate is used, the managing underwriter or
underwriters, will be set forth on the cover of such Prospectus Supplement.
Unless otherwise set forth in the Prospectus Supplement relating thereto, the
obligations of the underwriters to purchase the Debt Securities will be
subject to conditions precedent and the underwriters will be obligated to
purchase all the Debt Securities offered by the Prospectus Supplement if any
are purchased.
If dealers are utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, Capital will sell such Debt Securities to
the dealers as principals. The dealers may then resell such Debt Securities to
the public at varying prices to be determined by such dealers at the time of
resale. The names of the dealers and the terms of the transaction will be set
forth in the Prospectus Supplement relating thereto.
The Debt Securities may be sold directly by Capital or through agents
designated by Capital from time to time. Any agent involved in the offer or
sale of the Debt Securities in respect to which this Prospectus is delivered
will be named, and any commissions payable by Capital to such agent will be
set forth in, the Prospectus Supplement relating thereto.
The Debt Securities may be sold directly by Capital to institutional
investors or others, who may be deemed to be underwriters within the meaning
of the Securities Act with respect to any resale thereof. The terms of any
such sales will be described in the Prospectus Supplement relating thereto.
Agents, dealers and underwriters may be entitled under agreements entered
into with Capital and Industries to indemnification by Capital and Industries
against certain civil liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments which such agents, dealers or
underwriters may be required to make in respect thereof. Agents, dealers and
underwriters may be customers of, engage in transactions with, or perform
services for Capital and Industries in the ordinary course of business.
LEGAL OPINION
The validity of the Debt Securities offered hereby and the Support Agreement
will be passed upon for Capital by Schiff Hardin & Waite, Chicago, Illinois.
The opinions with respect to the Debt Securities may be conditioned upon, and
subject to certain assumptions regarding, future action to be taken by
Capital, Industries and the Trustee in connection with the issuance and sale
of particular Debt Securities, the specific terms of the Debt Securities and
other matters that may affect the validity of the Debt Securities but that
cannot be ascertained on the date of such opinions.
14
<PAGE>
EXPERTS
The consolidated financial statements and schedules of Industries and its
subsidiaries incorporated by reference in this Registration Statement from
Industries' 1995 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996
and Current Report on Form 8-K as filed on February 14, 1997 have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference in this
Registration Statement in reliance upon the authority of said firm as experts
in giving said reports. Reference is made to Industries' 1995 Annual Report on
Form 10-K, which includes an explanatory paragraph with respect to changes in
the methods of accounting for income taxes and post-retirement benefits other
than pensions, as discussed in the notes to the consolidated financial
statements.
15
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN CONTAINED OR INCORPO-
RATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUP-
PLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS
SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE AGENTS. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT OR THE PROSPECTUS NOR
ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUP-
PLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANY-
ONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR TO ANY-
ONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT
PAGE
----
<S> <C>
Risk Factors............................................................... S- 3
Description of Notes....................................................... S- 5
Special Provisions Relating to Foreign Currency Notes...................... S-22
Certain United States Federal Income Tax Considerations.................... S-24
Plan of Distribution....................................................... S-33
Legal Opinions............................................................. S-34
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents By Reference............................ 2
The Companies.............................................................. 3
Use of Proceeds............................................................ 4
Description of Debt Securities............................................. 4
Plan of Distribution....................................................... 14
Legal Opinion.............................................................. 14
Experts.................................................................... 15
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$300,000,000
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
NIPSCO
CAPITAL MARKETS, INC.
ENTITLED TO THE BENEFIT OF A SUPPORT AGREEMENT PROVIDING THE PAYMENT OF
PRINCIPAL AND INTEREST BY
NIPSCO
INDUSTRIES, INC.
-----------
PROSPECTUS SUPPLEMENT
-----------
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<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
distribution of the Debt Securities being registered. All amounts shown below
are estimates, except the registration fee:
<TABLE>
<S> <C>
Registration fee of the Securities and Exchange Commission... $ 90,909.09
Accountants' fees and expenses............................... 20,000.00
Legal fees and expenses...................................... 75,000.00
Printing Registration Statement, prospectus and exhibits and
other printing expenses..................................... 25,000.00
Trustee fees and expenses.................................... 3,000.00
Rating agency fees........................................... 30,000.00
Blue sky fees, expenses and legal fees....................... 7,500.00
Miscellaneous................................................ 3,990.91
-----------
Total.................................................... $255,400.00
===========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The By-Laws of Industries provide for indemnification by Industries of each
director and officer of Industries and Capital 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 Industries or Capital. Under the By-
Laws of Industries as well as the Indiana Business Corporation Law (the
"Indiana BCL"), Industries is required to indemnify the directors and officers
of Industries and Capital 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 Industries and Capital, provided that such person
acted in good faith and in a manner he or she reasonably believed to be in the
best interest of Industries and Capital, or, with respect to a criminal
proceeding, has no reasonable cause to believe that his or her conduct was
unlawful.
The By-Laws of Industries provide that except where a director or officer is
substantially and finally successful on the merits, Industries 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.
Industries also may not advance expenses prior to the disposition of an
action, suit or proceeding until: (a) the director or officer provides
Industries 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 cannot be
obtained), special legal counsel or a majority vote of disinterested
shareholders.
As authorized under the By-Laws of Industries and the Indiana BCL,
Industries and its subsidiaries, including Capital, have insurance which
insures directors and officers for acts committed as such directors or
officers which are determined not to be indemnifiable under Industries'
indemnity provisions.
II-1
<PAGE>
Section 7 of the Distribution Agreement filed as Exhibit 1 to this
Registration Statement provides for the indemnification of Capital and
Industries and their respective officers and directors and each person, if
any, who controls Capital or Industries within the meaning of the Securities
Act, against certain liabilities in connection with the offering described
herein, including liabilities under the federal securities laws, under certain
circumstances.
ITEM 16. EXHIBITS
The Exhibits filed herewith are set forth on the Exhibit Index filed as a
part of this Registration Statement.
ITEM 17. UNDERTAKINGS
The undersigned registrants hereby undertake:
(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;
(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 Debt Securities offered (if the total
dollar value of Debt Securities 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 Commission 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 periodic
reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the Debt Securities offered
therein, and the offering of such Debt Securities 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 Debt Securities 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, each filing of Industries' annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the Debt Securities offered therein, and
the offering of such Debt Securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrants pursuant to the provisions described under Item 15 above, or
otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the registrants of expenses incurred or paid by a
director, officer or controlling person of the registrants in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the Debt Securities being
registered, the registrants 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 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, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF 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 25TH DAY OF
FEBRUARY, 1997.
NIPSCO Industries, Inc.
(Registrant)
/s/ Gary L. Neale
By___________________________________
Gary L. Neale
Chairman, President and Chief
Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED 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, Chief February 25, 1997
____________________________________ Executive Officer and
Gary L. Neale Director
/s/ Stephen P. Adik Executive Vice President, February 25, 1997
____________________________________ Chief Financial Officer
Stephen P. Adik
/s/ Jerry M. Springer Controller and Principal February 25, 1997
____________________________________ Accounting Officer
Jerry M. Springer
/s/ Steven C. Beering* Director February 25, 1997
____________________________________
Steven C. Beering
/s/ Arthur J. Decio* Director February 25, 1997
____________________________________
Arthur J. Decio
/s/ Ernestine M. Raclin* Director February 25, 1997
____________________________________
Ernestine M. Raclin
/s/ Denis E. Ribordy* Director February 25, 1997
____________________________________
Denis E. Ribordy
/s/ Ian M. Rolland* Director February 25, 1997
____________________________________
Ian M. Rolland
/s/ Edmund A. Schroer* Director February 25, 1997
____________________________________
Edmund A. Schroer
/s/ John W. Thompson* Director February 25, 1997
____________________________________
John W. Thompson
/s/ Robert J. Welsh, Jr.* Director February 25, 1997
____________________________________
Robert J. Welsh, Jr.
</TABLE>
/s/ Arthur A. Paquin
*By ___________________________
Arthur A. Paquin
Attorney in Fact
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, 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 25TH DAY OF
FEBRUARY, 1997.
NIPSCO Capital Markets, Inc.
(Registrant)
/s/ Stephen P. Adik
By___________________________________
Stephen P. Adik
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED 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 and Director February 25, 1997
____________________________________
Gary L. Neale
/s/ Stephen P. Adik President, Director and February 25, 1997
____________________________________ Chief Executive Officer
Stephen P. Adik
/s/ Jeffrey W. Yundt Executive Vice President and February 25, 1997
____________________________________ Director
Jeffrey W. Yundt
/s/ Jerry M. Springer Vice President and Chief February 25, 1997
____________________________________ Financial Officer
Jerry M. Springer
/s/ Arthur A. Paquin Comptroller and Principal February 25, 1997
____________________________________ Accounting Officer
Arthur A. Paquin
/s/ Patrick J. Mulchay Director February 25, 1997
____________________________________
Patrick J. Mulchay
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
------- ------- ------
<C> <S> <C>
1 Form of Distribution Agreement among NIPSCO Capital Markets,
Inc., NIPSCO Industries, Inc., Goldman, Sachs & Co., Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, and Morgan Stanley & Co. Incorporated
4.1 Form of Indenture among NIPSCO Capital Markets, Inc., NIPSCO
Industries, Inc. and The Chase Manhattan Bank, as Trustee
4.2 Support Agreement dated April 4, 1989 as amended as of May
15, 1989, December 10, 1990 and February 14, 1991, between
NIPSCO Industries, Inc. and NIPSCO Capital Markets, Inc.
(incorporated by reference to Exhibit 4.2 to the Registration
Statement on Form S-3 filed by Capital and Industries on
November 13, 1992 (Registration No. 33-54516))
4.3 Form of Floating Rate Note
4.4 Form of Fixed Rate Note
5 Opinion of Schiff Hardin & Waite as to the legality of the
Debt Securities
12 Statement re Computation of Ratio of Earnings to Fixed
Charges
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Schiff Hardin & Waite (contained in their opinion
filed as Exhibit 5)
24.1 Powers of Attorney of the directors of NIPSCO Industries,
Inc.
25 Form T-1, Statement of Eligibility of The Chase Manhattan
Bank
</TABLE>
<PAGE>
EXHIBIT 1
NIPSCO CAPITAL MARKETS, INC.
$300,000,000
MEDIUM-TERM NOTES
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:
NIPSCO Capital Markets, Inc., an Indiana corporation (the "Company") and a
wholly-owned subsidiary of NIPSCO Industries, Inc., an Indiana corporation
("Industries"), proposes to issue and sell from time to time its Medium-Term
Notes (the "Securities"), in an aggregate amount up to $300,000,000 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 directly on its own behalf, 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 February 14,
1997 (the "Indenture"), among Industries, the Company and The Chase Manhattan
Bank, 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-
<PAGE>
1. The Company and Industries jointly and severally represent and warrant
to, and agree with, each Agent that:
(a) A registration statement on Form S-3 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 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) Giving effect to the interpretations of the requirements of the Act
reflected in the Company's
-2-
<PAGE>
letter requesting "no-action" submitted to the staff of the Commission (the
"Staff"), dated April 27, 1992, as supplemented by letters dated July 9, 1992
and September 21, 1992 (the "No-Action Request") and the Staff's response
thereto dated September 25, 1992 (the "Staff Response"), the Registration
Statement and the Prospectus 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 Industries 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 Industries and its
subsidiaries taken as a whole or upon the ability of Industries or the Company
to perform their respective 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 Industries and its subsidiaries or the consolidated
share capital or long-term debt of either the Company or Northern Indiana Public
Service Company, a wholly-owned subsidiary of Industries ("Northern Indiana"),
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
Industries 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 Industries 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 been prepared in conformity with
generally accepted accounting principles applied on a consistent basis and, with
respect to financial statements included in periodic reports filed by Industries
pursuant to Sections 13 or 15(d) of the Exchange Act with the Commission on and
after September 25, 1992, contain the information requested by the Staff in the
Staff Response to be so included; and the supporting schedules included or
incorporated by reference in the Prospectus present fairly the information
required to be stated therein.
(g) Each of Industries, Northern Indiana and 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 respective 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 Industries has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation.
(h) Industries has an authorized capitalization as set forth in the
Prospectus; all of the issued
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capital shares of Industries and each wholly-owned subsidiary of Industries 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 Securites,
all of the issued common shares of Northern Indiana and all the issued capital
shares of each other subsidiary of Industries (except for directors' qualifying
shares and as set forth or incorporated by reference in the Registration
Statement) are owned directly or indirectly by Industries, 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
entitled to the benefits provided by (i) the Support Agreement, dated April 4,
1989, as amended as of May 15, 1989, December 10, 1990 and February 14, 1991,
between Industries and the Company (the "Support Agreement"), which will be
substantially in the form filed as an exhibit to the Registration Statement and
(ii) the Indenture, which will be substantially in the form filed as an exhibit
to the Registration Statement; the Indenture has been duly authorized and duly
qualified under the Trust Indenture Act and, when executed and delivered by the
Company, Industries and the Trustee, the Indenture will constitute, and the
Support Agreement has been duly authorized, executed and delivered by each of
Industries and the Company and constitutes, a valid and legally binding
instrument, enforceable against Industries and the Company, as the case may be,
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles; and the
Securities will conform, and the Support Agreement and the Indenture conform, to
the descriptions thereof in the Prospectus.
(j) Industries' obligations under the Support Agreement will rank prior to
the equity securities of Industries and equal with all other unsecured and
unsubordinated indebtedness of Industries, whether now or hereafter outstanding.
(k) 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 and Industries enforceable against each of them 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.
(l) None of Industries, Northern Indiana or the Company is 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, the
Support Agreement and this Agreement, the compliance by Industries with all of
the provisions of the Securities, the Indenture, the Support Agreement 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,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which Industries or any of its subsidiaries is a party or by which Industries or
any of its subsidiaries is bound or to which any of the property or assets of
Industries 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 Industries 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 Industries or any of its subsidiaries or any of their
properties; 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
Industries and the Company of the transactions contemplated by this Agreement,
any Terms Agreement, the Support Agreement or the Indenture, except the
registration under the Act of the Securities, such as have been obtained under
the Trust Indenture Act
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<PAGE>
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) None of Industries, Northern Indiana or the Company has any material
contingent liability which is not disclosed in the Prospectus.
(n) Each of Industries, Northern Indiana and 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 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 Northern Indiana; Industries is exempt from
all provisions of the 1935 Act except Section 9(a)(2); and neither Northern
Indiana nor the Company is a "holding company" as so defined.
(p) Each of Industries and 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 sold or otherwise disposed of 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 and in accordance with the provisions of
Rule 3a-5 under the Investment Company Act of 1940, as amended (the "1940 Act").
(r) The Commission has issued an order (the "Order") exempting the Company
from all of the provisions of the 1940 Act; the Order is in full force and
effect; and the Company will continue to comply with the terms and conditions of
the Order, or otherwise remain exempt from all of the provisions of the 1940
Act, so long as any Securities are outstanding.
(s) The Prospectus accurately describes the most restrictive of the
existing limitations on the payment of dividends by Northern Indiana on its
common shares held by Industries.
(t) Neither Industries 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.
(u) Other than as included in the Prospectus, there are no legal or
governmental proceedings pending to which Industries or any of its subsidiaries
is a party or to which any property of Industries or any of its subsidiaries is
subject which, if determined adversely to Industries or any of its subsidiaries,
would individually or in the aggregate have a material adverse effect on the
consolidated financial position, shareholders' equity or results of operations
of Industries and its subsidiaries; and, to the best of each of Industries' and
the Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(v) 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
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<PAGE>
the terms and conditions set forth in the Prospectus as amended or supplemented
from time to time. The Company reserves the right to offer Securities for sale
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 or original issuance of nine months
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
except 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.
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:
<TABLE>
<CAPTION>
Range of Maturities Commission (percentage of
- ------------------------------------- aggregate principal amount
of Securities sold)
---------------------------
<S> <C>
From 9 months to less than 1 year .125%
From 1 year to less than 18 months .150%
From 18 months to less than 2 years .200%
From 2 years to less than 3 years .250%
From 3 years to less than 4 years .350%
From 4 years to less than 5 years .450%
From 5 years to less than 6 years .500%
From 6 years to less than 7 years .550%
From 7 years to less than 10 years .600%
From 10 years to less than 15 years .625%
From 15 years to less than 20 years .675%
From 20 years to 30 years .750%
</TABLE>
Commissions with respect to Securities with stated maturities in excess of
30 years that are sold through an Agent will be negotiated between the Company
and such Agent at the time of sale.
(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
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<PAGE>
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 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").
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<PAGE>
4. Industries and the Company jointly and severally covenant and agree
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)(3) under the Act 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, (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 Industries or 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.
(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 neither Industries
nor the Company shall 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
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<PAGE>
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),
earning statements of Industries and its subsidiaries and of the Company (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
Industries, 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 of Industries, and deliver to such Agent (i) as soon as they are
available, copies of any reports and financial statements of Industries
furnished to or filed with the Commission or any national securities exchange on
which any class of securities of Industries is listed, and (ii) such additional
information concerning the business and financial condition of Industries 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
Industries and its subsidiaries are consolidated in reports furnished to its
shareholders generally or to the Commission).
(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 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
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<PAGE>
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 Industries'
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 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 Industries 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 Industries 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 change in the rating accorded any of Industries', Northern
Indiana'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; (ii) the public announcement of any
such rating organization that it has under surveillance or review its rating of
any of Industries', Northern Indiana's or the Company's debt securities; (iii)
any change in the consolidated share capital or long-term debt of Industries 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 Industries and
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or affecting the general affairs, management, financial position, shareholders'
equity or results of operations of Industries and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus, the effect of which could
reasonably be expected to have a Material Adverse Effect.
5. The Company and Industries jointly and severally covenant and agree
with each Agent that the Company will pay or cause to be paid the following: (i)
the fees, disbursements and expenses of Industries' and 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 and
Industries' respective 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 and Industries 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 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
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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) Each of Industries, Northern Indiana and 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 respective power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus.
(ii) Industries has an authorized capitalization as set forth in the
Prospectus; all of the issued capital shares of Industries and each wholly-
owned subsidiary of Industries have been duly and validly authorized and
issued and are fully paid and non-assessable; and all of the issued common
shares of Northern Indiana and all the issued capital shares of the Company
and each other Significant Subsidiary of Industries (except for directors'
qualifying shares and as set forth or incorporated by reference in the
Registration Statement) are owned directly or indirectly by Industries,
free and clear of all liens, encumbrances, equities or claims.
(iii) Each of Industries, Northern Indiana and 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; and each
other Significant Subsidiary of Industries has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of Industries or
its subsidiaries, provided that such counsel shall state that they believe
that both you and they are justified in relying upon such opinions and
certificates).
(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 Industries or any of its subsidiaries is a party or to
which any property of Industries or any of its subsidiaries is subject
which, if determined adversely to Industries or any of its subsidiaries,
would individually or in the aggregate have a material adverse effect on
the consolidated financial position, shareholders' equity or results of
operations of Industries 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.
(v) Each of this Agreement and the Support Agreement has been duly
authorized, executed and delivered by each of Industries and the Company
and constitutes a valid and legally binding obligation, enforceable against
each in accordance with its terms, subject, as to
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enforcement, (a) in the case of both this Agreement and the Support
Agreement, 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 (b) in the
case of this Agreement, 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 Industries 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 Support
Agreement and 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 each of the Company
and Industries with all of the provisions of the Securities, the Indenture,
the Support Agreement, 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 Industries or any of its Significant Subsidiaries is a
party or by which Industries or any of its Significant Subsidiaries is
bound or to which any of the property or assets of Industries 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 Industries 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 Industries or any of
its Significant Subsidiaries or any of their properties.
(ix) 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
Industries or the Company of the transactions contemplated by this
Agreement, any applicable Terms Agreement, the Support 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 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 Industries or 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.
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(xi) Giving effect to the interpretations of the requirements of the
Act reflected in the No-Action Request and the Staff Response, the
Registration Statement and the Prospectus and any further amendments and
supplements thereto made by Industries or 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 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 Industries or 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.
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 Industries or 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 Industries or 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 Industries or
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 Industries or 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
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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 Industries 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 Industries 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 Industries 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.
(f) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded any of Industries', Northern Indiana'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', Northern Indiana'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 Company or Industries 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) Each of Industries and the Company shall have furnished or caused to
be furnished to such Agent certificates of officers of Industries and 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 Industries and the Company herein at and as of
the Commencement Date or such applicable date, as the case may be (except
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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 Industries and the Company of all of their
respective 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; and as to such other
matters as such Agent may reasonably request.
7. (a) Industries and the Company will jointly and severally 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 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 neither the Company nor Industries shall 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 or Industries by such Agent expressly for
use therein.
(b) Each Agent will indemnify and hold harmless the Company and Industries
against any losses, claims, damages or liabilities to which the Company or
Industries 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 or Industries by such Agent expressly for use therein; and will
reimburse the Company or Industries, as the case may be, 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.
(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
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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.
(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 and Industries 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 and Industries
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 and Industries 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 bear to the total commissions or
discounts received by such Agent in respect thereof. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading relates to information supplied by the Company
or Industries 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, Industries 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 and Industries under this Section 7
shall be in addition to any liability which they 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 Industries and to each person, if any,
who controls the Company or Industries 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 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,
-17-
<PAGE>
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, the Company and Industries 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, the Company or
Industries, or any officer or director or any controlling person of the Company
or Industries, 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 Industries and 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 Industries and 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 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
-18-
<PAGE>
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, the Company and Industries, and to
the extent provided in Section 7, Section 8 and Section 9 hereof, the officers
and directors of the Company and Industries and any person who controls any
Agent, the Company or Industries, 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 (a) the Company and (b) all other direct
and indirect subsidiaries of Industries 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 Industries, 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.
[This space intentionally left blank.]
-19-
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us 10 counterparts hereof, whereupon this letter and the
acceptance by you thereof shall constitute a binding agreement between the
Company and Industries, on the one hand, and each of you, on the other hand, in
accordance with its terms.
Very truly yours,
NIPSCO CAPITAL MARKETS, INC.
By: ____________________________________
Name:
Title:
NIPSCO INDUSTRIES, INC.
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: _____________________________
-20-
<PAGE>
ANNEX I
NIPSCO CAPITAL MARKETS, INC.
MEDIUM-TERM NOTES
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:
NIPSCO Capital Markets, Inc., an Indiana corporation (the "Company") and a
wholly-owned subsidiary of NIPSCO Industries, Inc., an Indiana corporation
("Industries"), proposes, subject to the terms and conditions stated herein and
in the Distribution Agreement dated _______________, 1997 (the "Distribution
Agreement"), between the Company and Industries 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.
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.
I-1
<PAGE>
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 and Industries
on the other.
Very truly yours,
NIPSCO CAPITAL MARKETS, INC.
By: __________________________________
Name:
Title:
NIPSCO INDUSTRIES, INC.
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
Aggregate Principal Amount:
[$________ or units of other Specified Currency]
[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 February 14, 1997 among Industries, the Company and
The Chase Manhattan Bank, as Trustee.
Time of Delivery:
Closing Location:
Maturity:
Interest Rate:
[ %]
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:
I-3
<PAGE>
[(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 NIPSCO Capital Markets, Inc., an Indiana corporation (the
"Company") and a wholly-owned subsidiary of NIPSCO Industries, Inc., an Indiana
corporation ("Industries"), Industries 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").
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
II-1
<PAGE>
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,
(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,
II-2
<PAGE>
(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
(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
II-3
<PAGE>
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 The Northern Trust Company, Account No.
4119061, ABA No. 071000152, Reference: NIPSCO Capital Markets, Inc., or such
other account as the Company may have previously specified to the Trustee, in
funds available for immediate use in the amount transferred to the Trustee in
accordance with Settlement Procedure "F".
J. Upon request, the Trustee will send to the Company a statement setting
forth the principal amount of Book-Entry Securities outstanding as of that date
under the Indenture.
K. Such Agent will confirm the purchase of such Book-Entry Security to the
purchaser either by transmitting to the Participants with respect to such Book-
Entry Security a confirmation order or orders through the Depositary's
institutional delivery system or by mailing a written confirmation to such
purchaser.
L. The Depositary will, at any time, upon request of the Company or the
Trustee, promptly furnish to the Company or the Trustee a list of the names and
addresses of the participants for whom the Depositary has credited Book-Entry
Securities.
Preparation of Pricing Supplement:
If the Company accepts an offer to purchase a Book-Entry Security, it will
prepare a Pricing Supplement reflecting the terms of such Book-Entry Security
and arrange to have delivered to the Selling Agent or Purchasing Agent, as the
case may be, at least ten copies of such Pricing Supplement, not later than
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
II-4
<PAGE>
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:
II-5
<PAGE>
<TABLE>
<CAPTION>
Settlement
Procedure Time
- ---------- ----
<S> <C> <C>
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
</TABLE>
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 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
II-6
<PAGE>
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:
II-7
<PAGE>
(1) Principal Amount of Certificated Securities to be purchased;
(2) If a Fixed Rate Certificated Security, the interest rate and
initial interest payment date;
(3) Trade Date;
(4) Settlement Date;
(5) Maturity Date;
(6) Specified Currency and, if the Specified Currency is other than
U.S. dollars, the applicable Exchange Rate for such Specified
Currency;
(7) Indexed Currency, the Base Rate and the Exchange Rate
Determination Date, if applicable;
(8) Issue Price;
(9) Selling Agent's commission or Purchasing Agent's discount, as the
case may be;
(10) Net Proceeds to the Company;
(11) If a redeemable Certificated Security, such of the following as
are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price shall decline
(but not below par) on each anniversary of the Redemption
Commencement Date;
(12) If a Floating Rate Certificated Security, such of the following
as are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread 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.
II-8
<PAGE>
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 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.
II-9
<PAGE>
ANNEX III
ACCOUNTANTS' LETTER
Pursuant to Section 4(j) and Section 6(d), as the case may be, of the
Distribution Agreement, Industries' independent certified public accountants
shall furnish letters to the effect that:
(i) They are independent certified public accountants with respect
to Industries 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 Industries 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 Industries' 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
Industries and 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 Industries
for the five most recent fiscal years included in the Prospectus and
included or incorporated by reference in Item 6 of Industries' 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 Industries' Annual Reports on Form
10-K for such fiscal years;
(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
III-1
<PAGE>
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 Industries
and its subsidiaries, inspection of the minute books of Industries and its
subsidiaries since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, inquiries of
officials of Industries 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 Industries' 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 Industries' 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
Industries' 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
Industries' 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 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 Industries 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
III-2
<PAGE>
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 Industries 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 Industries 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 4.1
================================================================================
NIPSCO CAPITAL MARKETS, INC.
AND
NIPSCO INDUSTRIES, INC.,
TO
THE CHASE MANHATTAN BANK,
as Trustee
-------------------
INDENTURE
Dated as of February 14, 1997
-------------------
Providing for Issuance of Debt Securities
================================================================================
<PAGE>
NIPSCO Capital Markets, Inc.
NIPSCO Industries, Inc.
Reconciliation and Tie between Trust Indenture Act of 1939, as amended, and
Indenture, dated as of February 14, 1997
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section(s)
- ----------- ----------
<S> <C>
(S)310 (a)(1)....................................................609
(a)(2)....................................................609
(a)(3)....................................................Not Applicable
(a)(4)....................................................Not Applicable
(a)(5)....................................................609
(b).......................................................608, 610
(c).......................................................Not Applicable
(S)311 (a).......................................................613
(b).......................................................613
(c).......................................................613
(S)312 (a).......................................................701, 702(a)
(b).......................................................702(a)
(c).......................................................702(b)
(S)313 (a).......................................................703(a)
(b).......................................................703(b)
(c).......................................................703(c)
(d).......................................................703(c)
(S)314 (a).......................................................704
(a)(4)....................................................101, 1009
(b).......................................................Not Applicable
(c)(1)....................................................102
(c)(2)....................................................102
(c)(3)....................................................Not Applicable
(d).......................................................Not Applicable
(e).......................................................102
(f).......................................................Not Applicable
(S)315 (a).......................................................601
(b).......................................................602
(c).......................................................601
(d).......................................................601
(e).......................................................514
(S)316 (a)(1)(A).................................................502, 512
(a)(1)(B).................................................513
(a)(2)....................................................Not Applicable
(b).......................................................508
(c).......................................................104
(S)317 (a)(1)....................................................503
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(a)(2)....................................................504
(b).......................................................1003
(S)318 (a).......................................................108
</TABLE>
NOTE: This Reconciliation and Tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE ONE Definitions and Other Provisions of General Application....................2
SECTION 101. Definitions.....................................................................2
SECTION 102. Compliance Certificates and Opinions............................................9
SECTION 103. Form of Documents Delivered to Trustee.........................................10
SECTION 104. Acts of Holders; Record Dates..................................................10
SECTION 105. Notices, etc., to Trustee, Company and Industries..............................13
SECTION 106. Notice to Holders of Securities; Waiver........................................13
SECTION 107. Language of Notices, etc.......................................................14
SECTION 108. Conflict with Trust Indenture Act..............................................14
SECTION 109. Effect of Headings and Table of Contents.......................................14
SECTION 110. Successors and Assigns.........................................................15
SECTION 111. Separability Clause............................................................15
SECTION 112. Benefits of Indenture..........................................................15
SECTION 113. Governing Law..................................................................15
SECTION 114. Legal Holidays.................................................................15
SECTION 115. Appointment of Agent for Service...............................................15
SECTION 116. No Adverse Interpretation of Other Agreements..................................16
SECTION 117. Execution in Counterparts......................................................16
ARTICLE TWO Security Forms............................................................16
SECTION 201. Forms Generally................................................................16
SECTION 202. Form of Trustee's Certificate of Authentication................................17
SECTION 203. Securities in Global Form......................................................17
SECTION 204. Form of Legend for Global Securities...........................................18
SECTION 205. Form of Legend for Bearer Securities...........................................18
ARTICLE THREE The Securities and the Support Agreement..................................18
SECTION 301. Amount Unlimited; Issuable in Series...........................................18
SECTION 302. Denominations..................................................................21
SECTION 303. Execution, Authentication, Delivery and Dating.................................21
SECTION 304. Temporary Securities...........................................................24
SECTION 305. Registration, Registration of Transfer and Exchange............................25
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities...............................28
SECTION 307. Payment of Interest; Interest Rights Preserved.................................29
SECTION 308. Persons Deemed Owners..........................................................31
SECTION 309. Cancellation...................................................................31
SECTION 310. Computation of Interest........................................................32
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 311. Form of Certification by a Person Entitled to Receive a
Bearer Security............................................................32
SECTION 312. Support Agreement...............................................................33
ARTICLE FOUR Satisfaction and Discharge.................................................33
SECTION 401. Satisfaction and Discharge of Indenture.........................................33
SECTION 402. Application of Trust Money......................................................35
ARTICLE FIVE Remedies...................................................................35
SECTION 501. Events of Default...............................................................35
SECTION 502. Acceleration of Maturity; Rescission and Annulment..............................37
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.................38
SECTION 504. Trustee May File Proofs of Claim................................................39
SECTION 505. Trustee May Enforce Claims Without Possession of Securities
or Coupons.................................................................40
SECTION 506. Application of Money Collected..................................................40
SECTION 507. Limitation on Suits.............................................................41
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest...............................................................41
SECTION 509. Restoration of Rights and Remedies..............................................42
SECTION 510. Rights and Remedies Cumulative..................................................42
SECTION 511. Delay or Omission Not Waiver....................................................42
SECTION 512. Control by Holders of Securities................................................42
SECTION 513. Waiver of Past Defaults.........................................................43
SECTION 514. Undertaking for Costs...........................................................43
SECTION 515. Waiver of Stay or Extension Laws................................................43
ARTICLE SIX The Trustee................................................................44
SECTION 601. Certain Duties and Responsibilities.............................................44
SECTION 602. Notice of Defaults..............................................................45
SECTION 603. Certain Rights of Trustee.......................................................46
SECTION 604. Not Responsible for Recitals or Issuance of Securities..........................47
SECTION 605. May Hold Securities.............................................................47
SECTION 606. Money Held in Trust.............................................................47
SECTION 607. Compensation and Reimbursement..................................................47
SECTION 608. Disqualification; Conflicting Interests.........................................48
SECTION 609. Corporate Trustee Required; Eligibility.........................................48
SECTION 610. Resignation and Removal; Appointment of Successor...............................49
SECTION 611. Acceptance of Appointment by Successor..........................................50
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.....................51
SECTION 613. Preferential Collection of Claims Against Company...............................52
SECTION 614. Appointment of Authenticating Agent.............................................52
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE SEVEN Holders' Lists and Reports by Trustee, Company and Industries..............55
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.......................55
SECTION 702. Preservation of Information; Communications to Holders..........................55
SECTION 703. Reports by Trustee..............................................................55
SECTION 704. Reports by Company and Industries...............................................56
ARTICLE EIGHT Consolidation, Merger, Conveyance, Transfer or Lease.......................57
SECTION 801. Company and Industries May Consolidate, Etc., Only on
Certain Terms..............................................................57
SECTION 802. Successor Corporation Substituted...............................................58
SECTION 803. Assumption by Industries or Subsidiary..........................................58
ARTICLE NINE Supplemental Indentures....................................................58
SECTION 901. Supplemental Indentures without Consent of Holders..............................58
SECTION 902. Supplemental Indentures with Consent of Holders.................................60
SECTION 903. Execution of Supplemental Indentures............................................61
SECTION 904. Effect of Supplemental Indentures...............................................61
SECTION 905. Conformity with Trust Indenture Act.............................................62
SECTION 906. Reference in Securities to Supplemental Indentures..............................62
ARTICLE TEN Covenants..................................................................62
SECTION 1001. Payment of Principal, Premium and Interest.....................................62
SECTION 1002. Maintenance of Office or Agency................................................62
SECTION 1003. Money for Securities Payments to Be Held in Trust..............................63
SECTION 1004. Additional Amounts.............................................................65
SECTION 1005. Corporate Existence............................................................66
SECTION 1006. Maintenance of Properties......................................................66
SECTION 1007. Payment of Taxes and Other Claims..............................................66
SECTION 1008. Restrictions on Liens..........................................................67
SECTION 1009. Statement as to Default........................................................69
SECTION 1010. Waiver of Certain Covenants....................................................69
SECTION 1011. Support Agreement..............................................................69
ARTICLE ELEVEN Redemption of Securities...................................................70
SECTION 1101. Applicability of Article.......................................................70
SECTION 1102. Election to Redeem; Notice to Trustee..........................................70
SECTION 1103. Selection by Trustee of Securities to Be Redeemed..............................70
SECTION 1104. Notice of Redemption...........................................................71
SECTION 1105. Deposit of Redemption Price....................................................71
SECTION 1106. Securities Payable on Redemption Date..........................................72
SECTION 1107. Securities Redeemed in Part....................................................72
</TABLE>
(iii)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE TWELVE Sinking Funds................................................................73
SECTION 1201. Applicability of Article.......................................................73
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities..........................73
SECTION 1203. Redemption of Securities for Sinking Fund......................................74
ARTICLE THIRTEEN Meetings of Holders of Securities............................................74
SECTION 1301. Purposes for Which Meetings May be Called......................................74
SECTION 1302. Call Notice and Place of Meeting...............................................74
SECTION 1303. Persons Entitled to Vote at Meetings...........................................75
SECTION 1304. Quorum; Action.................................................................75
SECTION 1305. Determination of Voting Rights; Conduct and Adjournment
of Meetings..................................................................76
SECTION 1306. Counting Votes and Recording Action of Meetings................................77
SECTION 1307. Action Without Meeting.........................................................77
ARTICLE FOURTEEN Immunity of Incorporators, Stockholders, Officers,
Directors and Employees.....................................................77
SECTION 1401. Liability Solely Corporate......................................................77
</TABLE>
EXHIBIT A Support Agreement dated April 4, 1989 as amended as of May 15,
1989, December 10, 1990 and February 14, 1991, between NIPSCO
Industries, Inc. and NIPSCO Capital Markets, Inc.
(iv)
<PAGE>
INDENTURE, dated as of February 14, 1997 among NIPSCO Capital Markets,
Inc., a corporation duly organized and existing under the laws of the State of
Indiana (herein called the "Company"), having its principal office at 5265
Hohman Avenue, Hammond, Indiana 46320, NIPSCO Industries, Inc., a corporation
duly organized and existing under the laws of the State of Indiana (herein
called "Industries"), having its principal office at 5265 Hohman Avenue,
Hammond, Indiana 46320, and The Chase Manhattan Bank, a corporation duly
organized and existing under the laws of New York, having its principal
corporate trust office at 450 West 33rd Street, New York, New York 10001, as
Trustee (herein called the "Trustee').
RECITALS OF THE COMPANY AND INDUSTRIES
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The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein collectively called
the "Securities", and individually called a "Security"), to be issued in one or
more series as in this Indenture provided.
Industries has duly authorized the execution and delivery of this Indenture
and has previously entered into a Support Agreement, dated April 4, 1989, as
amended as of May 15, 1989, December 10, 1990 and February 14, 1991 (as such
agreement may be hereafter amended, modified or supplemented from time to time
in accordance with its terms and the provisions of this Indenture, the "Support
Agreement"), with the Company, a copy of which (as currently in effect) is
attached hereto as Exhibit A, pursuant to which Industries has agreed to ensure
the timely payment of principal of and premium, if any, and interest on Debt (as
defined in the Support Agreement), provided that no holder of such Debt shall
have recourse against the stock or assets of Northern Indiana Public Service
Company, an Indiana corporation ("Northern Indiana"), or any interest of the
Company or Industries therein.
All things necessary to make this Indenture a valid agreement of the
Company and Industries, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture Act of
1939, as amended, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder that are required to be part of this Indenture
and, to the extent applicable, shall be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
<PAGE>
ARTICLE ONE
Definitions and Other Provisions of General Application
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States of America, and, except as otherwise herein
expressly provided, the term "generally accepted accounting principles"
with respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted in the United States
of America at the date of such computation;
(4) the words "herein," "hereof," "hereto" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(5) the word "or" is always used inclusively (for example, the phrase
"A or B" means "A or B or both," not "either A or B but not both").
Certain terms used principally in certain Articles are defined in those
Articles.
"Act," when used with respect to any Holder of a Security, has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
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"Authenticating Agent" means any Person or Persons authorized by the
Trustee to act on behalf of the Trustee to authenticate one or more series of
Securities.
"Authorized Newspaper" means a newspaper, in an official language of the
country of publication or in the English language, customarily published on each
Business Day, whether or not published on Saturdays, Sundays or holidays, and of
general circulation in the place in connection with which the term is used or in
the financial community of such place. Where successive publications are
required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any Business Day.
"Bearer Security" means any Security in the form for Bearer Securities set
forth in Section 203 or established pursuant to Section 201 which is payable to
bearer and shall bear the legend specified in Section 205.
"Board of Directors" means either the board of directors of the Company or
Industries, as the case may be, or any duly authorized committee thereof.
"Board Resolution" means a copy of a resolution certified by the Corporate
Secretary or an Assistant Corporate Secretary of the Company or Industries, as
the case may be, to have been duly adopted by the Board of Directors and to be
in full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day," when used with respect to a particular location specified
in the Securities or this Indenture, means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which state or national banks in such
location are authorized or obligated by law or executive order to close.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended,
or, if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"Consolidated Net Tangible Assets" means the total amount of assets
appearing on a consolidated balance sheet of Industries and its Subsidiaries
other than the Utilities less, without duplication, the following:
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(a) all current liabilities (excluding any thereof which are by their
terms extendable or renewable at the sole option of the obligor thereon
without requiring the consent of the obligee to a date more than 12 months
after the date of determination);
(b) all reserves for depreciation and other asset valuation reserves
but excluding any reserves for deferred Federal income taxes arising from
accelerated amortization or otherwise;
(c) all intangible assets such as goodwill, trademarks, trade names,
patents and unamortized debt discount and expense carried as an asset on
said balance sheet; and
(d) all appropriate adjustments on account of minority interests of
other Persons holding Common Stock in any Subsidiary.
Consolidated Net Tangible Assets shall be determined in accordance with
generally accepted accounting principles and as of a date not more than 90 days
prior to the happening of the event for which such determination is being made.
"Corporate Trust Office" means the principal corporate trust office of the
Trustee of a series of Securities at which at any particular time its corporate
trust business shall be administered, which office on the date of execution of
this Indenture is located at 450 West 33rd Street, New York, New York 10001,
Attention: Global Trust Services, except that with respect to presentation of
Securities of a series for payment or for registration of transfer or exchange,
such term shall mean the office or agency of the Trustee of such series at
which, at any particular time, its corporate agency business shall be conducted
which office or agency on the date of execution of this Indenture is located at
55 Water Street, Room 234, New York, New York 10041.
"Corporation" includes any corporation, association, company or business
trust.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more Global Securities, a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, specified for that purpose as contemplated by Section 301 or any
successor clearing agency registered under such Act as contemplated by Section
305, and if at any time there is more than one such Person, "Depositary" as used
with respect to the Securities of any series shall mean the Depositary with
respect to the Securities of such series.
"Dollar" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts.
"Event of Default" has the meaning specified in Section 501.
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"Global Security" means a Security bearing the legend specified in Section
204 evidencing all or part of a series of Securities, issued to the Depositary
for such series or its nominee, and registered in the name of such Depositary or
nominee.
"Holder," when used with respect to any Security, means in the case of a
Registered Security the Person in whose name the Security is registered in the
Security Register and in the case of a Bearer Security the bearer thereof and,
when used with respect to any coupon, means the bearer thereof.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Industries" means the Person named as "Industries'' in the first paragraph
of this instrument until a successor Corporation shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Industries''
shall mean such successor Corporation.
"Interest," when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date," when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Maturity," when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Northern Indiana" has the meaning stated in the second recital of this
Indenture.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Controller, an Assistant Controller, the Corporate Secretary or
an Assistant Corporate Secretary, of the Company or Industries, as the case may
be, that complies with the requirements of Section 314(c) of the Trust Indenture
Act and is delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company or Industries, as the case may be, and who shall be acceptable
to the Trustee, that complies with the requirements of Section 314(c) of the
Trust Indenture Act.
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"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding," when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Securities and any coupons thereto appertaining;
provided that, if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have been given any request,
demand, authorization, direction, notice, consent or waiver hereunder or are
present at a meeting of Holders of Securities for quorum purposes, Securities
owned by the Company, Industries or any other obligor upon the Securities or any
Affiliate of the Company, Industries or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver or upon any such
determination as to the presence of a quorum, only Securities which the Trustee
knows to be so owned shall be so disregarded. Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company,
Industries or any other obligor upon the Securities or any Affiliate of the
Company, Industries or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
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<PAGE>
"Person" means any individual, Corporation, partnership, joint venture,
joint-stock company, trust, limited liability company, unincorporated
organization or government or any agency or political subdivision thereof.
"Place of Payment," when used with respect to the Securities of any series,
means the place or places where the principal of (and premium, if any) and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Registered Security" means any Security established pursuant to Section
201 which is registered in the Security Register.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Registered Securities of any series means the date specified for that
purpose as contemplated by Section 301.
"Request" or "Order" means a written request or order signed in the name of
the Company or Industries, as the case may be, by its Chairman of the Board, its
President or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Controller, an Assistant Controller, its Corporate Secretary or an Assistant
Corporate Secretary, and delivered to the Trustee.
"Responsible Officer," when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any Vice President, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any senior trust officer, any trust officer or assistant
trust officer, the controller or any assistant controller or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
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<PAGE>
"Securities" and "Security" have the meanings stated in the first recital
of this Indenture and more particularly means any Securities authenticated and
delivered under this Indenture; provided, however, that, if at any time there is
more than one Person acting as Trustee under this Indenture, "Securities," with
respect to any such Person, shall mean Securities authenticated and delivered
under this Indenture, exclusive, however, of Securities of any series as to
which such Person is not Trustee.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest on the
Registered Securities of any series means a date fixed by the Trustee pursuant
to Section 307.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security or a coupon representing such installment of interest as the
fixed date on which the principal of such Security or such installment of
principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by Industries or by one or more
other Subsidiaries, or by Industries 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.
"Support Agreement" has the meaning stated in the second recital of this
Indenture.
"Support Obligations" means the obligations of Industries under the Support
Agreement.
"Trust Indenture Act'' means the Trust Indenture Act of 1939, as amended,
and any reference herein to the Trust Indenture Act or a particular provision
thereof shall mean such Act or provision, as the case may be, as amended or
replaced from time to time or as supplemented from time to time by rules or
regulations adopted by the Commission under or in furtherance of the purposes of
such Act or provision, as the case may be.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such with respect to
one or more series of Securities pursuant to the applicable provisions of this
Indenture, and thereafter "Trustee" shall mean or include each Person who is
then a Trustee hereunder, and if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean the
Trustee with respect to Securities of that series.
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"Utility" means Northern Indiana, Kokomo Gas and Fuel Company, Northern
Indiana Fuel and Light Company, Inc. and Crossroads Pipeline Company, or any
other public utility Corporation owned, either directly or indirectly, by
Industries.
"United States" means the United States of America (including the States
and the District of Columbia), its territories and possessions and other areas
subject to its jurisdiction.
"United States Alien" means any Person who, for United States Federal
income tax purposes, is a foreign corporation, a non-resident alien individual,
a non-resident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for United States Federal
income tax purposes, a foreign corporation, a non-resident alien individual or a
non-resident alien fiduciary of a foreign estate or trust.
"Vice President," when used with respect to the Company, Industries or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
SECTION 102. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company or Industries, as the case
may be, to the Trustee to take any action under any provision of this Indenture,
the Company or Industries, as the case may be, shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
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(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company or Industries may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company or
Industries, as the case may be, stating that the information with respect to
such factual matters is in the possession of the Company or Industries, as the
case may be, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
-----------------------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided in or pursuant to this Indenture to be made,
given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing. If Securities of a series are issuable
as Bearer Securities, any request, demand, authorization, direction, notice,
consent, waiver or other action provided in or pursuant to this Indenture to be
made, given or taken by Holders may, alternatively, be embodied in and evidenced
by the record of Holders of Securities voting in favor thereof, either in person
or by proxies duly appointed in writing, at any meeting of Holders of Securities
duly called and held in accordance with the provisions of Article Thirteen, or a
combination of such instrument or instruments and any such record. Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record or both are delivered to the Trustee
and, where it is hereby expressly required, to the Company and Industries. Such
instrument or instruments and any such record (and the action embodied therein
and evidenced thereby) are herein
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sometimes referred to as the "Act" of the Holders signing such instrument or
instruments and so voting at any such meeting. Proof of execution of any such
instrument or of a writing appointing any such agent, or of the holding by any
Person of a Security, shall be sufficient for any purpose of this Indenture and
(subject to Section 601) conclusive in favor of the Trustee, the Company and
Industries, if made in the manner provided in this Section. The record of any
meeting of Holders of Securities shall be proved in the manner provided in
Section 1306.
Notwithstanding the foregoing, with respect to any Global Security, nothing
herein shall prevent the Company, the Trustee, or any agent of the Company or
the Trustee, from giving effect to any request, demand, authorization,
direction, notice, consent, waiver or other action provided in this Indenture to
be given or taken by a Depositary or impair, as between a Depositary and such
holders of beneficial interests, the operation of customary practices governing
the exercise of the rights of the Depositary (or its nominee) as Holder of any
Security.
Without limiting the generality of this Section 104, unless otherwise
provided in or pursuant to this Indenture, a Holder, including a Depositary that
is a Holder of a Global Security, may make, give or take, by a proxy or proxies
duly appointed in writing, any request, demand, authorization, direction,
notice, consent, waiver or other action provided in or pursuant to this
Indenture to be made, given or taken by Holders, and a Depositary that is a
Holder of a Global Security may give its proxy or proxies to the Depositary's
participants or the beneficial owners of interests in any such Global Security,
as the case may be, through such Depositary's standing instructions and
customary practices.
Subject to the next succeeding paragraph, the Company may, in the
circumstances permitted by the Trust Indenture Act, fix any day as the record
date for the purpose of determining the Holders of Securities of any series
entitled to give or take any request, demand, authorization, direction, notice,
consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders of Securities of such series. If not
set by the Company prior to the first solicitation of a Holder of Securities of
such series made by any Person in respect of any such action, or in the case of
any such vote, prior to such vote, the record date for any such action or vote
shall be the 30th day prior to such first solicitation or vote, or, if later,
the date of the most recent list of Holders required to be provided pursuant to
Section 701, as the case may be. With regard to any record date for action to
be taken by the Holders of one or more series of Securities, only the Holders of
Securities of such series on such date (or their duly designated proxies) shall
be entitled to give or take, or vote on, the relevant action.
The Trustee shall fix a record date for the purpose of determining the
Persons who are beneficial owners of interests in any permanent Global Security
held by a Depositary and who are entitled under the procedures of such
Depositary to make, give or take, by a proxy or proxies duly appointed in
writing, any request, demand, authorization, direction, notice, consent, waiver
or other action provided in or pursuant to this Indenture to be made, given or
taken by Holders. If such a record date is fixed, the Holders on such record
date or their duly appointed proxy or proxies, and
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only such Persons, shall be entitled to make, give or take such request, demand,
authorization, direction, notice, consent, waiver or other action, whether or
not such Holders remain Holders after such record date. No such request,
demand, authorization, direction, notice, consent, waiver or other action shall
be valid or effective if made, given or taken more than 90 days after such
record date.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient.
(c) The principal amount and serial numbers of Registered Securities
held by any Person, and the date of holding the same, shall be proved by the
Security Register.
(d) The principal amount and serial numbers of Bearer Securities held
by any Person executing any such instrument or writing as a Holder of
Securities, and the date of his holding the same, may be proved by the
production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company, bank, banker or other depositary, wherever
situated, if such certificate shall be deemed by the Trustee to be satisfactory,
showing that at the date therein mentioned such Person had on deposit with such
depositary, or exhibited to it, the Bearer Securities therein described; or such
facts may be proved by the certificate or affidavit of the Person executing such
instrument or writing as a Holder of Securities, if such certificate or
affidavit is deemed by the Trustee to be satisfactory. The Trustee, the Company
and Industries may assume that such ownership of any Bearer Security continues
until (1) another certificate or affidavit bearing a later date issued in
respect of the same Bearer Security is produced, or (2) such Bearer Security is
produced to the Trustee by some other Person, or (3) such Bearer Security is
surrendered in exchange for a Registered Security, or (4) such Bearer Security
is no longer Outstanding.
(e) The fact and date of execution of any such instrument or writing,
the authority of the Person executing the same, the principal amount and serial
numbers of Bearer Securities held by the Person so executing such instrument or
writing and the date of holding the same may also be proved in any other
reasonable manner which the Trustee deems sufficient; and the Trustee may in any
instance require further proof with respect to any of the matters referred to in
this Section.
(f) Any request, demand, authorization, direction, notice, consent,
election, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee, the
Company or Industries in reliance thereon, whether or not notation of such
action is made upon such Security.
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SECTION 105. Notices, etc., to Trustee, Company and Industries.
-------------------------------------------------
Any request, demand, authorization, direction, notice, consent, election,
waiver or other Act of Holders of a series of Securities or other document
provided or permitted by this Indenture to be made upon, given or furnished to,
or filed with,
(1) the Trustee of such series by any Holder of a Security of such
series or by the Company or Industries shall be sufficient for every
purpose hereunder if made, given, furnished or filed in writing to or with
the Trustee of such series at its Corporate Trust Office, or
(2) the Company or Industries, as the case may be, by the Trustee of
such series or by any Holder of a Security of such series shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Company or Industries, as the case may be, addressed to the attention of
its Corporate Secretary, at 5265 Hohman Avenue, Hammond, Indiana 46320, or
at any other address previously furnished in writing to the Trustee of such
series by the Company or Industries, as the case may be.
SECTION 106. Notice to Holders of Securities; Waiver.
---------------------------------------
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Securities (of any series) of any event,
(1) such notice shall be sufficiently given to Holders of Registered
Securities of such series if in writing and mailed, first-class postage
prepaid, to each Holder of a Registered Security of such series affected by
such event, at his address as it appears in the Security Register, not
later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such Notice; and
(2) such notice shall be sufficiently given to Holders of Bearer
Securities of such series if published in an Authorized Newspaper in the
Borough of Manhattan, The City of New York and, if the Securities of such
series are then listed on The Stock Exchange of the United Kingdom and the
Republic of Ireland and such stock exchange shall so require, in London
and, if the Securities of such series are then listed on the Luxembourg
Stock Exchange and such stock exchange shall so require, in Luxembourg and,
if the Securities of such series are then listed on any other stock
exchange outside the United States and such stock exchange shall so
require, in any other required city outside the United States or, if not
practicable, in Europe, on a Business Day at least twice, the first such
publication to be not earlier than the earliest date and not later than the
latest date prescribed for the giving of such notice.
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In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder. In any case where notice
to Holders of Registered Securities is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any particular
Holder of a Registered Security shall affect the sufficiency of such notice with
respect to other Holders of Registered Securities or the sufficiency of any
notice by publication to Holders of Bearer Securities given as provided above.
In case by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearer Securities of any
series as provided above, then such notification to Holders of such Bearer
Securities as shall be given with the approval of the Trustee for such series
shall constitute sufficient notice to such Holders for every purpose hereunder.
Neither failure to give notice by publication to Holders of Bearer Securities as
provided above, nor any defect in any notice so published, shall affect the
sufficiency of any notice mailed to Holders of Registered Securities as provided
above.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders of Securities shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
SECTION 107. Language of Notices, etc.
Any request, demand, authorization, direction, notice, consent, election or
waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
SECTION 108. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with any duties
under any required provision of the Trust Indenture Act imposed hereon by
Section 318(c) thereof, such required provision shall control.
SECTION 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
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SECTION 110. Successors and Assigns.
All covenants and agreements in this Indenture by the Company and
Industries shall bind their respective successors and assigns, whether so
expressed or not.
SECTION 111. Separability Clause.
In case any provision in this Indenture or the Securities or coupons shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 112. Benefits of Indenture.
Nothing in this Indenture or the Securities or coupons, express or implied,
shall give to any Person, other than the parties hereto, their successors
hereunder and the Holders of Securities and coupons, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 113. Governing Law.
This Indenture and the Securities and coupons shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 114. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Securities
or coupons) payment of interest or principal (and premium, if any) need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity, provided that no interest shall accrue on the amount so payable for
the period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be.
SECTION 115. Appointment of Agent for Service.
By the execution and delivery of this Indenture, the Company and Industries
hereby appoint the Trustee as their agent upon which process may be served in
any legal action or proceeding which may be instituted in any Federal or State
court in the Borough of Manhattan, The City of New York, arising out of or
relating to the Securities, the coupons or this Indenture. Service of process
upon such agent at the office of such agent at 450 West 33rd Street, New York,
New York 10001, Attention: Global Trust Services (or such other address in the
Borough of Manhattan, The City of New York, as may be the Corporate Trust Office
of the Trustee), and written notice of said service
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to the Company and Industries by the Person serving the same addressed as
provided in Section 105, shall be deemed in every respect effective service of
process upon the Company and Industries in any such legal action or proceeding,
and the Company and Industries hereby submit to the jurisdiction of any such
court in which any such legal action or proceeding is so instituted. Such
appointment shall be irrevocable so long as the Holders of Securities or coupons
shall have any rights pursuant to the terms thereof or of this Indenture until
the appointment of a successor by the Company and Industries with the consent of
the Trustee and such successor's acceptance of such appointment. The Company and
Industries further agree to take any and all action, including the execution and
filing of any and all such documents and instruments, as may be necessary to
continue such designation and appointment of such agent or successor.
By the execution and delivery of this Indenture, the Trustee hereby agrees
to act as such agent and undertakes promptly to notify the Company and
Industries of receipt by it of service of process in accordance with this
Section.
SECTION 116. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company, Industries or any Affiliate of either. No such
indenture, loan or debt agreement may be used to interpret this Indenture.
SECTION 117. Execution in Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally.
The Registered Securities, if any, of each series and the Bearer
Securities, if any, of each series and related coupons and the Global
Securities, if any, issued pursuant to this Indenture shall be in such form as
shall be established by or pursuant to a Board Resolution of the Company or in
one or more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
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consistently herewith, be determined by the officers executing such Securities
or coupons, as evidenced by their execution of the Securities or coupons. If
the forms of Securities or coupons of any series are established by action taken
pursuant to a Board Resolution of the Company, a copy of an appropriate record
of such action shall be certified by the Corporate Secretary or an Assistant
Corporate Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Order of the Company contemplated by Section 303 for the
authentication and delivery of such Securities or coupons.
The Trustee's certificates of authentication shall be in substantially the
form set forth in this Article or Article Six.
Unless otherwise provided as contemplated by Section 301 with respect to
any series of Securities, the Securities of each series shall be issuable in
global and registered form without coupons. If so provided as contemplated by
Section 301, the Securities of a series also shall be issuable in bearer form,
with or without interest coupons attached.
The definitive Securities and coupons, if any, shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities or coupons.
SECTION 202. Form of Trustee's Certificate of Authentication.
Subject to Section 614, the Trustee's certificate of authentication shall
be in substantially the following form:
This is one of the Securities of the series referred to in the within
mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By:____________________________________
Authorized Officer
SECTION 203. Securities in Global Form.
If Securities of a series are issuable in global form, any such Security
may provide that it or any number of such Securities shall represent the
aggregate amount of all Outstanding Securities of such series (or such lesser
amount as is permitted by the terms thereof) from time to time endorsed thereon
and may also provide that the aggregate amount of Outstanding Securities
represented thereby may from time to time be increased or reduced to reflect
exchanges. Any endorsement of any Security in global form to reflect the
amount, or any increase or decrease in the amount, or
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changes in the rights of Holders, of Outstanding Securities represented thereby
shall be made in such manner and by such Person or Persons as shall be specified
therein or in the Order of the Company to be delivered pursuant to Sections 303
or 304 with respect thereto. Subject to the provisions of Section 303 and, if
applicable, Section 304, the Trustee shall deliver and redeliver any Security in
permanent global form in the manner and upon instructions given by the Person or
Persons specified therein or in the applicable Order of the Company. If the
Order of the Company pursuant to Sections 303 or 304 has been, or simultaneously
is, delivered, any instructions by the Company with respect to a Security in
global form shall be in writing but need not be accompanied by or contained in
an Officers' Certificate and need not be accompanied by an Opinion of Counsel.
SECTION 204. Form of Legend for Global Securities.
Any Global Security authenticated and delivered hereunder shall bear a
legend in substantially the following form, or in such other form that is
acceptable to the Depositary and the Trustee:
"Unless and until it is exchanged in whole or in part for Securities in
definitive registered form, this Security 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."
SECTION 205. Form of Legend for Bearer Securities.
Any Bearer Security authenticated and delivered hereunder shall bear a
legend in substantially the following form:
"Any United States person who holds this Security will be subject to
limitations under the United States income tax laws, including the limitation
provided in Sections 165(j) and 1287(a) of the Internal Revenue Code of 1986, as
amended."
ARTICLE THREE
The Securities and the Support Agreement
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
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The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution of the Company, and set forth
in an Officers' Certificate of the Company, or established in one or more
indentures supplemental hereto, prior to the issuance of Securities of any
series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of all other
series issued by the Company);
(2) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 906 or 1107);
(3) the date or dates on which the principal of the Securities of the
series is payable;
(4) the rate or rates at which the Securities of the series shall
bear interest, if any, or any method by which such rate or rates shall be
determined, the date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest shall be payable and the
Regular Record Date for the interest payable on Registered Securities on
any Interest Payment Date;
(5) the place or places where the principal of (and premium, if any)
and interest, if any, on Securities of the series shall be payable;
(6) whether Securities of such series may be redeemed, and if so, the
period or periods within which, the price or prices at which and the terms
and conditions upon which Securities of the series may be redeemed, in
whole or in part, at the option of the Company;
(7) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(8) whether Bearer Securities of the series are to be issuable;
(9) if Bearer Securities of the series are to be issuable, whether
interest in respect of any portion of a temporary Bearer Security in global
form (representing all of the Outstanding Bearer Securities of the series)
payable in respect of an Interest Payment Date prior to the exchange of
such temporary Bearer Security for definitive Securities of the series
shall be paid to any clearing organization with respect to the portion of
such temporary
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Bearer Security held for its account and, in such event, the terms and
conditions (including any certification requirements) upon which any such
interest payment received by a clearing organization will be credited to
the Persons entitled to interest payable on such Interest Payment Date;
(10) the date as of which any Bearer Securities of the series, any
temporary Bearer Security in global form and any Global Securities shall be
dated if other than the date of original issuance of the first Security of
the series to be issued;
(11) the denominations in which Registered Securities of the series,
if any, shall be issuable if other than denominations of $1,000 and any
integral multiple thereof, and the denominations in which Bearer Securities
of the series, if any, shall be issuable if other than the denomination of
$5,000;
(12) the currency or currencies, including composite currencies, in
which payment of the principal of (and premium, if any) and interest, if
any, on the Securities of the series shall be payable (if other than the
currency of the United States of America);
(13) if the amount of payments of principal of (and premium, if any)
or interest on the Securities of the series may be determined with
reference to an index, the manner in which such amounts shall be
determined;
(14) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section
502;
(15) any Events of Default or covenants of the Company or Industries
pertaining to the Securities of the series;
(16) whether and under what circumstances the Company will pay
additional amounts on the Securities of the series held by a Person who is
a United States Alien in respect of taxes or similar charges withheld or
deducted and, if so, whether the Company will have the option to redeem
such Securities rather than pay such additional amounts;
(17) whether any Securities of the series are to be issuable in whole
or in part in the form of one or more Global Securities and, if so, (a) the
Depositary with respect to such Global Security or Securities and (b) the
circumstances under which beneficial owners of interests in any such Global
Security may exchange such interest for Securities of the same series and
of like tenor and of any authorized form and denomination, and the
circumstances under which any such exchange may occur, if other than as set
forth in Section 305;
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(18) if any of such Securities are to be issued in global form and
are to be issuable in definitive form (whether upon original issue or upon
exchange of a temporary Security) only upon receipt of certain certificates
or other documents or satisfaction of other conditions, then the form and
terms of such certificates, documents, or conditions; and
(19) any other terms of the series (which terms shall not be
inconsistent with the terms of this Indenture).
All Securities of any one series and the coupons appertaining to Bearer
Securities of such series, if any, shall be substantially identical except, in
the case of Registered Securities, as to denomination and except as may
otherwise be provided in or pursuant to such Board Resolution and set forth in
such Officers' Certificate or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution of the Company, a copy of an appropriate record of such
action shall be certified by the Corporate Secretary or an Assistant Corporate
Secretary of the Company and delivered to the Trustee at or prior to the
delivery of the Officers' Certificate of the Company setting forth the terms of
the series. Such Board Resolution may provide general terms or parameters for
Securities of such series and may provide that the specific terms of particular
Securities of such series, and the Persons authorized to determine such terms or
parameters, may be determined in accordance with or pursuant to the Order of the
Company referred to in the third paragraph of Section 303.
SECTION 302. Denominations.
-------------
Unless otherwise provided as contemplated by Section 301 with respect to
any series of Securities, the Registered Securities of each series shall be
issuable in denominations of $1,000 or any integral multiple thereof and the
Bearer Securities of each series, if any, shall be issuable in the denomination
of $5,000.
SECTION 303. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its President or one of its Vice Presidents, under its corporate
seal reproduced thereon attested by its Corporate Secretary or one of its
Assistant Corporate Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile. Coupons shall bear the facsimile
signature of the Treasurer or any Assistant Treasurer of the Company.
Securities and coupons bearing the manual or facsimile signatures of
individuals who were at any time relevant to the authorization thereof the
proper officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices at
the date of such Securities.
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At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed on behalf
of the Company to the Trustee for authentication by the Trustee together with an
Order of the Company for the authentication and delivery of such Securities, and
the Trustee in accordance with such Order shall authenticate and deliver such
Securities; provided, however, that, in connection with its original issuance, a
Bearer Security may be delivered only outside the United States and only if the
Trustee shall have received from the Person entitled to receive such Bearer
Security a certificate in the form required by Section 311; provided, further,
that, with respect to Securities of a series constituting a medium term note
program, the Trustee shall authenticate and deliver Securities of such series
for original issue from time to time in the aggregate principal amount
established for such series pursuant to such procedures acceptable to the
Trustee and to such recipients as may be specified from time to time by an Order
of the Company. The maturity dates, original issue dates, interest rates and
any other terms of the Securities of such series shall be determined by or
pursuant to such Order of the Company and procedures. If provided for in such
procedures, such Order of the Company may authorize authentication and delivery
pursuant to oral instructions from the Company or its duly authorized agent,
which instructions shall be promptly confirmed in writing.
In authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Sections 315(a) through
315(d) of the Trust Indenture Act) shall be fully protected in relying upon:
(a) the Board Resolution of the Company or indenture supplemental
hereto establishing the form of the Securities of that series pursuant to
Section 201 and the terms of the Securities of that series pursuant to
Section 301 (or, in the case of a Board Resolution, pursuant to which such
form and terms are established);
(b) an Officer's Certificate pursuant to Sections 201 and 301 and
complying with Section 102; and
(c) an Opinion of Counsel complying with Section 102 stating,
(i) that the forms of such Securities and coupons, if any,
have been established by or pursuant to a Board Resolution of the
Company or by an indenture supplemental hereto, as permitted by
Section 201 and in conformity with the provisions of this Indenture;
(ii) that the terms of such Securities have been established by
or pursuant to a Board Resolution of the Company or by an indenture
supplemental hereto, as permitted by Sections 201 and 301 and in
conformity with the provisions of this Indenture;
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(iii) that such Securities, together with the coupons, if any,
appertaining thereto, when authenticated and delivered by the Trustee
and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company entitled to the benefits
provided by the Support Agreement and the Indenture, enforceable in
accordance with their respective terms, except to the extent that the
enforcement of such obligations may be subject to bankruptcy laws or
insolvency laws or other similar laws, general principles of equity
and such other qualifications as such counsel shall conclude are
customary or do not materially affect the rights of the Holders of
such Securities;
(iv) that all laws and requirements in respect of the execution
and delivery of the Securities have been complied with; and
(v) such other matters as the Trustee may reasonably request.
With respect to Securities of a series constituting a medium term note
program, the Trustee may conclusively rely on the documents and opinion
delivered pursuant to Sections 201 and 301 and this Section 303, as applicable
(unless revoked by superseding comparable documents or opinions) as to the
authorization of the Board of Directors of any Securities delivered hereunder,
the form thereof and the legality, validity, binding effect and enforceability
thereof.
Notwithstanding the provisions of Section 301 and of the preceding two
paragraphs, if not all the Securities of any series are to be issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the documents otherwise required pursuant to
the preceding clauses (a), (b) or (c) prior to or at the time of issuance of
each Security, but such documents shall be delivered prior to or at the time of
issuance of the first Security of such series. After any such first delivery,
any separate Request by the Company that the Trustee authenticate Securities of
such series for original issue will be deemed to be a certification by the
Company that all conditions precedent provided for in this Indenture relating to
authentication and delivery of such Securities continue to have been complied
with.
If such forms or terms have been so established by or pursuant to a Board
Resolution of the Company or by an indenture supplemental hereto as permitted by
Sections 201 and 301, the Trustee shall have the right to decline to
authenticate and deliver any Securities of such series:
(i) if the Trustee, being advised by counsel, determines that such
action may not lawfully be taken;
(ii) if the Trustee in good faith by its board of directors, executive
committee or a trust committee of directors or Responsible Officers of the
Trustee in good faith determines
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that such action would expose the Trustee to personal liability to Holders
of any Outstanding series of Securities; or
(iii) if the issue of such Securities pursuant to this Indenture
will affect the Trustee's own rights, duties and immunities under the
Securities and this Indenture or otherwise in a manner which is not
reasonably acceptable to the Trustee.
If the Company shall establish pursuant to Section 301 that the Securities
of a series are to be issued in whole or in part in the form of one or more
Global Securities, then the Company shall execute and the Trustee shall, in
accordance with this Section and the Order of the Company with respect to such
series, authenticate and deliver one or more Global Securities in permanent form
that (i) shall represent and shall be denominated in an amount equal to the
aggregate principal amount of the Outstanding Securities of such series to be
represented by such Global Security or Securities, (ii) shall be registered, if
in registered form, in the name of the Depositary for such Global Security or
Securities or the nominee of such Depositary, (iii) shall be delivered by the
Trustee to such Depositary or pursuant to such Depositary's instruction and (iv)
shall bear a legend as required by Section 204.
Each Registered Security shall be dated the date of its authentication.
Each Global Security, each Bearer Security and any temporary Bearer Security in
global form shall be dated as of the date specified as contemplated by Section
301.
No Security or related coupon shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein executed by the Trustee by manual signature, and such certificate upon
any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Indenture. Except as permitted by Section 306 or 307, the
Trustee shall not authenticate and deliver any Bearer Security unless all
appurtenant coupons for interest then matured and paid or payment duly provided
for have been detached and canceled.
SECTION 304. Temporary Securities.
--------- ----------
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon an Order of the Company the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form or, if authorized, in bearer form with one or
more coupons or without coupons, and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as evidenced by their execution of such Securities. In
the case of Bearer Securities of any series, such temporary Securities may be in
global form, representing all of the outstanding Bearer Securities of such
series.
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Except in the case of temporary Securities in global form, which shall be
exchanged in accordance with the provisions thereof, if temporary Securities of
any series are issued, the Company will cause definitive Securities of that
series to be prepared without unreasonable delay. After the preparation of
definitive Securities of such series, the temporary Securities of such series
shall be exchangeable for definitive Securities of such series upon surrender of
the temporary Securities of such series at the office or agency of the Company
in a Place of Payment for that series, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities of any series
(accompanied by any unmatured coupons appertaining thereto), the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor (at
an office or agency of the Company in the case of Bearer Securities) a like
principal amount of definitive Securities of the same series of authorized
denominations and of like tenor; provided, however, that no definitive Bearer
Security shall be delivered in exchange for a temporary Registered Security; and
provided, further, that no definitive Bearer Security shall be delivered in
exchange for a temporary Bearer Security unless the Trustee shall have received
from the Person entitled to receive the definitive Bearer Security a certificate
in the form required by Section 311. Until so exchanged, the temporary
Securities of any series, including temporary Securities in global form, shall
in all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.
SECTION 305. Registration, Registration of Transfer and Exchange.
---------------------------------------------------
The Company shall cause to be kept at one of its offices or agencies
designated pursuant to Section 1002 a register (referred to as the "Security
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Registered Securities of each
series and of transfers and exchanges of Registered Securities of such series.
Said office or agency is hereby appointed the security registrar (referred to as
the "Security Registrar") for the purpose of registering Registered Securities
of each series and transfers and exchanges of Registered Securities of such
series as herein provided.
Upon surrender for registration of transfer of any Registered Security of
any series at the office or agency in a Place of Payment maintained for such
purpose for such series, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Registered Securities of the same series, Stated
Maturity and original issue date, of any authorized denominations and of like
tenor and aggregate principal amount.
At the option of the Holder, Registered Securities of any series (except a
Global Security representing all or a portion of such series) may be exchanged
for Registered Securities of the same series, Stated Maturity and original issue
date, of any authorized denominations and of like tenor and aggregate principal
amount, upon surrender of the Securities to be exchanged at any such office or
agency.
At the option of the Holder, Bearer Securities of any series may be
exchanged for Registered Securities of the same series, Stated Maturity and
original issue date, of any authorized
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denominations and of like tenor and aggregate principal amount, upon surrender
of the Bearer Securities to be exchanged at any such office or agency, with all
unmatured coupons and all matured coupons in default thereto appertaining. If
the Holder of a Bearer Security is unable to produce any such unmatured coupon
or coupons or matured coupon or coupons in default, such exchange may be
effected if the Bearer Securities are accompanied by payment in funds acceptable
to the Company and the Trustee in an amount equal to the face amount of such
missing coupon or coupons, or the surrender of such missing coupon or coupons
may be waived by the Company and the Trustee if there be furnished to them such
security or indemnity as they may require to save each of them and any Paying
Agent harmless. If thereafter the Holder of such Security shall surrender to
any Paying Agent any such missing coupon in respect of which such a payment
shall have been made, such Holder shall be entitled to receive the amount of
such payment; provided, however, that, except as otherwise provided in Section
1002, interest represented by coupons shall be payable only upon presentation
and surrender of those coupons at an office or agency located outside the United
States. Notwithstanding the foregoing, in case a Bearer Security of any series
is surrendered at any such office or agency in exchange for a Registered
Security of the same series after the close of business at such office or agency
on (i) any Regular Record Date and before the opening of business at such office
or agency on the relevant Interest Payment Date, or (ii) any Special Record Date
and before the opening of business at such office or agency on the related date
for payment of Defaulted Interest, such Bearer Security shall be surrendered
without the coupon relating to such Interest Payment Date or proposed date of
payment, as the case may be.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
The Company shall not be required (i) to issue, to register the transfer of
or to exchange Securities of any series during a period of 15 Business Days
immediately preceding the date notice is given identifying the serial numbers of
the Securities of that series called for redemption, or (ii)
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to issue, to register the transfer of or to exchange any Registered Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part, or (iii) to exchange any Bearer Security so
selected for redemption except that such a Bearer Security may be exchanged for
a Registered Security of that series, provided that such Registered Security
shall be immediately surrendered for redemption with written instruction for
payment consistent with the provisions of this Indenture.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any Global Security shall be exchangeable pursuant
to this Section 305 or Sections 304, 306, 906 or 1107 for Securities registered
in the name of, and a transfer of a Global Security of any series may be
registered to, any Person other than the Depositary for such Global Security or
its nominee only if:
(i) such Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for such Global Security or if at any time
such Depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, and a successor Depositary is
not appointed by the Company within 90 days;
(ii) the Company executes and delivers to the Trustee an Order of
the Company that such Global Security shall be so exchangeable and the
transfer thereof so registrable; or
(iii) there shall have occurred and be continuing an Event of Default
or an event which, with the giving of notice or lapse of time, would
constitute an Event of Default with respect to the Securities of such
series.
Upon the occurrence in respect of any Global Security of any series of any one
or more of the conditions specified in clauses (i), (ii) or (iii) of the
preceding sentence or such other conditions as may be specified as contemplated
by Section 301 for such series, then without unnecessary delay, but in any event
not later than the earliest date on which such interests may be so exchanged,
the Company shall deliver to the Trustee definitive Securities of that series in
aggregate principal amount equal to the principal amount of such Global
Security, executed by the Company.
On or after the earliest date on which such interests may be so exchanged,
such Global Securities shall be surrendered from time to time by the Depositary
and in accordance with instructions given to the Trustee and the Depositary
(which instructions shall be in writing but need not be contained in or
accompanied by an Officers' Certificate or be accompanied by an Opinion of
Counsel), as shall be specified in the Order of the Company with respect thereto
to the Trustee, as the Company's agent for such purpose, to be exchanged, in
whole or in part, for definitive Securities of the same series without service
charge. The Trustee shall authenticate and make available for delivery, in
exchange for each portion of such surrendered Global Security, a like aggregate
principal amount of definitive Securities of the same series of authorized
denominations and of like tenor as the portion of such Global Security to be
exchanged which (unless the Securities of the series are
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not issuable both as Bearer Securities and as Registered Securities, in which
case the definitive Securities exchanged for the Global Security shall be
issuable only in the form in which the Securities are issuable, as specified as
contemplated by Section 301) shall be in the form of Bearer Securities or
Registered Securities, or any combination thereof, as shall be specified by the
beneficial owner thereof; provided, however, that no such exchanges may occur
during a period beginning at the opening of business 15 Business Days before any
selection of Securities of that series to be redeemed and ending on the relevant
Redemption Date; and provided, further, that (unless otherwise specified as
contemplated by Section 301) no Bearer Security delivered in exchange for a
portion of a Global Security shall be mailed or otherwise delivered to any
location in the United States.
Promptly following any such exchange in part, such Global Security shall be
returned by the Trustee to the Depositary in accordance with the instructions of
the Company referred to above. If a Registered Security is issued in exchange
for any portion of a Global Security after the close of business at the office
or agency where such exchange occurs on (i) any Regular Record Date for such
Security and before the opening of business at such office or agency on the next
Interest Payment Date, or (ii) any Special Record Date for such Security and
before the opening of business at such office or agency on the related proposed
date for payment of interest or Defaulted Interest, as the case may be, interest
shall not be payable on such Interest Payment Date or proposed date for payment,
as the case may be, in respect of such Registered Security, but shall be payable
on such Interest Payment Date or proposed date for payment, as the case may be,
only to the Person to whom interest in respect of such portion of such Global
Security is payable in accordance with the provisions of this Indenture.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security or a Security with a mutilated coupon
appertaining to it is surrendered to the Trustee, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a new Security
of the same series, Stated Maturity and original issue date, and of like tenor
and principal amount and bearing a number not contemporaneously outstanding,
with coupons corresponding to the coupons, if any, appertaining to the
surrendered Security.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security or coupon
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security or coupon has been acquired by a
bona fide purchaser, the Company shall execute and upon its Request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security or in exchange for the Security to which a destroyed, lost or stolen
coupon appertains (with all appurtenant coupons not destroyed, lost or stolen),
a new Security of the same series, Stated Maturity and original issue date, and
of like tenor and principal amount and bearing a number not contemporaneously
outstanding, with coupons corresponding to the coupons, if any, appertaining to
such destroyed, lost or stolen Security or to the Security to which such
destroyed, lost or stolen coupon appertains.
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In case any such mutilated, destroyed, lost or stolen Security or coupon
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security or coupon; provided,
however, that payment of principal of (and premium, if any) and any interest on
Bearer Securities shall, except as otherwise provided in Section 1002, be
payable only at an office or agency located outside the United States; and
provided, further, that, with respect to any such coupons, interest represented
thereby (but not any additional amounts payable as provided in Section 1004),
shall be payable only upon presentation and surrender of the coupons
appertaining thereto.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series, with its coupons, if any, issued pursuant
to this Section in lieu of any mutilated, destroyed, lost or stolen Security, or
in exchange for a Security to which a destroyed, lost or stolen coupon
appertains, shall constitute an original additional contractual obligation of
the Company, whether or not the mutilated, destroyed, lost or stolen Security
and its coupons, if any, or the mutilated, destroyed, lost or stolen coupon
shall be at any time enforceable by anyone, and any such new Security and
coupons, if any, shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of that series and their
coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities or coupons.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Unless otherwise provided as contemplated by Section 301 with respect to
any series of Securities, interest on any Registered Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest. Interest, if any, is paid on Bearer Securities to Holders of
coupons. In case a Bearer Security of any series is surrendered in exchange for
a Registered Security of such series after the close of business (at an office
or agency in a Place of Payment for such series) on any Regular Record Date and
before the opening of business (at such office or agency) on the next succeeding
Interest Payment Date, such Bearer Security shall be surrendered without the
coupon relating to such Interest Payment Date and interest will not be payable
on such Interest Payment Date in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holder of
such coupon when due in accordance with the provisions of this Indenture.
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Any interest on any Registered Security of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of having been such Holder,
and such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Registered Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Registered Security of such series and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as provided in
this clause. Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than 15 days and
not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder of Registered Securities of such series at the address of
such Holder as it appears in the Security Register, not less than 10 days
prior to such Special Record Date. The Trustee may, in its discretion, in
the name and at the expense of the Company, cause a similar notice to be
published at least once in an Authorized Newspaper in each Place of
Payment, but such publication shall not be a condition precedent to the
establishment of such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor having been
so mailed, such Defaulted Interest shall be paid to the Persons in whose
names the Registered Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following clause (2). In case a Bearer Security of any series is
surrendered at the office or agency in a Place of Payment for such series
in exchange for a Registered Security of such series after the close of
business at such office or agency on any Special Record Date and before the
opening of business at such office or agency on the related proposed date
for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the coupon relating to such proposed date of payment
and Defaulted Interest will not be payable on such proposed date of payment
in respect of the Registered Security issued in exchange for such Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture.
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(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may deem and treat the Person in whose name such Registered Security is
registered as the absolute owner of such Registered Security for the purpose of
receiving payment of principal of (and premium, if any) and (subject to Section
307) interest on such Security and for all other purposes whatsoever, whether or
not such Security be overdue, and neither the Company, the Trustee nor any agent
of the Company or the Trustee shall be affected by any notice to the contrary.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the bearer of any Bearer Security and the bearer of any coupon as the
absolute owner of such Security or coupon for the purpose of receiving payment
thereof or on account thereof and for all other purposes whatsoever, whether or
not such Security or coupon be overdue, and neither the Company, the Trustee nor
any agent of the Company or the Trustee shall be affected by notice to the
contrary.
No holder of any beneficial interest in any Global Security held on its
behalf by a Depositary (or its nominee) shall have any rights under this
Indenture with respect to such Global Security or any Security represented
thereby, and such Depositary may be treated by the Company, the Trustee, and any
agent of the Company or the Trustee as the owner of such Global Security or any
Security represented thereby for all purposes whatsoever. None of the Company,
the Trustee, any Paying Agent or the Security Registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
SECTION 309. Cancellation.
All Securities and coupons surrendered for payment, redemption,
registration of transfer or exchange or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee and shall be promptly canceled by the Trustee. The
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Company may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly canceled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities canceled as provided in this Section,
except as expressly permitted by this Indenture. All canceled Securities and
coupons held by the Trustee shall be destroyed and certification of their
destruction delivered to the Company, unless an Order of the Company shall
direct that canceled Securities be returned to the Company.
The repayment of any principal amount of Securities pursuant to such option
of the Holder to require repayment of Securities before their Stated Maturity,
for purposes of this Section 309, shall not operate as a payment, redemption or
satisfaction of the indebtedness represented by such Securities unless and until
the Company, at its option, shall deliver or surrender the same to the Trustee
with an Order that such Securities be canceled.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360-day year consisting of twelve 30-day months.
SECTION 311. Form of Certification by a Person Entitled to Receive a Bearer
Security.
Whenever any provision of this Indenture or the form of Security
contemplates that certification be given by a Person entitled to receive a
Bearer Security, such certification shall be provided substantially in the form
of the following certificate, with only such changes as shall be approved by the
Company:
[Form of Certificate to Be Given By
Person Entitled to Receive Bearer Security]
Certificate
[Name of Security]
This is to certify that the above-captioned Security is not being acquired
by or on behalf of a United States person, or for offer to resell or for resale
to a United States person, or, if a beneficial interest in the Security is being
acquired by a United States person, that such person is a financial institution
or is acquiring through a financial institution and that the Security is held by
a financial institution that has agreed in writing to comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder and that such person or
financial institution is not purchasing for offer to resell or for resale within
the United
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States. If this certificate is being provided by a clearing organization, it is
based on statements provided to it by its member organizations. As used herein,
"United States" means the United States of America (including the States and the
District of Columbia), its territories and possessions and other areas subject
to its jurisdiction, and "United States person" means any citizen or resident of
the United States, any corporation, partnership or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof and any estate or trust the income of which is subject to United States
Federal income taxation regardless of its source. If the undersigned is a
dealer, the undersigned agrees to obtain a similar certificate from each person
entitled to delivery of any of the above-captioned Securities in bearer form
purchased from it; provided, however, that, if the undersigned has actual
knowledge that the information contained in such a certificate is false, the
undersigned will not deliver a Security in temporary or definitive bearer form
to the person who signed such certificate notwithstanding the delivery of such
certificate to the undersigned.
We undertake to advise you by telecopy if the above statement as to
beneficial ownership is not correct on the date of delivery of the above-
captioned Securities in bearer form as to all of such Securities.
We understand that this certificate is required in connection with certain
tax legislation in the United States. If administrative or legal proceedings
are commenced or threatened in connection with which this certificate is or
would be relevant, we irrevocably authorize you to produce this certificate or a
copy thereof to any interested party in such proceedings.
Dated: __________, 19__
SECTION 312. Support Agreement.
Holders of Securities and coupons and the Trustee are entitled to the
benefits of the Support Agreement available to Lenders (as defined in the
Support Agreement), it being understood and agreed that the Securities and
coupons constitute Debt (as defined in the Support Agreement) for purposes of
the Support Agreement.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon a Request of the Company cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for, and any right to receive
additional amounts, as provided in Section 1004), and the Trustee, at
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the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when:
(1) either
(A) all Securities theretofore authenticated and delivered and all
coupons appertaining thereto (other than (i) coupons appertaining to Bearer
Securities surrendered for exchange for Registered Securities and maturing
after such exchange, whose surrender is not required or has been waived as
provided in Section 305, (ii) Securities and coupons which have been
destroyed, lost or stolen and which have been replaced or paid as provided
in Section 306, (iii) coupons appertaining to Securities called for
redemption and maturing after the relevant Redemption Date, whose surrender
has been waived as provided in Section 1106, and (iv) Securities and
coupons for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (B)(i), (ii) or (iii) above, has deposited
or caused to be deposited with the Trustee as trust funds in trust
dedicated solely for such purpose an amount sufficient to pay and discharge
the entire indebtedness on such Securities and coupons not theretofore
delivered to the Trustee for cancellation, for principal (and premium, if
any) and interest to the date of such deposit (in the case of Securities
which have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
of the Company and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.
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In the event there are Securities of two or more series hereunder, the
Trustee shall be required to execute an instrument acknowledging satisfaction
and discharge of this Indenture only if requested to do so with respect to
Securities of all series as to which it is Trustee and if the other conditions
thereto are met. In the event there are two or more Trustees hereunder, then
the effectiveness of any such instrument shall be conditioned upon receipt of
such instruments from all Trustees hereunder.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company and Industries to the Trustee under Section 607, the
obligations of the Trustee to any Authenticating Agent under Section 614 and, if
money shall have been deposited with the Trustee pursuant to subclause (B) of
clause (1) of this Section, the obligations of the Trustee under Sections 305,
306, 402, 1002 and 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provision of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities, the coupons
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee, but such money need not be segregated from other funds, except to the
extent required by law.
ARTICLE FIVE
Remedies
SECTION 501. Events of Default.
"Event of Default," wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Company defaults in the payment of any interest (including
any additional amounts due under Section 1004 as specified therein) upon
any Security of that series when it becomes due and payable and continuance
of such default for a period of 30 days; or
(2) the Company defaults in the payment of the principal (including
any additional amounts due under Section 1004 as specified therein) of (or
premium, if any, on) any Security of that series at its Maturity and
continuance of such default for a period of three Business Days thereafter;
or
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(3) the Company defaults in the deposit of any sinking fund payment
when and as due by the terms of a Security of that series and continuance
of such default for a period of three Business Days thereafter; or
(4) the Company or Industries defaults in the performance or breach
of any covenant or warranty of the Company or Industries, as the case may
be, in this Indenture or the Support Agreement (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with or which has expressly been included
in or pursuant to this Indenture solely for the benefit of one or more
series of Securities other than that series), and continuance of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company and Industries by the Trustee,
or to the Company, Industries and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Securities of that series, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;
or
(5) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company (including a default with
respect to Securities of any series other than that series) or under any
mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any indebtedness for money borrowed
by the Company (including this Indenture), whether such indebtedness now
exists or shall hereafter be created, which default shall constitute a
failure to pay in excess of $5,000,000 of the principal or interest of such
indebtedness when due and payable after the expiration of any applicable
grace period with respect thereto or shall have resulted in such
indebtedness in an amount in excess of $5,000,000 becoming or being
declared due and payable prior to the date on which it would otherwise have
become due and payable, without such indebtedness having been discharged,
or such acceleration having been rescinded or annulled within a period of
90 days after there shall have been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding Securities
of that series a written notice specifying such default and requiring the
Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that such notice is a
"Notice of Default" hereunder; provided, however, that, subject to the
provisions of Sections 601 and 602, the Trustee shall not be deemed to have
knowledge of such default unless either (A) a Responsible Officer of the
Trustee assigned to Global Trust Services (or any successor division or
department of the Trustee) shall have actual knowledge of such default or
(B) the Trustee shall have received written notice thereof from the
Company, from any Holder, from the holder of any such indebtedness or from
the trustee under any such mortgage, Indenture or other instrument; or
(6) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of any of the Company, Industries or
Northern Indiana in an
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involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a decree
or order adjudging any of the Company, Industries or Northern Indiana a
bankrupt or insolvent, or approving as properly filed a petition by one or
more Persons other than the Company, Industries, Northern Indiana or any of
their Affiliates seeking reorganization, arrangement, adjustment or
composition of or in respect of any of the Company, Industries or Northern
Indiana under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official for any of the Company, Industries or Northern Indiana or
for any substantial part of the property of any of the Company, Industries
or Northern Indiana, or ordering the liquidation or winding up of the
affairs of any of the Company, Industries or Northern Indiana, and the
continuance of any such decree or order for relief or any such other decree
or order unstayed and in effect for a period of 90 consecutive days; or
(7) the commencement by any of the Company, Industries or Northern
Indiana of a case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect of it
in a case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official in respect of it or any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or its
admission in writing of its inability to pay its debts generally as they
become due, or its taking of corporate action in furtherance of any such
action; or
(8) any other Event of Default provided with respect to Securities of
that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 33% in principal amount of the Outstanding Securities
of that series may declare the principal amount (or, if the Securities of that
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of all of the Securities
of that series to be due and payable immediately, by a notice in writing to the
Company and Industries (and to the Trustee if given by Holders), and upon any
such declaration such principal amount (or specified amount) shall become
immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by
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the Trustee as hereinafter in this Article provided, the Holders of a majority
in principal amount of the Outstanding Securities of that series, by written
notice to the Company, Industries and the Trustee, may rescind and annul such
declaration and its consequences if:
(1) the Company or Industries has paid or deposited with the Trustee
a sum sufficient to pay:
(A) all overdue interest on all Securities of that series;
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate or rates prescribed
therefor in such Securities;
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities; and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due to the
Trustee under Section 607;
and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
No such rescission and annulment shall affect any subsequent default or
impair any right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if:
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof and such default continues
for a period of three Business Days,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities and coupons, the whole amount then due and payable on
such Securities and coupons for
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principal (and premium, if any) and interest, with interest on any overdue
principal (and premium, if any) and on any overdue interest, to the extent that
payment of such interest shall be legally enforceable, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due to the Trustee
under Section 607.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company, Industries (pursuant to its Support Obligations) or any
other obligor upon such Securities and collect the moneys adjudged or decreed to
be payable in the manner provided by law out of the property of the Company,
Industries (subject to the limitations set forth in the Support Agreement) or
any other obligor upon such Securities, wherever situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series and any
related coupons by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or the
Support Agreement, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company, Industries or any other obligor
upon the Securities or the property of the Company, Industries or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company, Industries or any other obligor for the payment of
overdue principal or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities
and to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due to the Trustee
under Section 607) and of the Holders of Securities and coupons allowed in
such judicial proceeding; and
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(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities and coupons to make such payments to the Trustee and,
in the event that the Trustee shall consent to the making of such payments
directly to the Holders of Securities and coupons, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
or coupon any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or coupons or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder of a
Security or coupon in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities or
Coupons.
All rights of action and claims under this Indenture, the Support Agreement
or the Securities or coupons may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or coupons or the production
thereof in any proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Securities and coupons in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities or coupons, or both, as
the case may be, and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities and
coupons in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities and coupons for principal
(and premium, if any) and interest, respectively; and
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THIRD: To the Company or Industries, as the case may be.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series or any related coupons shall have
any right to institute any proceeding, judicial or otherwise with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than a majority in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in principal
amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture or the Support Agreement to affect, disturb or prejudice the
rights of any other of such Holders or to obtain or to seek to obtain priority
or preference over any other of such Holders or to enforce any right under this
Indenture or the Support Agreement, except in the manner herein or therein
provided and for the equal and ratable benefit of all of such Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, (1) the Holder of
any Security or coupon shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if any) and
(subject to Section 307) interest on such Security or payment of such coupon on
the Stated Maturity or Maturities expressed in such Security or coupon (or, in
the case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder; and (2) the Holder of any Security or coupon shall
be considered a Lender (as defined in the Support Agreement) and shall have all
rights of a Lender set forth therein.
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SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security or coupon has instituted any
proceeding to enforce any right or remedy under this Indenture or the Support
Agreement and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then and in
every such case, subject to any determination in such proceeding, the Company,
Industries, the Trustee and the Holders of Securities and coupons shall be
restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities or coupons in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders of Securities or coupons is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise
shall, not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security or
coupon to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this Article
or by law to the Trustee or to the Holders of Securities or coupons may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders of Securities or coupons, as the case may be.
SECTION 512. Control by Holders of Securities.
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Securities of
such series, provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, expose the Trustee to personal liability or be unduly
prejudicial to Holders not joined therein; and
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(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series and any related coupons waive any past default
hereunder with respect to such series and its consequences, except a default:
(1) in the payment of the principal of (or premium, if any) or
interest on any Security of such series; or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security or
coupon by his acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities of
any series, or to any suit instituted by any Holder of any Security or coupon
for the enforcement of the payment of the principal of (or premium, if any) or
interest on any Security or the payment of any coupon on or after the Stated
Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
SECTION 515. Waiver of Stay or Extension Laws.
Each of the Company and Industries covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force which may
affect the covenants or the performance of this Indenture; and each of the
Company and
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Industries (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default with respect
to Securities of any series:
(1) the Trustee undertakes to perform, with respect to
Securities of such series, such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may,
with respect to Securities of such series, conclusively rely, as to
the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Indenture.
(b) In case an Event of Default with respect to Securities of any
series has occurred and is continuing, the Trustee shall exercise, with
respect to Securities of such series, such of the rights and powers vested
in it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in
the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own wilful misconduct, except that:
(1) this subsection shall not be construed to limit the effect
of subsection (a) of this Section;
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(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority in principal amount of the
Outstanding Securities of any series relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture with respect to the Securities of such series;
and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with respect
to the Securities of any series, the Trustee shall transmit, in the manner and
to the extent provided in Section 313(c) of the Trust Indenture Act, notice of
all such defaults hereunder known to the Trustee, unless such default shall have
been cured or waived; provided, however, that, except in the case of a default
in the payment of the principal of (or premium, if any) or interest on any
Security of such series or in the payment of any sinking fund installment with
respect to Securities of such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors or Responsible Officers of the
Trustee in good faith determine that the withholding of such notice is in the
interest of the Holders of Securities of such series; and provided, further,
that in the case of any default of the character specified in Section 501(4)
with respect to Securities of such series, no such notice to Holders shall be
given until at least 30 days after the occurrence thereof. For the purpose of
this Section, the term "default" means any event which is, or after notice or
lapse of time or both would become, an Event of Default with respect to
Securities of such series.
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SECTION 603. Certain Rights of Trustee.
Subject to Sections 315(a) through 315(d) of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note,
coupon, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company or Industries mentioned herein
shall be sufficiently evidenced by a Request or Order and any resolution of the
Board of Directors of the Company or Industries shall be sufficiently evidenced
by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders of Securities of any series pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, coupon, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company or Industries, personally or by agent
or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
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(h) except as otherwise provided in Section 501(5), the Trustee shall not
be charged with knowledge of any Event of Default with respect to the Securities
of any series for which it is acting as Trustee unless either (1) a Responsible
Officer of the Trustee assigned to Global Trust Services (or any successor
division or department of the Trustee) shall have actual knowledge of the Event
of Default or (2) written notice of such Event of Default shall have been given
to the Trustee by the Company, any other obligor on such Securities or by any
Holder of such Securities.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities (except the Trustee's
certificates of authentication) and in any coupons shall be taken as the
statements of the Company, and the Trustee or any Authenticating Agent assumes
no responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture, the Support Agreement or of
the Securities or coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification on Form T-1 supplied to the Company
are true and accurate, subject to the qualifications set forth therein. The
Trustee or any Authenticating Agent shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and coupons and, subject
to Sections 310(b) and 311 of the Trust Indenture Act, may otherwise deal with
the Company, Industries or an Affiliate of either with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company and Industries agree:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
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(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel and any Authenticating Agent),
except any such expense, disbursement or advance as may be attributable to
its negligence, willful misconduct or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence, willful
misconduct or bad faith on its part, arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.
As security for the performance of the obligations of the Company and
Industries under this Section the Trustee shall have a lien prior to the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of principal of, premium, if any, or
interest, if any, on particular Securities.
SECTION 608. Disqualification; Conflicting Interests.
The Trustee shall comply with the terms of Section 310(b) of the Trust
Indenture Act. There shall be excluded from the terms of Section 310(b) of the
Trust Indenture Act (i) the Indenture, dated as of December 2, 1992, among the
Company, Industries and Chemical Bank, pursuant to which the Company's Zero
Coupon Notes due 1997 were issued and are outstanding and (ii) the Indenture,
dated as of February 1, 1996, among the Company, Industries and Chemical Bank,
pursuant to which the Company's 7-3/4% Junior Subordinated Deferrable Interest
Debentures, Series A, were issued and are outstanding.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America, any
State thereof or the District of Columbia, authorized under such laws to
exercise corporate trust powers, or any other Person permitted by the Trust
Indenture Act to act as trustee under an indenture qualified under the Trust
Indenture Act and that has a combined capital and surplus (computed in
accordance with Section 310(a)(2) of the Trust Indenture Act) of at least
$50,000,000, is subject to supervision or examination by Federal, State or
District of Columbia authority and is not otherwise ineligible under Section
310(a)(5) of the Trust Indenture Act. If such Corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority,
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then for the purposes of this Section, the combined capital and surplus of such
Corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company and
Industries. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Trustee, the Company and
Industries.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company and Industries or by any
Holder of a Security who has been a bona fide Holder of a Security for
at least six months; or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company and
Industries or by any such Holder; or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation;
then, in any such case, (i) the Company and Industries by Board Resolutions may
remove the Trustee with respect to all Securities, or (ii) subject to Section
315(e) of the Trust Indenture Act, any Holder of a Security who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all other similarly situated Holders, petition any court of competent
jurisdiction for
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the removal of the Trustee with respect to all Securities and the appointment of
a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company and Industries, by
Board Resolutions, shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series) and shall comply with
the applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company, Industries and
the retiring Trustee, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment in accordance with the applicable
requirements of Section 611, become the successor Trustee with respect to the
Securities of such series and to that extent supersede the successor Trustee
appointed by the Company and Industries. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company and
Industries or the Holders of Securities and accepted appointment in the manner
required by Section 611, any Holder of a Security who has been a bona fide
Holder of a Security of such series for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Registered Securities, if any, of such series as their names and
addresses appear in the Security Register and, if Securities of such Series are
issuable as Bearer Securities, by publishing notice of such event once in an
Authorized Newspaper in each Place of Payment located outside the United States.
Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company, Industries and to the retiring
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Company and Industries or on the request of the successor
Trustee, such retiring Trustee shall, upon payment of
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its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
Industries, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company and Industries or on
the request of any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder, subject nevertheless to its lien provided for
in Section 607, with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company and Industries
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which
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the Trustee shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company or
Industries (or any other obligor upon the Securities), the Trustee shall be
subject to the provisions of Section 311 and any other provision of the Trust
Indenture Act regarding the collection of claims against the Company or
Industries (or any such other obligor).
SECTION 614. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding the Trustee may
appoint an Authenticating Agent or Agents with respect to one or more series of
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon exchange, registration of
transfer or partial redemption thereof or pursuant to Section 306, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus (computed in accordance with Section
310(a)(2) of the Trust Indenture Act) of not less than $50,000,000 and subject
to supervision or examination by Federal, State or District of Columbia
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
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Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such termination, or in case at any time such Authenticating
Agent shall cease to be eligible in accordance with the provisions of this
Section, the Trustee may appoint a successor Authenticating Agent which shall be
acceptable to the Company and shall (i) mail written notice of such appointment
by first-class mail, postage prepaid, to all Holders of Registered Securities,
if any, of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register, and (ii) if
Securities of the series are issuable as Bearer Securities, publish notice of
such appointment at least once in an Authorized Newspaper in the place where
such successor Authenticating Agent has its principal office if such office is
located outside the United States. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all the rights,
powers and duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments in accordance with the
provisions of Section 607.
The provisions of Sections 308, 604 and 605 shall be applicable to each
Authenticating Agent.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
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This is one of the Securities of the series referred to in the within-
mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By_______________________________
As Authenticating Agent
By_______________________________
Authorized Signatory
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ARTICLE SEVEN
Holders' Lists and Reports by Trustee, Company and Industries
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
In accordance with Section 312(a) of the Trust Indenture Act, the Company
will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than June 1 and December 1, in each
year, a list, in such form as the Trustee may reasonably require,
containing all the information in the possession or control of the Company,
or any of its Paying Agents other than the Trustee, as to the names and
addresses of the Holders of Securities as of the preceding May 15 or
November 15, as the case may be, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished,
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall comply with the obligations imposed upon it pursuant
to Section 312 of the Trust Indenture Act.
(b) Every Holder of Securities or coupons, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor
Industries nor the Trustee nor any agent of any of them shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders of Securities in accordance with Section 312 of the
Trust Indenture Act, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Section 312 of the Trust Indenture
Act.
SECTION 703. Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing with the first May
15 following the first issuance of Securities pursuant to Section 301, if
required by Section 313(a) of the Trust Indenture Act, the Trustee shall
transmit, pursuant to Section 313(c) of the Trust Indenture
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Act, a brief report dated as of such May 15 with respect to any of the events
specified in said Section 313(a) which may have occurred since the later of the
immediately preceding May 15 and the date of this Indenture.
(b) The Trustee shall transmit the reports required by Section 313(b) of
the Trust Indenture Act at the times specified therein.
(c) Reports pursuant to this Section shall be transmitted in the manner and
to the Persons required by Sections 313(c) and 313(d) of the Trust Indenture
Act.
SECTION 704. Reports by Company and Industries.
The Company and Industries, pursuant to Section 314(a) of the Trust
Indenture Act, shall:
(1) file with the Trustee, within 15 days after the Company or
Industries is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company or
Industries may be required to file with the Commission pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934, as amended; or,
if the Company or Industries is not required to file information, documents
or reports pursuant to either of said sections, then it shall file with the
Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the supplementary
and periodic information, documents and reports which may be required
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended,
in respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company and Industries with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(3) transmit, within 30 days after the filing thereof with the
Trustee, to the Holders of Securities, in the manner and to the extent
provided in Section 313(c) of the Trust Indenture Act, such summaries of
any information, documents and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) of this Section as may be required by
rules and regulations prescribed from time to time by the Commission.
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ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company and Industries May Consolidate, Etc., Only on Certain
Terms.
Neither the Company nor Industries shall consolidate with or merge
into any other Corporation or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, unless:
(1) the Corporation formed by any such consolidation or into which it
is merged or the Person which acquires by conveyance or transfer, or which
leases, its properties and assets substantially as an entirety shall be a
Corporation organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall expressly
assume, in the case of the Company, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Securities; in
the case of the Company or Industries, the performance of every covenant of
this Indenture on the part of the Company or Industries, as applicable; and
in the case of Industries, all the obligations under the Support Agreement
to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing; and
(3) the Company or Industries, as applicable, has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, conveyance, transfer or lease complies
with this Section 801 and that all conditions precedent herein provided for
relating to such transaction have been complied with.
The Company covenants and agrees that if, upon any consolidation or merger
of the Company with or into any other Corporation, or upon any consolidation or
merger of any other Corporation with or into the Company, or upon any sale or
conveyance of all or substantially all of the property and assets of the Company
to any other Corporation, any property of the Company or any Subsidiary or any
indebtedness issued by any Subsidiary owned by the Company or by any Subsidiary
immediately prior thereto would thereupon become subject to any mortgage,
security interest, pledge, lien or other encumbrance not permitted by Section
1008 hereof, the Company, prior to or concurrently with such consolidation,
merger, sale or conveyance, will by indenture supplemental hereto effectively
secure the Securities then Outstanding (equally and ratably with (or prior to)
any other indebtedness of or guaranteed by the Company or such Subsidiary then
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.
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SECTION 802. Successor Corporation Substituted.
Upon any consolidation by the Company or Industries with or merger by the
Company or Industries into any other Corporation or any conveyance, transfer or
lease of either the Company's or Industries' properties and assets substantially
as an entirety in accordance with Section 801, the successor Corporation formed
by such consolidation or into which it is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company or Industries, as applicable,
under this Indenture with the same effect as if such successor Corporation had
been named as the Company or Industries, as applicable, herein, and thereafter,
except in the case of a lease, the predecessor Corporation shall be relieved of
all obligations and covenants under this Indenture, the Securities and, in the
case of Industries, the Support Agreement.
SECTION 803. Assumption by Industries or Subsidiary.
Industries or a Subsidiary may directly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, the due and punctual payment of the principal of (premium, if
any) and interest on all the Securities and any coupons appertaining thereto and
the performance of every covenant of this Indenture on the part of the Company
to be performed or observed. Upon any such assumption, Industries or such
Subsidiary shall succeed to and be substituted for and may exercise every right
and power of the Company under this Indenture with the same effect as if
Industries or such Subsidiary had been named as the Company herein and the
Company shall be released from its liability as obligor on the Securities;
provided that, in the case of such assumption by a Subsidiary, the Support
Agreement is modified so that references to the Company and its Debt therein are
changed to, or modified to include, references to such Subsidiary and its Debt
(including the Securities). No such assumption shall be permitted unless
Industries has delivered to the Trustee an Officers' Certificate of Industries
and an Opinion of Counsel for Industries, each stating that such assumption and
supplemental indenture comply with this Article, that all conditions precedent
herein provided for relating to such transaction have been complied with and, in
the event of assumption by a Subsidiary, that Industries' obligations under this
Indenture and the Support Agreement (modified as aforesaid) remain in full force
and effect.
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders of Securities or coupons, the Company
and Industries, when authorized by Board Resolutions, and the Trustee, at any
time and from time to time, may
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enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Corporation to the Company
or Industries and the assumption by any such successor of the covenants of
the Company or Industries, as the case may be, herein and in the Securities
and coupons; or
(2) to add to the covenants of the Company and Industries for the
benefit of the Holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for the
benefit of such series) or to surrender any right or power herein conferred
upon the Company or Industries; or
(3) to add any additional Events of Default; or
(4) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal (or
premium, if any) on Registered Securities or of principal (or premium, if
any) or any interest on Bearer Securities, to permit Registered Securities
to be exchanged for Bearer Securities or to permit the issuance of
Securities in uncertificated form, provided any such action shall not
adversely affect the interests of the Holders of Securities of any series
or any related coupons in any material respect; or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit
of such provision; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series and
any related coupons as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series, to contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
predecessor Trustee with respect to the Securities of any series as to
which the predecessor Trustee is not retiring shall continue to be vested
in the predecessor Trustee, and to add to or change any of the provisions
of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 611(b); or
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(9) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided such action shall not
adversely affect the interests of the Holders of Securities of any series
or any related coupons in any material respect; or
(10) to effect assumption by Industries or a Subsidiary pursuant to
Section 803; or
(11) to conform this Indenture to any amendments to the Trust
Indenture Act.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company,
Industries and the Trustee, the Company and Industries, when authorized by Board
Resolutions, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or modifying
in any manner the rights of the Holders of Securities of such series and any
related coupons under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security or coupon affected thereby:
(1) 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 rate of interest 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 additional amounts pursuant to Section 1004 (except as contemplated by
Section 801(1) and permitted by Section 901(1)), or reduce the amount of
the principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant
to Section 502, 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); or
(2) 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 this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or reduce the requirements of Section 1304 for quorum or voting;
or
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(3) change any obligation of the Company to maintain an office or
agency in each Place of Payment, or any obligation of the Company to
maintain an office or agency outside the United States pursuant to Section
1002; or
(4) modify any of the provisions of this Section, Section 513 or
Section 1010, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby; provided, however, that this clause shall not be deemed to require
the consent of any Holder of a Security or coupon with respect to changes
in the references to "the Trustee" and concomitant changes in this Section
and Section 1009, or the deletion of this proviso, in accordance with the
requirements of Sections 611(b) and 901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders of Securities under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
The Company and Industries shall have the right to set a record date for
the solicitation of any consents under this Article Nine, which record date
shall be set in accordance with Section 104.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 315 of the Trust Indenture Act) shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
which affects the Trustee's own rights, duties, immunities or liabilities under
this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
and of any coupons appertaining thereto shall be bound thereby.
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SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of the Securities, any coupons appertaining thereto and this Indenture.
Any interest due on Bearer Securities on or before Maturity, other than
additional amounts, if any, payable as provided in Section 1004 in respect of
principal of (or premium, if any, on) such a Security, shall be payable only
upon presentation and surrender of the several coupons for such interest
installments as are evidenced thereby as they severally mature.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series (but, except as
otherwise provided below, unless such Place of Payment is located outside the
United States, not Bearer Securities) may be presented or surrendered for
payment, where Securities of that series may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served. The
Company initially hereby appoints the Trustee, its office or agency for each of
said purposes. If Securities of a series are issuable as Bearer Securities, the
Company will maintain, subject to any laws or regulations applicable thereto, an
office or agency in a Place of Payment for such series which is located outside
the United States where Securities of such series and the related coupons may be
presented and surrendered for
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payment (including payment of any additional amounts payable on Securities of
such series pursuant to Section 1004); provided, however that if the Securities
of such series are listed on The Stock Exchange of the United Kingdom and the
Republic of Ireland or the Luxembourg Stock Exchange or any other stock exchange
located outside the United States and such stock exchange shall so require, the
Company will maintain a Paying Agent in London or Luxembourg or any other
required city located outside the United States, as the case may be, so long as
the Securities of such series are listed on such exchange. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency in respect of any series of
Securities or shall fail to furnish the Trustee with the address thereof, such
presentations and surrenders of Securities of that series may be made and
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, except that Bearer Securities of that series and the related coupons
may be presented and surrendered for payment (including payment of any
additional amounts payable on Bearer Securities of that series pursuant to
Section 1004) at the place specified for the purpose pursuant to Section 301 or,
if no such place is specified, at the main office of the Trustee in London, and
the Company hereby appoints the Trustee as its agent to receive such respective
presentations, surrenders, notices and demands.
No payment of principal, premium or interest on Bearer Securities shall be
made at any office or agency of the Company in the United States or by check
mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States; provided, however, payment
of principal of and any premium and interest in U.S. dollars (including
additional amounts payable in respect thereof) on any Bearer Security may be
made at the Corporate Trust Office of the Trustee in the Borough of Manhattan,
The City of New York if (but only if) payment of the full amount of such
principal, premium, interest or additional amounts at all offices outside the
United States maintained for the purpose by the Company in accordance with this
Indenture is illegal or effectively precluded by exchange controls or other
similar restrictions.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment in accordance with the requirements set forth above for
Securities of any series for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
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thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, on or prior to each due date of the principal of (and
premium, if any) or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.
The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment of principal of (and premium, if any) or interest on the Securities
of that series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Order of
the Company direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same terms as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
Any sums deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security of any series and remaining unclaimed for two years
after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Request of the Company, or (if then held
by the Company) shall be discharged from such trust; and the Holder of such
Security or any coupon appertaining thereto shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to
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such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once in an Authorized Newspaper in each Place of
Payment or mailed to each such Holder, or both, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication or mailing, any unclaimed balance of
such money then remaining will be repaid to the Company.
SECTION 1004. Additional Amounts.
If the Securities of a series provide for the payment of additional
amounts, the Company will pay to the Holder of any Security of any series or any
coupon appertaining thereto additional amounts as provided therein. Whenever in
this Indenture there is mentioned, in any context, the payment of principal of
(or premium, if any) or interest on, or in respect of, any Security of any
series or any related coupon or the net proceeds received on the sale or
exchange of any Security of any series, such mention shall be deemed to include
mention of the payment of additional amounts provided for in this Section to the
extent that, in such context, additional amounts are, were or would be payable
in respect thereof pursuant to the provisions of this Section and express
mention of the payment of additional amounts (if applicable) in any provisions
hereof shall not be construed as excluding additional amounts in those
provisions hereof where such express mention is not made.
If the Securities of a series provide for the payment of additional
amounts, at least 10 days prior to the first Interest Payment Date with respect
to that series of Securities (or if the Securities of that series will not bear
interest prior to Maturity, the first day on which a payment of principal (and
premium, if any) is made), and at least 10 days prior to each date of payment of
principal (and premium, if any) or interest if there has been any change with
respect to the matters set forth in the below-mentioned Officers' Certificate,
the Company will furnish the Trustee and the Company's principal Paying Agent or
Paying Agents, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment of principal of (and premium, if any) or interest on the Securities of
that series shall be made to Holders of Securities of that series or the related
coupons who are United States Aliens without withholding for or on account of
any tax, assessment or other governmental charge described in the Securities of
that series. If any such withholding shall be required, then such Officers'
Certificate shall specify by country the amount, if any, required to be withheld
on such payments to such Holders of Securities or coupons and the Company will
pay to the Trustee or such Paying Agent the additional amounts required by this
Section. The Company covenants to indemnify the Trustee and any Paying Agent
for, and to hold them harmless against, any loss, liability or expense
reasonably incurred without negligence or bad faith on their part arising out of
or in connection with actions taken or omitted by any of them in reliance on any
Officers' Certificate furnished pursuant to this Section.
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SECTION 1005. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and its rights (charter and statutory) and franchises.
Subject to Article Eight, (1) Industries will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and that of its subsidiary Northern Indiana and its rights (charter
and statutory) and franchises and those of Northern Indiana; provided, however,
that Industries shall not be required to preserve any such right or franchise of
Northern Indiana if, in the judgment of Industries, the preservation thereof is
no longer desirable in the conduct of the business of Northern Indiana and the
loss thereof would not be disadvantageous in any material respect to the Holders
of Securities, and (2) Industries will continue to own, directly or indirectly,
all of the outstanding common stock of Northern Indiana.
SECTION 1006. Maintenance of Properties.
Each of the Company and Industries will cause all properties used or useful
in the conduct of its business, and Industries will cause all properties used or
useful in the business of the Subsidiaries, to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall
prevent Industries from discontinuing the operation or maintenance of any of
such properties or disposing of them if such discontinuance or disposal is, in
the judgment of Industries, desirable in the conduct of its business or the
business of the Subsidiaries and not disadvantageous in any material respect to
the Holders of Securities.
SECTION 1007. Payment of Taxes and Other Claims.
Each of the Company and Industries will pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, (1) all taxes,
assessments and governmental charges levied or imposed upon it and, in the case
of Industries, any of the Subsidiaries, or upon the income, profits or property
of the Company, Industries or any of the Subsidiaries, and (2) all lawful claims
for labor, materials and supplies which, if unpaid, might by law become a lien
upon the property of the Company, Industries or any of the Subsidiaries;
provided, however, that none of the Company, Industries or any of the
Subsidiaries shall be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.
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SECTION 1008. Restrictions on Liens.
(a) So long as any Securities remain outstanding, neither the Company nor
Industries will, nor will Industries permit any Subsidiary other than a Utility
to, issue, assume or guarantee any debt for money borrowed (hereinafter in this
Section 1008 referred to as "Debt"), secured by any mortgage, security interest,
pledge, lien or other encumbrance (hereinafter in this Section 1008 called
"mortgage" or "mortgages") upon any property of the Company, Industries or any
such Subsidiary (other than a Utility), except indebtedness issued by any such
Subsidiary and owned by Industries or any other such Subsidiary (whether such
property or indebtedness is now owned or hereafter acquired), without in any
such case effectively securing, prior to or concurrently with the issuance,
assumption or guarantee of any such Debt, the Securities (together with, if the
Company shall so determine, any other indebtedness of or guaranteed by the
Company, Industries or such Subsidiary ranking equally with the Securities and
then existing or thereafter created) equally and ratably with (or prior to) such
Debt; provided, however, that the foregoing restrictions shall not apply to nor
prevent the creation or existence of:
(i) mortgages on any property, acquired, constructed or improved by
Industries or any of the Subsidiaries other than the Utilities after the
date of this Indenture which are created or assumed contemporaneously with,
or 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 arranged with a lender or investor within
such 120-day period, to secure or provide for the payment of all or any
part of the purchase price of such property or the cost of such
construction or improvement incurred after the date of this Indenture, or,
in addition to mortgages contemplated by clauses (ii) and (iii) below,
mortgages on any property existing at the time of acquisition thereof,
provided that the mortgages shall not apply to any property theretofore
owned by Industries or any such Subsidiary other than, in the case of any
such construction or improvement, any theretofore unimproved real property
on which the property so constructed or the improvement is located;
(ii) existing mortgages on any property or indebtedness of a
corporation which is merged with or into or consolidated with Industries or
a Subsidiary;
(iii) mortgages on property or indebtedness of a corporation existing
at the time such corporation becomes a Subsidiary;
(iv) mortgages to secure Debt of a Subsidiary to Industries or to
another Subsidiary other than a Utility;
(v) mortgages in favor of the United States of America, any State,
any foreign country or any department, agency or instrumentality or
political subdivision of any such jurisdiction, to secure partial,
progress, advance or other payments pursuant to any contract
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or statute or to secure any indebtedness incurred for the purpose of
financing all or any part of the purchase price of the cost of constructing
or improving the property subject to such mortgages, including, without
limitation, mortgages to secure Debt of the pollution control or industrial
revenue bond type;
(vi) mortgages to secure loans to Industries or any Subsidiary other
than a Utility maturing within 12 months from the creation thereof and made
in the ordinary course of business;
(vii) mortgages on any property (including any natural gas, oil or
other mineral property) to secure all or part of the cost of exploration,
drilling or development thereof or to secure Debt incurred to provide funds
for any such purpose;
(viii) mortgages existing on the date of this Indenture; and
(ix) mortgages for the sole purposes of extending, renewing or
replacing in whole or in part Debt secured by any mortgage referred to in
the foregoing clauses (i) to (viii), inclusive, or this clause (ix);
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 such extension, renewal or
replacement shall be limited to all or a part of the property or
indebtedness which secured the mortgage so extended, renewed or replaced
(plus improvements on such property).
(b) The provisions of subsection (a) of this Section 1008 shall not apply
to the issuance, assumption or guarantee by Industries or any Subsidiary of Debt
secured by a mortgage which would otherwise be subject to the foregoing
restrictions up to an aggregate amount which, together with all other Debt of
Industries and the Subsidiaries other than the Utilities secured by mortgages
(other than mortgages permitted by subsection (a) of this Section 1008 which
would otherwise be subject to the foregoing restrictions), does not at the time
exceed 5% of Consolidated Net Tangible Assets.
(c) If at any time Industries or any Subsidiary other than the Utilities
shall issue, assume or guarantee any Debt secured by any mortgage and if
subsection (a) of this Section 1008 requires that the Securities be secured
equally and ratably with such Debt, the Company will promptly deliver to the
Trustee:
(i) an Officers' Certificate stating that the covenant of the Company
contained in subsection (a) of this Section has been complied with; and
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(ii) an Opinion of Counsel to the effect that such covenant has been
complied with, and that any instruments executed by the Company in the
performance of such covenant comply with the requirements of such covenant.
SECTION 1009. Statement as to Default.
(a) Each of the Company and Industries will deliver to the Trustee, within
120 days after the end of each fiscal year of the Company ending after the date
hereof, a certificate, signed by the principal executive officer, principal
financial officer or principal accounting officer of the Company or Industries,
as the case may be, stating whether or not to the best knowledge of the signers
thereof the Company or Industries, as the case may be, is in default in the
performance and observance of any of the terms, provisions and conditions of
this Indenture (without regard to any period of grace or requirement of notice
provided hereunder) and, if the Company or Industries shall be in default,
specifying all such defaults and the nature and status thereof of which they may
have knowledge.
(b) The Company or Industries, as applicable, will deliver to the Trustee,
within five days after the occurrence thereof, written notice of any event which
after notice or lapse of time would become an Event of Default pursuant to
clause (4) of Section 501.
SECTION 1010. Waiver of Certain Covenants.
The Company and Industries may omit in any particular instance to comply
with any term, provision or condition set forth in Sections 1006 and 1007 with
respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and Industries and
the duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
SECTION 1011. Support Agreement.
Each of the Company and Industries covenants and agrees for the benefit of
each series of Securities that (1) it will perform its respective obligations
under the Support Agreement, and (2) it will not agree to any amendment or
termination of the Support Agreement as in effect on the date of this Indenture,
except in accordance with the terms of the Support Agreement as in effect on the
date of this Indenture.
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ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of any series)
in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution. In case of any redemption at the election of the Company of
all of the Securities of any series, the Company shall, at least 60 days prior
to the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date. In case of any redemption at the election of the Company of less than all
the Securities of any series, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date and of the principal amount of Securities of such series to be redeemed. In
the case of any redemption of Securities (i) prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, or (ii) pursuant to an election of the Company
which is subject to a condition specified in the terms of such Securities, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction or condition.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee from the Outstanding Securities of
such series (other than Securities of such series held by the Company), not
previously called for redemption, by such method as the Trustee shall deem fair
and appropriate and which may provide for the selection for redemption of
portions (equal to the minimum authorized denomination for Securities of that
series or any integral multiple thereof) of the principal amount of Securities
of such series of a denomination larger than the minimum authorized denomination
for Securities of that series. Unless otherwise provided in the Securities of a
series, partial redemptions must be in an amount not less than $1,000,000
principal amount of Securities.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
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For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given in the manner provided in Section 106
to the Holders of Securities to be redeemed not less than 30 nor more than 60
days prior to the Redemption Date.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(5) the place or places where such Securities, together in the case
of Bearer Securities with all coupons appertaining thereto, if any,
maturing after the Redemption Date, are to be surrendered for payment of
the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
A notice of redemption published as contemplated by Section 106 need not
identify particular Registered Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and
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(except if the Redemption Date shall be an Interest Payment Date) accrued
interest, if any, on, all the Securities which are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, and the conditions, if
any, set forth in such notice having been satisfied, the Securities so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest and the coupons for such interest
appertaining to any Bearer Securities so to be redeemed, except to the extent
provided below, shall be void. Upon surrender of any such Security for
redemption in accordance with said notice, together with all coupons, if any,
appertaining thereto maturing after the Redemption Date, such Security shall be
paid by the Company at the Redemption Price, together with accrued interest, if
any, to the Redemption Date; provided, however, that installments of interest on
Bearer Securities whose Stated Maturity is on or prior to the Redemption Date
shall be payable only upon presentation and surrender of coupons for such
interest (at an office or agency located outside the United States except as
otherwise provided in Section 1002); and provided, further, that installments of
interest on Registered Securities whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
307.
If any Bearer Security surrendered for redemption shall not be accompanied
by all appurtenant coupons maturing after the Redemption Date, such Security may
be paid after deducting from the Redemption Price an amount equal to the face
amount of all such missing coupons, or the surrender of such missing coupon or
coupons may be waived by the Company and the Trustee if there be furnished to
them such security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Security shall surrender
to the Trustee or any Paying Agent any such missing coupon in respect of which a
deduction shall have been made from the Redemption Price, such Holder shall be
entitled to receive the amount so deducted; provided, however, that interest
represented by coupons shall be payable only upon presentation and surrender of
those coupons at an office or agency located outside of the United States except
as otherwise provided in Section 1002.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires with
respect to any Registered Security,
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due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series, Stated Maturity and of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
Except as otherwise specified as contemplated by Section 301, if a Global
Security is so surrendered, the Company shall execute, and the Trustee shall
authenticate and deliver to the Depositary in global form, without service
charge, a new Global Security or Securities of the same series, Stated Maturity
and of any authorized denomination as requested by the Depositary, in an
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Global Security so surrendered.
ARTICLE TWELVE
Sinking Funds
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment." If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption), together in the case of any Bearer
Securities of such series with all unmatured coupons appertaining thereto, and
(2) may apply as a credit Securities of a series which have been redeemed either
at the election of the Company pursuant to the terms of such Securities or
through the application of permitted optional sinking fund payments pursuant to
the terms of such Securities, in each case in satisfaction of all or any part of
any sinking fund payment with respect to the Securities of such series required
to be made pursuant to the terms of such Securities as provided for
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by the terms of such series; provided that such Securities have not been
previously so credited. Such Securities shall be received and credited for such
purpose by the Trustee at the Redemption Price specified in such Securities for
redemption through operation of the sinking fund and the amount of such sinking
fund payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202 and stating the basis for such credit and that such
Securities have not previously been so credited and will also deliver to the
Trustee any Securities to be so delivered. Not less than 30 days before each
such sinking fund payment date the Trustee shall select the Securities to be
redeemed upon such sinking fund payment date in the manner specified in Section
1103 and cause notice of the redemption thereof to be given in the name of and
at the expense of the Company in the manner provided in Section 1104. Such
notice having been duly given, the redemption of such Securities shall be made
upon the terms and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
Meetings of Holders of Securities
SECTION 1301. Purposes for Which Meetings May be Called.
If Securities of a series are issuable as Bearer Securities, a meeting of
Holders of Securities of such series may be called at any time and from time to
time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series.
SECTION 1302. Call Notice and Place of Meeting.
(a) The Trustee may at any time call a meeting of Holders of Securities of
any series for any purpose specified in Section 1301, to be held at such time
and at such place in the Borough of Manhattan, The City of New York, or in
London as the Trustee shall determine. Notice of every meeting of Holders of
Securities of any series, setting forth the time and the place of such meeting
and in general terms the action proposed to be taken at such meeting, shall be
given, in the manner provided in Section 106, not less than 21 nor more than 180
days prior to the date fixed for the meeting.
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(b) In case at any time the Company, pursuant to a Board Resolution, or the
Holders of at least 10% in principal amount of the Outstanding Securities of any
series shall have requested the Trustee to call a meeting of the Holders of
Securities of such series for any purpose specified in Section 1301, by written
request setting forth in reasonable detail the action proposed to be taken at
the meeting, and the Trustee shall not have made the first publication of the
notice of such meeting within 21 days after receipt of such request or shall not
thereafter proceed to cause the meeting to be held as provided herein, then the
Company or the Holders of Securities of such series in the amount above
specified, as the case may be, may determine the time and the place in the
Borough of Manhattan, The City of New York, or in London for such meeting and
may call such meeting for such purposes by giving notice thereof as provided in
subsection (a) of this Section.
SECTION 1303. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities of any
series, a Person shall be (1) a Holder of one or more Outstanding Securities of
such series, or (2) a Person appointed by an instrument in writing as proxy for
a Holder or Holders of one or more Outstanding Securities of such series by such
Holder or Holders. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the
Trustee and its counsel and any representatives of the Company, Industries and
each of their respective counsel.
SECTION 1304. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities of a series shall constitute a quorum for a meeting of
Holders of Securities of such series. In the absence of a quorum within 30
minutes of the time appointed for any such meeting, the meeting shall, if
convened at the request of Holders of Securities of such series, be dissolved.
In any other case the meeting may be adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the adjournment of
such meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Except as provided by Section 1305(d), notice of the
reconvening of any adjourned meeting shall be given as provided in Section
1302(a), except that such notice need be given only once not less than five days
prior to the date on which the meeting is scheduled to be reconvened. Notice of
the reconvening of an adjourned meeting shall state expressly the percentage, as
provided above, of the principal amount of the Outstanding Securities of such
series which shall constitute a quorum.
Except as limited by the proviso to Section 902, any resolution presented
to a meeting or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Securities of that series;
provided, however, that, except as limited by the proviso to Section 902, any
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<PAGE>
resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action which this Indenture expressly provides
may be made, given or taken by the Holders of a specified percentage, which is
less than a majority, in principal amount of the Outstanding Securities of a
series may be adopted at a meeting or an adjourned meeting duly reconvened and
at which a quorum is present as aforesaid by the affirmative vote of the Holders
of such specified percentage in principal amount of the Outstanding Securities
of that series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and the related coupons,
whether or not present or represented at the meeting.
SECTION 1305. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities of such series in regard to proof of the holding of
Securities of such series and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall deem appropriate.
Except as otherwise permitted or required by any such regulations, the holding
of Securities shall be proved in the manner specified in Section 104 and the
appointment of any proxy shall be proved in the manner specified in Section 104.
Such regulations may provide that written instruments appointing proxies,
regular on their face, may be presumed valid and genuine without the proof
specified in Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of Securities as provided in Section 1302(b), in which
case the Company or the Holders of Securities of the series calling the meeting,
as the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or proxy shall
be entitled to one vote for each $1,000 principal amount of Securities of such
series held or represented by him; provided, however, that no vote shall be cast
or counted at any meeting in respect of any Security challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding. The
chairman of the meeting shall have no right to vote, except as a Holder of a
Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly called
pursuant to Section 1302 at which a quorum is present may be adjourned from time
to time by Persons entitled to vote
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<PAGE>
a majority in principal amount of the Outstanding Securities of such series
represented at the meeting; and the meeting may be held as so adjourned without
further notice.
SECTION 1306. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1302 and, if
applicable, Section 1304. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
SECTION 1307. Action Without Meeting.
In lieu of a vote of Holders at a meeting as hereinbefore contemplated in
this Article, any request, demand, authorization, direction, notice, consent,
waiver or other action may be made, given or taken by Holders by written
instruments as provided in Section 104.
ARTICLE FOURTEEN
Immunity of Incorporators, Stockholders, Officers,
Directors and Employees
SECTION 1401. Liability Solely Corporate.
No recourse shall be had for the payment of the principal of or premium, if
any, or interest, if any, on any Securities, or any part thereof, or for any
claim based thereon or otherwise in respect thereof, or of the indebtedness
represented thereby, or upon any obligation, covenant or agreement under this
Indenture, against any incorporator, stockholder, officer, director or employee,
as such, past, present or future of the Company or Industries or of any
predecessor or successor Corporation (either directly or through the Company,
Industries or a predecessor or successor Corporation of
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<PAGE>
either of them), whether by virtue of any constitutional provision, statute or
rule of law, or by the enforcement of any assessment or penalty or otherwise; it
being expressly agreed and understood that this Indenture and all the Securities
are solely corporate obligations, and that no personal liability whatsoever
shall attach to, or be incurred by, any incorporator, stockholder, officer,
director or employee, past, present or future, of the Company or Industries or
of any predecessor or successor Corporation of either of them, either directly
or indirectly through the Company, Industries or any predecessor or successor
Corporation of either of them, because of the indebtedness hereby authorized or
under or by reason of any of the obligations, covenants or agreements contained
in this Indenture or in any of the Securities or to be implied herefrom or
therefrom, and that any such personal liability is hereby expressly waived and
released as a condition of, and as part of the consideration for, the execution
of this Indenture and the issuance of the Securities; provided, however, that
nothing in this Section 1401 shall be interpreted to relieve Industries of its
corporate obligations set forth in this Indenture by virtue of it being a
stockholder of the Company.
--------------------
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
NIPSCO Capital Markets, Inc.
[SEAL] By:
--------------------------------
Name: Stephen P. Adik
Attest: Title: President
- ----------------------
NIPSCO Industries, Inc.
[SEAL] By:
--------------------------------
Name: Stephen P. Adik
Attest: Title: Executive Vice President and
Chief Financial Officer
- ----------------------
The Chase Manhattan Bank, as Trustee
[SEAL] By:
--------------------------------
Name:
Attest: Title: Senior Trust Officer
By:
------------------
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<PAGE>
EXHIBIT 4.3
[FACE OF 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., CONFORM 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./1/
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
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./2/
<TABLE>
<S> <C> <C>
REGISTERED No. FLR-____ CUSIP No.: __________ PRINCIPAL AMOUNT: __________
NIPSCO CAPITAL MARKETS, INC.
MEDIUM-TERM NOTE
(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:
MATURITY: INITIAL INTEREST RATE: INTEREST PAYMENT DATE(S):
SPREAD (PLUS OR MINUS): SPREAD MULTIPLIER: INITIAL INTEREST RESET DATE:
</TABLE>
- ------------------------
/1/ This paragraph applies to global Notes only.
/2/ This paragraph applies to global Notes only.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM INTEREST MAXIMUM INTEREST INTEREST RESET
RATE: ____% RATE: ____% 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 [_] Actual/360 for the period
Date:___________ 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 DENOMINATION:
[_] United States dollars [_] $1,000 and integral multiples thereof
[_] Other: [_] Other:
EXCHANGE RATE AGENT:
DEFAULT RATE: ____%
ADDENDUM ATTACHED
[_] Yes
[_] No
OTHER/ADDITIONAL PROVISIONS:
2
</TABLE>
<PAGE>
NIPSCO Capital Markets, Inc. 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 , 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.
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."
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 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
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<PAGE>
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
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
4
<PAGE>
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 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
5
<PAGE>
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.
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.
The indebtedness evidenced by this Note is entitled to the benefits of a
Support Agreement, dated as of April 4, 1989, as amended as of May 15, 1989,
December 10, 1990, and February 14, 1991 (as such Agreement may be hereafter
amended, modified or supplemented from time to time in accordance with the terms
and conditions of the Indenture, the "Support Agreement") between the Company
and NIPSCO Industries, Inc. ("Industries"). The Support Agreement provides
that, during the term thereof, (i) Industries will own all of the voting stock
of the Company, (ii) Industries will cause the Company to have at all times a
positive net worth (net assets less intangible assets, if any), as determined in
accordance with generally accepted accounting principles, and (iii) if the
Company is unable to make timely payment of principal of or any premium or
interest on any Debt (as defined below) issued by the Company, Industries will,
at the request of the Company or any Lender (as defined below), provide funds to
the Company to make such payments. The Support Agreement also provides that any
Lender to the Company shall have the right to demand that the Company enforce
its rights against Industries under the Support Agreement as described in the
previous sentence, and in the event that the Company fails to require Industries
to perform such obligations or the Company defaults in the timely payment of
principal of or any premium or interest on any Debt owed to a Lender, such
Lender may proceed directly against Industries to enforce the Company's rights
against Industries under the Support Agreement or to obtain payment of such
defaulted principal, premium or interest owed to such Lender.
The Support Agreement provides that in no event may any Lender, on default
of the Company or Industries or upon failure by the Company or Industries to
comply with the Support Agreement, have recourse to or against the stock or
assets of Northern Indiana Public Service Company ("Northern Indiana") or any
interest of the Company or Industries therein. Notwithstanding this limitation,
the Support Agreement provides that funds available to Industries to satisfy any
obligations under the Support Agreement will include cash dividends paid by
Northern Indiana to Industries.
6
<PAGE>
The term "Debt" is defined in the Support Agreement as debt securities or
other obligations and includes the Note. The term "Lender" is defined in the
Support Agreement as any person, firm or corporation to which the Company is
indebted for money borrowed or to which the Company otherwise owes any Debt or
which is acting as trustee or authorized representative on behalf of such
person, firm or corporation. The Indenture provides that each Holder of a Note,
as well as the Trustee, shall be considered a "Lender" for purposes of the
Support Agreement and shall have all rights of a "Lender" set forth therein.
The Support Agreement may be amended or terminated at any time by the
agreement of Industries and the Company, provided that (i) no amendment
regarding the terms described above may be made unless all Lenders consent in
advance and in writing to such amendment, (ii) no amendment regarding any other
term of the Support Agreement may be made in a manner that adversely affects the
rights of Lenders unless all affected Lenders consent in advance and in writing
to such amendment, and (iii) no termination shall be effective until such time
as all Debt (including the Note) shall have been paid in full.
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, NIPSCO Capital Markets, Inc. has caused this Note to be
duly executed.
NIPSCO CAPITAL MARKETS, INC.
By:
----------------------------------
Title:
-------------------------------
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Debt Securities of
the series designated therein referred
to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By
----------------------------------
Authorized Signatory
7
<PAGE>
[REVERSE OF NOTE]
NIPSCO CAPITAL MARKETS, INC.
MEDIUM-TERM NOTE
(Floating Rate)
This Note is one of a duly authorized series of Debt Securities (the "Debt
Securities") of the Company issued and to be issued under an Indenture, dated as
of February 14, 1997, as amended, modified or supplemented from time to time
(the "Indenture"), between the Company and The Chase Manhattan Bank, as Trustee
(the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the holders of the Debt
Securities, and of the terms upon which the Debt Securities are, and are to be,
authenticated and delivered. This Note is one of the Debt Securities designated
as "Medium-Term Notes Due Nine Months or More From Date of Issue" (the
"Notes"). All terms used but not defined in this Note specified on the face
hereof or in an Addendum hereto shall have the meanings assigned to such terms
in the Indenture.
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 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
8
<PAGE>
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 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.
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(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 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-
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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
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P.M., New York City time, on the related Calculation Date (as defined below),
the rate on such CD Rate Interest 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
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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 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
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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 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. 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
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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.
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
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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
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.
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"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 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
17
<PAGE>
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 contains provisions for defeasance of (i) the entire
indebtedness of the Notes or (ii) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein, which provisions apply to the Notes.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Debt Securities at any time by the
Company and the Trustee with the consent of the holders of not less than a
majority of the aggregate principal amount of all Debt Securities at the time
outstanding and affected thereby. The Indenture also contains provisions
permitting the holders of not less than a majority of the aggregate principal
amount of the outstanding Debt Securities of any series, on behalf of the
holders of all such Debt Securities, to waive compliance by the Company with
certain provisions of the Indenture. Furthermore, provisions in the Indenture
permit the holders of not less than a majority of the aggregate principal amount
of the outstanding Debt Securities of any series, in certain instances, to
waive, on behalf of all of the holders of Debt Securities of such series,
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the holder of this Note shall be conclusive and binding
upon such holder and upon all future holders of this Note and other Notes issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Note.
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.
As provided in the Indenture and subject to certain limitations therein and
herein set forth, the transfer of this Note is registrable in the Security
Register of the Company upon surrender of this Note for registration of transfer
at the office or agency of the Company in any place where the principal hereof
and any premium or interest hereon are payable, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the holder hereof or by his attorney duly
authorized in writing, and thereupon one or
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<PAGE>
more new Notes, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein and
herein set forth, this Note is exchangeable for a like aggregate principal
amount of Notes of different authorized denominations but otherwise having the
same terms and conditions, as requested by the holder hereof surrendering the
same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
holder in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by 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.
19
<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.
20
<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.
21
<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.
22
<PAGE>
EXHIBIT 4.4
[FACE OF 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./1/
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
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./2/
<TABLE>
<CAPTION>
REGISTERED No. FXR-_______ CUSIP No.:_______ PRINCIPAL AMOUNT:
__________________________
<S> <C> <C>
NIPSCO CAPITAL MARKETS, INC.
MEDIUM-TERM NOTE
(Fixed Rate)
ORIGINAL ISSUES DATE: INTEREST RATE:____% STATED MATURITY DATE:
INTEREST PAYMENT DATE(S): DEFAULT RATE:____%
[_] _______ and ________
[_] Other:
ANNUAL REDEMPTION
INITIAL REDEMPTION DATE: INITIAL REDEMPTION PERCENTAGE REDUCTION:____%
PERCENTAGE: ____%
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>
- ----------------------------
/1/ This paragraph applies to global Notes only.
/2/ This paragraph applies to global Notes only.
<PAGE>
NIPSCO Capital Markets, Inc., 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 , 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.
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".
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
2
<PAGE>
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 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 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
3
<PAGE>
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
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).
4
<PAGE>
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 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.
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.
The indebtedness evidenced by this Note is entitled to the benefits of a
Support Agreement, dated as of April 4, 1989, as amended as of May 15, 1989,
December 10, 1990, and February 14, 1991 (as such Agreement may be hereafter
amended, modified or supplemented from time to time in accordance with the terms
and conditions of the Indenture, the "Support Agreement") between the Company
and NIPSCO Industries, Inc. ("Industries"). The Support Agreement provides that,
during the term thereof, (i) Industries will own all of the voting stock of the
Company, (ii) Industries will cause the Company to have at all times a positive
net worth (net assets less intangible assets, if any), as determined in
accordance with generally accepted accounting principles, and (iii) if the
Company is unable to make timely payment of principal of or any premium or
interest on any Debt (as defined below) issued by the Company, Industries will,
at the request of the Company or any Lender (as defined below), provide funds to
the Company to make such payments. The Support Agreement also provides that any
Lender to the Company shall have the right to demand that the Company enforce
its rights against Industries under the Support Agreement as described in the
previous sentence, and in the event that the Company fails to require Industries
to perform such obligations or the Company defaults in the timely payment of
principal of or any premium or interest on any Debt owed to a Lender, such
Lender may proceed directly against Industries to enforce the Company's rights
against Industries under the
5
<PAGE>
Support Agreement or to obtain payment of such defaulted principal, premium or
interest owed to such Lender.
The Support Agreement provides that in no event may any Lender, on default
of the Company or Industries or upon failure by the Company or Industries to
comply with the Support Agreement, have recourse to or against the stock or
assets of Northern Indiana Public Service Company ("Northern Indiana") or any
interest of the Company or Industries therein. Notwithstanding this limitation,
the Support Agreement provides that funds available to Industries to satisfy any
obligations under the Support Agreement will include cash dividends paid by
Northern Indiana to Industries.
The term "Debt" is defined in the Support Agreement as debt securities or
other obligations and includes this Note. The term "Lender"is defined in the
Support Agreement as any person, firm or corporation to which the Company is
indebted for money borrowed or to which the Company otherwise owes any Debt or
which is acting as trustee or authorized representative on behalf of such
person, firm or corporation. The Indenture provides that each holder of a Note,
as well as the Trustee, shall be considered a "Lender" for purposes of the
Support Agreement and shall have all rights of a "Lender" set forth therein.
The Support Agreement may be amended or terminated at any time by the
agreement of Industries and the Company, provided that (i) no amendment
regarding the terms described above may be made unless all Lenders consent in
advance and in writing to such amendment, (ii) no amendment regarding any other
term of the Support Agreement may be made in a manner that adversely affects the
rights of Lenders unless all affected Lenders consent in advance and in writing
to such amendment, and (iii) no termination shall be effective until such time
as all Debt (including the Note) shall have been paid in full.
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.
6
<PAGE>
IN WITNESS WHEREOF, NIPSCO Capital Markets, Inc. has caused this Note to be
duly executed.
NIPSCO CAPITAL MARKETS, INC.
By:
------------------------
Title:
---------------------
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Debt Securities of
the series designated therein referred
to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By:
--------------------------------
Authorized Signatory
7
<PAGE>
[REVERSE OF NOTE]
NIPSCO CAPITAL MARKETS, INC.
MEDIUM-TERM NOTE
(Fixed Rate)
This Note is one of a duly authorized series of Debt Securities (the "Debt
Securities") of the Company issued and to be issued under an Indenture, dated as
of February 14, 1997, as amended, modified or supplemented from time to time
(the "Indenture"), between the Company and The Chase Manhattan Bank, as Trustee
(the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the holders of the Debt
Securities, and of the terms upon which the Debt Securities are, and are to be,
authenticated and delivered. This Note is one of the Debt Securities designated
as "Medium-Term Notes Due Nine Months or More From Date of Issue" (the "Notes").
All terms used but not defined in this Note specified on the face hereof or in
an Addendum hereto shall have the meanings assigned to such terms in the
Indenture.
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 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
8
<PAGE>
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 contains provisions for defeasance of (i) the entire
indebtedness of the Notes or (ii) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein, which provisions apply to the Notes.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Debt Securities at any time by the
Company and the Trustee with the consent of the holders of not less than a
majority of the aggregate principal amount of all Debt Securities at the time
outstanding and affected thereby. The Indenture also contains provisions
permitting the holders of not less than a majority of the aggregate principal
amount of the outstanding Debt Securities of any series, on behalf of the
holders of all such Debt Securities, to waive compliance by the Company with
certain provisions of the Indenture. Furthermore, provisions in the Indenture
permit the holders of not less than a majority of the aggregate principal amount
of the outstanding Debt Securities of any series, in certain instances, to
waive, on behalf of all of the holders of Debt Securities of such series,
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the holder of this Note shall be
9
<PAGE>
conclusive and binding upon such holder and upon all future holders of this Note
and other Notes issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Note.
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.
As provided in the Indenture and subject to certain limitations therein and
herein set forth, the transfer of this Note is registrable in the Security
Register of the Company upon surrender of this Note for registration of transfer
at the office or agency of the Company in any place where the principal hereof
and any premium or interest hereon are payable, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the holder hereof or by his attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein and
herein set forth, this Note is exchangeable for a like aggregate principal
amount of Notes of different authorized denominations but otherwise having the
same terms and conditions, as requested by the holder hereof surrendering the
same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
holder in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by 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>
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.
11
<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.
12
<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.
13
<PAGE>
EXHIBIT 5
SCHIFF HARDIN & WAITE
A Partnership Including Professional Corporations
7200 Sears Tower, Chicago, Illinois 60606-6473
Telephone (312) 876-1000 Facsimile (312) 258-5600
Chicago
Washington
New York
Peoria
Merrillville
Andrew A. Kling
(312) 258-5551
February 25, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: NIPSCO Industries, Inc. and NIPSCO Capital Markets, Inc. Registration
---------------------------------------------------------------------
Statement on Form S-3
---------------------
Ladies and Gentlemen:
We are acting as counsel to NIPSCO Industries, Inc., an Indiana corporation
("Industries"), and NIPSCO Capital Markets, Inc., an Indiana corporation
("Capital"), in connection with the filing of a Registration Statement on Form
S-3 by Capital and Industries. The Registration Statement relates to registering
the offer and sale of debt securities in the aggregate principal amount of
$300,000,000 (the "Debt Securities"), and the related obligations of Industries
under the Support Agreement, dated April 4, 1989, as amended as of May 15, 1989,
December 10, 1990, and February 14, 1991, between Capital and Industries (the
"Support Agreement"), as more fully described in the Registration Statement. The
Debt Securities will be issued under an indenture among Capital, Industries and
The Chase Manhattan Bank, as trustee (the "Trustee"), in substantially the form
of Exhibit 4.1 to the Registration Statement (the "Indenture"). In that
connection, we have examined such corporate records, certificates and other
documents, and have made such other factual and legal investigations, as we have
deemed necessary or appropriate for the purposes of this opinion.
Based upon the foregoing, it is our opinion that:
1. The Debt Securities will be the legally issued, valid and binding
obligations of Capital, enforceable in accordance with their terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws relating to or
affecting the enforcement of creditors' rights generally or by general
principles of equity, at such time as:
(a) the Indenture shall have been duly executed and delivered by the
Company and the Trustee;
(b) the series in which such Debt Securities are to be issued and the
terms of such Debt Securities shall have established by or pursuant to
resolutions of the Board of Directors of Capital consistent with the
Indenture, and such series and terms shall have been set forth
<PAGE>
Securities and Exchange Commission
February 25, 1997
Page 2
or determined in the manner provided in an Officer's Certificate (as
defined in the Indenture) or supplemental indenture in accordance with the
requirements of the Indenture;
(c) such Debt Securities shall have been duly executed by Capital,
duly authenticated by the Trustee pursuant to the Indenture, and delivered
to the purchasers thereof upon payment of the agreement consideration
therefor; and
(d) the Registration Statement shall have become effective under the
Securities Act of 1933, as amended, and the Indenture shall have been
qualified under the Trust Indenture Act of 1939, as amended; and the Debt
Securities shall have been issued as contemplated by the Registration
Statement and the procedures for sales of securities pursuant to Rule 415
under such Act.
2. The Debt Securities are entitled to the benefit of the Support
Agreement, which is the valid and binding obligation of Industries, enforceable
in accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
laws relating to or affecting the enforcement of creditors' rights generally or
by general principles of equity.
We hereby consent to the use of our name under the caption "Legal
Opinion" in the Prospectus, and under the caption "Legal Opinions" in the
Prospectus Supplement, constituting a part of the Registration Statement and to
the filing of this opinion as an exhibit to such Registration Statement.
Very truly yours,
SCHIFF HARDIN & WAITE
By: /s/ ANDREW A. KLING
-----------------------------
Andrew A. Kling
AAK/dr
<PAGE>
EXHIBIT 12
NIPSCO INDUSTRIES, INC.
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 603(d) of
Regulation S-K:
Income before interest
charges............... $248,243,984 $261,422,078 $267,739,129 $284,348,649 $290,836,347
Adjustments:
Federal income taxes.. 61,556,604 89,021,067 100,320,963 102,223,791 78,532,661
State income tax...... 11,700,316 13,132,078 15,398,420 15,420,719 12,450,863
Deferred investment
tax credit, net...... (7,461,688) (7,446,643) (6,488,242) (7,616,362) (7,407,813)
Deferred income taxes,
net.................. 14,503,080 2,122,284 (11,488,356) (2,680,002) 27,418,121
Federal and state
income taxes included
in other income...... (3,323,871) (5,537,170) (15,332,783) (9,260,066) (4,076,337)
Amortization of
capitalized interest. 0 0 103,130 247,616 247,512
------------ ------------ ------------ ------------ ------------
$326,228,506 $362,714,804 $349,241,282 $383,790,245 $387,301,754
============ ============ ============ ============ ============
Fixed charges as defined
in item 603(d) of
Regulation S-K:
Interest on long-term
debt.................. $ 37,660,094 $ 82,121,208 $ 78,292,155 $ 82,555,251 $ 35,381,829
Other interest......... 9,954,982 9,235,108 11,860,228 12,731,395 17,448,667
Amortization of
premium, reacquisition
premium, discount and
expense on debt, net.. 3,322,908 3,662,624 3,897,161 4,401,668 4,506,472
Interest portion of
rent expense.......... 1,395,288 2,038,882 2,220,675 2,416,111 2,656,116
Capitalized interest
during period......... 326,631 4,664,887 2,145,182 234,613 0
------------ ------------ ------------ ------------ ------------
$102,659,814 $101,835,618 $ 98,205,291 $102,488,028 $110,091,884
============ ============ ============ ============ ============
Plus preferred stock
dividends:
Preferred dividend
requirements of
subsidiary............ $ 10,858,424 $ 10,541,008 $ 9,912,758 $ 9,046,207 $ 8,711,986
Preferred dividend
requirements factor... 1.52 1.66 1.67 1.54 1.59
------------ ------------ ------------ ------------ ------------
Preferred dividend
requirements of
subsidiary............ 18,200,804 16,131,969 14,571,756 13,931,169 13,852,056
Fixed charges.......... 102,859,314 101,638,818 88,206,291 102,488,928 110,091,884
------------ ------------ ------------ ------------ ------------
$119,860,618 $117,767,787 $112,777,047 $116,419,187 $123,843,340
============ ============ ============ ============ ============
Ratio of earnings to
fixed charges.......... 2.74 3.00 3.10 3.30 3.21
</TABLE>
<PAGE>
EXHIBIT 23.1
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 27, 1996,
included or incorporated by reference in the annual report on Form 10-K for
NIPSCO Industries, Inc. for the year ended December 31, 1995; our report dated
April 26, 1996, included in the quarterly report on Form 10-Q for NIPSCO
Industries, Inc. for the periods ended March 31, 1996; our report dated July 26,
1996 included in the quarterly report on Form 10-Q for NIPSCO Industries, Inc.
for the periods ended June 30, 1996; our report dated October 23, 1996 included
in the quarterly report on Form 10-Q for NIPSCO Industries, Inc. for the periods
ended September 30, 1996; and our report dated January 28, 1997 included in the
Current Report on Form 8-K as filed on February 14, 1997, and to all references
made to our Firm included in this Registration Statement.
/s/ Arthur Andersen LLP
Chicago, Illinois
February 25, 1997
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Edmund A. Schroer, 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 NIPSCO Industries, Inc. ("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 $300,000,000 principal amount of Debt Securities of NIPSCO Capital
Markets, Inc. ("Capital Markets"), including the related obligations of the
Corporation pursuant to the Support Agreement between the Corporation and
Capital Markets, 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/ EDMUND A. SCHROER
------------------ -------------------------
Edmund A. Schroer
<PAGE>
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 NIPSCO Industries, Inc. ("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 $300,000,000 principal amount of Debt Securities of NIPSCO Capital
Markets, Inc. ("Capital Markets"), including the related obligations of the
Corporation pursuant to the Support Agreement between the Corporation and
Capital Markets, 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>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Robert 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 NIPSCO Industries, Inc. ("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 $300,000,000 principal amount of Debt Securities of NIPSCO Capital
Markets, Inc. ("Capital Markets"), including the related obligations of the
Corporation pursuant to the Support Agreement between the Corporation and
Capital Markets, 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
<PAGE>
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 NIPSCO Industries, Inc. ("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 $300,000,000 principal amount of Debt Securities of NIPSCO Capital
Markets, Inc. ("Capital Markets"), including the related obligations of the
Corporation pursuant to the Support Agreement between the Corporation and
Capital Markets, 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>
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 NIPSCO Industries, Inc. ("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 $300,000,000 principal amount of Debt Securities of NIPSCO Capital
Markets, Inc. ("Capital Markets"), including the related obligations of the
Corporation pursuant to the Support Agreement between the Corporation and
Capital Markets, 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>
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 NIPSCO Industries, Inc. ("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 $300,000,000 principal amount of Debt Securities of NIPSCO Capital
Markets, Inc. ("Capital Markets"), including the related obligations of the
Corporation pursuant to the Support Agreement between the Corporation and
Capital Markets, 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/ ERNESTINE M. RACLIN
------------------ -------------------------
Ernestine M. Raclin
<PAGE>
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 NIPSCO Industries, Inc. ("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 $300,000,000 principal amount of Debt Securities of NIPSCO Capital
Markets, Inc. ("Capital Markets"), including the related obligations of the
Corporation pursuant to the Support Agreement between the Corporation and
Capital Markets, 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>
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 NIPSCO Industries, Inc. ("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 $300,000,000 principal amount of Debt Securities of NIPSCO Capital
Markets, Inc. ("Capital Markets"), including the related obligations of the
Corporation pursuant to the Support Agreement between the Corporation and
Capital Markets, 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 25
--------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ______
-------------------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
-------------------------------------------------------
NIPSCO Capital Markets, Inc.
(Exact name of obligor as specified in its charter)
Indiana 35-1762940
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
5265 Hohman Avenue
Hammond, Indiana 46320
(Address of principal executive offices) (Zip Code)
NIPSCO Industries, Inc.
(Exact name of obligor as specified in its charter)
Indiana 35-1719974
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
5265 Hohman Avenue
Hammond, Indiana 46320
(Address of principal executive offices) (Zip Code)
-------------------------------------------------------
Debt Securities
(Title of the indenture securities)
--------------------------------------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and the Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 13th day of February, 1997.
THE CHASE MANHATTAN BANK
By /s/ R. LORENZEN
--------------------------------------
R. Lorenzen
Senior Trust Officer
<PAGE>
EXHIBIT 7 TO FORM T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1996, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin.................................. $ 11,095
Interest-bearing balances.......................... 4,998
Securities:
Held to maturity securities........................... 3,231
Available for sale securities......................... 38,078
Federal Funds sold and securities purchased under
agreement to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold................................. 8,018
Securities purchased under agreements to resell.... 731
Loans and lease financing receivables:
Loans and leases, net of unearned income $130,513
Less: Allowance for loan and lease losses 2,938
Less: Allocated transfer risk reserve.... 27
Loans and leases, net of unearned income, --------
allowance, and reserve............................. 127,548
Trading Assets........................................ 48,576
Premises and fixed assets (including capitalized
leases)............................................ 2,850
Other real estate owned............................... 300
Investments in unconsolidated subsidiaries and
associated companies............................... 92
Customer's liability to this bank on acceptances
outstanding........................................ 2,777
Intangible assets..................................... 1,361
Other assets.......................................... 12,204
------
TOTAL ASSETS.......................................... $261,859
========
</TABLE>
<PAGE>
LIABILITIES
<TABLE>
<CAPTION>
<S> <C>
Deposits
In domestic offices............................. $80,163
Noninterest-bearing.....................$30,596
Interest-bearing........................ 49,567
------
In foreign offices, Edge and Agreement
subsidiaries, and IBF's......................... 65,173
Noninterest-bearing.....................$ 3,616
Interest-bearing........................ 61,557
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's Federal funds purchased............ 14,594
Securities sold under agreements to repurchase.. 14,110
Demand notes issued to the U.S. Treasury........... 2,200
Trading liabilities................................ 30,136
Other Borrowed money:
With a remaining maturity of one year or less... 16,895
With a remaining maturity of more than one year. 449
Mortgage indebtedness and obligations under capital-
ized leases..................................... 49
Bank's liability on acceptances executed and 2,764
outstanding Subordinated notes and debentures...... 5,471
Other liabilities.................................. 13,997
TOTAL LIABILITIES.................................. 246,001
--------
Limited-Life Preferred stock and related surplus 550
EQUITY CAPITAL
Common stock....................................... 1,209
Surplus............................................ 10,176
Undivided profits and capital reserves............. 4,385
Net unrealized holding gains (Losses)
on available-for-sale securities................... (481)
Cumulative foreign currency translation adjustments 19
TOTAL EQUITY CAPITAL............................... 15,308
--------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL........................ $261,859
========
</TABLE>
I, Joseph L. Sclafani, S.V.P. & Controller of the above-
named bank, do hereby declare that this Report of
Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory
authority and is true to the best of my knowledge and
belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the instruct-
ions issued by the appropriate Federal regulatory authority
and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
THOMAS G. LABRECQUE )
