<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON , 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NIPSCO CAPITAL MARKETS, NIPSCO CAPITAL TRUST I NIPSCO INDUSTRIES, INC.
INC. AS ISSUER AND REGISTRANT AS ISSUER AND REGISTRANT
AS ISSUER AND REGISTRANT OF OF COMMON SHARES, STOCK
OF DEBENTURES, GUARANTEE PREFERRED SECURITIES PURCHASE CONTRACTS, STOCK
AND BACK-UP UNDERTAKINGS PURCHASE UNITS AND
AND MEDIUM-TERM NOTES (EXACT NAME OF REGISTRANT OBLIGATIONS PURSUANT TO
AS SPECIFIED IN ITS THE SUPPORT AGREEMENT
(EXACT NAME OF REGISTRANT CHARTER) (EXACT NAME OF REGISTRANT
AS SPECIFIED IN ITS AS SPECIFIED IN ITS
CHARTER) CHARTER)
INDIANA
DELAWARE INDIANA
(STATE OR OTHER (STATE OR OTHER (STATE OR OTHER
JURISDICTION OF JURISDICTION OF JURISDICTION OF
INCORPORATION OR INCORPORATION OR INCORPORATION OR
ORGANIZATION) ORGANIZATION) ORGANIZATION)
35-1719974
35-1762940 APPLIED FOR (I.R.S. EMPLOYER
(I.R.S. EMPLOYER (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
IDENTIFICATION NUMBER) IDENTIFICATION NUMBER)
801 EAST 86TH AVENUE
MERRILLVILLE, INDIANA 46410
(219) 853-5200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
PRINCIPAL EXECUTIVE OFFICES)
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FRANCIS P. GIROT, JR. COPIES TO:
NIPSCO INDUSTRIES, INC. ROBERT J. MINKUS
5265 HOHMAN AVENUE SCHIFF HARDIN & WAITE
HAMMOND, INDIANA 46320 6600 SEARS TOWER
(219) 853-6970 CHICAGO, ILLINOIS 60606
(NAME, ADDRESS, INCLUDING ZIP CODE, AND (312) 258-5500
TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR
SERVICE)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE 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, 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, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO TO BE OFFERING PRICE AGGREGATE REGISTRATION
BE REGISTERED REGISTERED PER UNIT(1)(2) OFFERING PRICE(1)(2) FEE(1)
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<S> <C> <C> <C> <C>
Stock Purchase Contracts of NIPSCO
Industries, Inc.(3)..................
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Stock Purchase Units of NIPSCO
Industries, Inc.(3)..................
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Common Shares, without par value, of
NIPSCO Industries, Inc.(4)...........
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Preferred Securities of NIPSCO Capital
Trust I......................
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Debentures of NIPSCO Capital Markets,
Inc.(5)..............................
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Guarantee and back-up undertakings of
NIPSCO Capital Markets, Inc. in
connection with Preferred Securities
of NIPSCO Capital Trust I(6).........
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Medium-Term Notes of NIPSCO Capital
Markets, Inc.........................
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Obligations of NIPSCO Industries, Inc.
pursuant to the Support
Agreement(7).........................
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Total................................. $850,000,000 100% $850,000,000 $236,300
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</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). The aggregate public offering price of the
Debentures, Guarantee and Medium-Term Notes of NIPSCO Capital Markets,
Inc., the Common Shares, Stock Purchase Units, Stock Purchase Contracts and
Obligations pursuant to the Support Agreement of NIPSCO Industries, Inc.,
and the Preferred Securities of NIPSCO Capital Trust I registered hereby
will not exceed $850 million.
(2) Exclusive of accrued interest and distributions, if any.
(3) Each Stock Purchase Unit of NIPSCO Industries, Inc. consists of (i) a Stock
Purchase Contract, under which the holder, upon settlement, will purchase
an indeterminate number of Common Shares to be issued by NIPSCO Industries,
Inc. and (ii) either a beneficial interest in Preferred Securities of
NIPSCO Capital Trust I or debt obligations of third parties, including U.S.
Treasury securities, purchased with the proceeds from the sale of the Stock
Purchase Units. Each beneficial interest will be pledged to secure the
obligation of such holder to purchase such Common Shares. No separate
consideration will be received for the Stock Purchase Contracts.
(4) Consists of such indeterminate number of Common Shares to be issued by
NIPSCO Industries, Inc. upon settlement of the Stock Purchase Contracts.
Includes Series A Junior Participating Preferred Share Rights. Prior to the
occurrence of certain events, these rights will not be exercisable or
evidenced separately from such Common Shares.
(5) The Debentures of NIPSCO Capital Markets, Inc. will be purchased by NIPSCO
Capital Trust I with the proceeds from the sale by NIPSCO Capital Trust I
of its Preferred Securities.
(6) No separate consideration will be received for the Guarantee or back-up
undertakings of NIPSCO Capital Markets, Inc. Includes the rights of holders
of the Preferred Securities under such Guarantee and back-up undertakings,
consisting of obligations of NIPSCO Capital Markets, Inc. as set forth in
the Amended and Restated Declaration of Trust of NIPSCO Capital Trust I
(including the obligation to pay expenses of NIPSCO Capital Trust I) and in
the Indenture governing the Debentures of NIPSCO Capital Markets, Inc., in
each case as further described in the Registration Statement.
(7) No separate consideration will be received for the obligations of NIPSCO
Industries, Inc. pursuant to the Support Agreement.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY +
+NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN +
+OFFER TO SELL THE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO BUY THESE +
+SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED DECEMBER 18, 1998
PROSPECTUS
$850,000,000
NIPSCO CAPITAL MARKETS, INC.
DEBENTURES
MEDIUM-TERM NOTES
-----------
NIPSCO CAPITAL TRUST I
PREFERRED SECURITIES
GUARANTEED AS SET FORTH HEREIN BY
NIPSCO CAPITAL MARKETS, INC.
-----------
NIPSCO INDUSTRIES, INC.
COMMON SHARES
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
OBLIGATIONS PURSUANT TO SUPPORT AGREEMENT
-----------
NIPSCO Capital Markets, Inc. may offer debentures and medium-term notes.
NIPSCO Capital Trust I may offer preferred securities that will be guaranteed
by NIPSCO Capital Markets, Inc. to the extent described in this Prospectus.
NIPSCO Industries, Inc. may offer stock purchase contracts, stock purchase
units and its Common Shares. In addition, any securities issued by NIPSCO
Capital Markets, Inc. will be entitled to the benefit of the Support Agreement
of NIPSCO Industries, Inc. described in this Prospectus.
These securities may be offered from time to time, in amounts, on terms and
at prices that will be determined at the time they are offered for sale. These
terms and prices will be described in more detail in one or more supplements to
this Prospectus, which will be distributed at the time the securities are
offered.
-----------
THIS PROSPECTUS MAY NOT BE USED TO SELL ANY OF THE SECURITIES UNLESS IT IS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
-----------
The Common Shares are listed on the New York Stock Exchange, the Chicago
Stock Exchange and the Pacific Exchange under the trading symbol "NI." Each
Prospectus Supplement offering any other securities will state whether those
securities are listed or will be listed on any national securities exchange.
-----------
The securities may be sold to or through underwriters, through dealers or
agents, directly to purchasers or through a combination of these methods. If an
offering of securities involves any underwriters, dealers or agents, then the
applicable Prospectus Supplement will name the underwriters, dealers or agents
and will provide information regarding any fee, commission or discount
arrangements made with those underwriters, dealers or agents.
-----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is December , 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Summary........................................................ 3
Available Information..................................................... 6
Incorporation of Certain Documents by Reference........................... 6
Forward-Looking Statements................................................ 7
Industries................................................................ 7
Capital Markets........................................................... 8
The Trust................................................................. 9
Ratio of Earnings to Fixed Charges........................................ 10
Use of Proceeds........................................................... 10
Description of Debentures................................................. 11
Description of Preferred Securities....................................... 18
Description of the Guarantee.............................................. 27
Relationship Among the Preferred Securities, the Debentures and the
Guarantee................................................................ 30
Description of the Common Shares.......................................... 31
Description of Stock Purchase Contracts and Stock Purchase Units.......... 35
Description of Medium-Term Notes.......................................... 35
Description of the Support Agreement...................................... 53
Book Entry Issuance....................................................... 54
Plan of Distribution...................................................... 57
Legal Matters............................................................. 58
Experts................................................................... 58
</TABLE>
2
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PROSPECTUS SUMMARY
Three related companies will be offering the securities described in this
Prospectus. These companies are NIPSCO Industries, Inc. and two of its wholly-
owned subsidiaries, NIPSCO Capital Markets, Inc. and NIPSCO Capital Trust I.
The following table lists the securities to be offered by each company:
<TABLE>
<C> <S>
NIPSCO CAPITAL MARKETS, INC. ("CAPITAL MARKETS").. Debentures
Medium-Term Notes
NIPSCO CAPITAL TRUST I (THE "TRUST").............. Preferred Securities
(guaranteed as set forth
herein by Capital Markets)
NIPSCO INDUSTRIES, INC. ("INDUSTRIES")............ Stock Purchase Contracts
Stock Purchase Units
Common Shares
Obligations under the
Support Agreement
</TABLE>
THE COMPANIES
INDUSTRIES
NIPSCO Industries, Inc. is an energy and utility-based holding company that
provides electric energy, natural gas and water to the public through seven
wholly-owned regulated subsidiaries. Industries also provides utility-related
services through these and other subsidiaries, such as installing, repairing
and maintaining underground pipelines, and locating and marking utility lines.
In addition, Industries has a number of wholly-owned non-regulated subsidiaries
that provide energy and utility services, such as energy marketing and trading,
power generation, and gas transmission, supply and storage. In addition,
pursuant to a definitive merger agreement entered into on December 18, 1997,
Industries has agreed to acquire Bay State Gas Company ("Bay State"), which
provides natural gas distribution service in Massachusetts, New Hampshire and
Maine. Industries was incorporated under the laws of Indiana in 1987. Its
principal executive offices are located at 801 East 86th Avenue, Merrillville,
Indiana 46410, and its telephone number is (219) 853-5200.
CAPITAL MARKETS
NIPSCO Capital Markets, Inc. is a wholly-owned subsidiary of Industries that
engages in financing activities to generate funds for Industries and for
certain of its subsidiaries. Capital Markets was incorporated under the laws of
Indiana in 1989. Its offices are located at 801 East 86th Avenue, Merrillville,
Indiana 46410. Its telephone number is (219) 853-5200.
THE TRUST
NIPSCO Capital Trust I is a business trust that was created in December 1998
under the laws of the State of Delaware. Capital Markets is the sponsor of the
Trust and owns all of the common securities of the Trust. The Trust is managed
by five trustees. Capital Markets may dissolve the Trust at any time. The
Trust's address is in care of Capital Markets, 801 East 86th Avenue,
Merrillville, Indiana 46410. Its telephone number is (219) 853-5200.
THE SECURITIES
The securities that may be sold pursuant to this Prospectus are: Industries'
Common Shares and Stock Purchase Contracts relating to Industries' Common
Shares; the Trust's Preferred Securities (which will be guaranteed by Capital
Markets); Stock Purchase Units (consisting of Stock Purchase Contracts and
Preferred
3
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Securities); and Capital Markets' Debentures and Medium-Term Notes, each of
which is described briefly below. In addition, any securities issued by Capital
Markets will be entitled to the benefit of a Support Agreement with Industries.
The aggregate initial offering price of all of the securities to be sold will
not exceed $850 million. At the time any of these securities are offered, a
Prospectus Supplement will be distributed that will describe in more detail the
specific terms and price of the securities being sold and whether those
securities will be sold to or through underwriters or by another means of
distribution.
STOCK PURCHASE CONTRACTS AND COMMON SHARES
Industries may offer stock purchase contracts ("Stock Purchase Contracts")
for the purchase of its common shares, without par value (the "Common Shares").
The Common Shares are listed on the New York Stock Exchange (the "NYSE"), the
Chicago Stock Exchange (the "CSE") and the Pacific Exchange (the "PE") under
the ticker symbol "NI." The price and terms of the Stock Purchase Contracts
will be determined at the time or times of offering. If Industries offers its
Stock Purchase Contracts, a Prospectus Supplement will provide information
about the terms of the offering, including the number of Common Shares to be
sold, the purchase price of the Common Shares, the date or dates on which the
Common Shares will be purchased and any amounts that Industries may be required
to pay to the holders of the Stock Purchase Contracts.
PREFERRED SECURITIES
The Trust may offer its preferred securities (the "Preferred Securities"),
each of which will represent an undivided beneficial ownership interest in the
assets of the Trust. The price and terms of the Preferred Securities will be
determined at the time of offering. If the Trust offers its Preferred
Securities, a Prospectus Supplement will provide information about the terms of
the offering, including the specific title of the Preferred Securities, the
aggregate number of Preferred Securities to be sold, the stated liquidation
amount and information regarding the rights of holders of Preferred Securities
to receive cumulative cash distributions. This will include information
regarding the rate of payment, whether distributions can be extended or
deferred, and whether the Preferred Securities can be redeemed. Payments with
respect to the Preferred Securities will be fully and unconditionally
guaranteed by Capital Markets to the extent described in the Prospectus
Supplement.
In connection with any sale of the Preferred Securities, the Trust will sell
common securities (the "Common Securities") to Capital Markets, each of which
will represent an undivided beneficial ownership interest in the assets of the
Trust. The Trust expects to use the proceeds from the sale of any Preferred
Securities and Common Securities (collectively, the "Trust Securities") to
purchase Debentures from Capital Markets. The Debentures may give Capital
Markets the right to defer payments of interest on the Debentures. If Capital
Markets decides to defer interest payments on the Debentures, then any
distributions on the Preferred Securities would be similarly deferred. At any
time interest payments are being deferred, neither Capital Markets nor
Industries would be able to declare or pay any cash distributions with respect
to their respective capital stock or any debt securities ranking junior to the
Debentures. Holders of Preferred Securities would not lose their cash
distributions; rather, interest would continue to accrue on the Debentures,
and, as a result, distributions would continue to accumulate on the Preferred
Securities until paid. The Prospectus Supplement will provide more detailed
information about Capital Markets' right to defer interest payments on the
Debentures and the impact of deferral upon the holders of Preferred Securities.
STOCK PURCHASE UNITS
Industries may offer stock purchase units ("Stock Purchase Units"), each of
which will consist of (i) a Stock Purchase Contract and (ii) a Preferred
Security or a U.S. Treasury security. The Preferred Security or the U.S.
Treasury security will be pledged as collateral to secure the holder's
obligation to purchase Common
4
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Shares under the Stock Purchase Contract. If Industries offers Stock Purchase
Units, a Prospectus Supplement will provide information about the terms of the
offering, including the specific terms of the Stock Purchase Contracts and
information about the security or obligation that will secure the holder's
obligation to purchase Common Shares.
DEBENTURES
Capital Markets may offer and sell to the Trust a series of debentures (the
"Debentures"), which the Trust would purchase with the proceeds from the sale
of its Preferred Securities to the public and the sale of its Common Securities
to Capital Markets. The Debentures would be the sole assets of the Trust. If
Capital Markets sells Debentures to the Trust, a Prospectus Supplement will
provide specific information about the Debentures, including their specific
designation, aggregate principal amount, denominations, date of maturity,
interest rate (which may be fixed or variable), the dates upon which interest
will be paid and whether payments of interest may be deferred. The Prospectus
Supplement also will indicate whether the Debentures are redeemable or
convertible or exchangeable into other securities, and whether the Debentures
contain any sinking fund provisions or any other special terms.
As described above under "Preferred Securities," the Debentures may give
Capital Markets the right to defer payments of interest on the Debentures. If
so, the Prospectus Supplement will provide more detailed information about this
right.
MEDIUM-TERM NOTES
Capital Markets may offer any series of medium-term notes (the "Medium-Term
Notes" or "Notes") that will be due nine months or more from the date of
issuance. The Medium-Term Notes may bear interest at fixed rates or floating
rates based upon 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, the Treasury Rate or any formula using these rates. If Capital Markets
offers Medium-Term Notes, a Prospectus Supplement will provide specific
information about the Medium-Term Notes, such as their maturity date and
interest rate, including whether the notes will be regular floating rate notes,
floating rate/fixed rate notes or inverse floating rate notes, and which market
rate will serve as the reference for determining the interest rate.
5
<PAGE>
AVAILABLE INFORMATION
Industries files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). You may read and copy
any of these reports, proxy statements and other information at the
Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. You may obtain information on the operation of the Public Reference Room
by calling the Commission at 1-800-SEC-0030. The Commission also maintains a
site on the World Wide Web that contains reports, proxy statements and other
information regarding Industries. The address of the Commission's Web site is
http://www.sec.gov. Information about Industries is also available at
http://www.nipsco.com; that information, however, is not a part of this
Prospectus except to the extent it is specifically incorporated by reference in
this Prospectus.
Industries, Capital Markets and the Trust together have filed with the
Commission a Registration Statement on Form S-3 (including any amendments
thereto, the "Registration Statement") under the Securities Act of 1933 (the
"Securities Act") with respect to the securities offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement. For
further information about Industries, Capital Markets, the Trust and the
securities offered hereby, reference is made to the Registration Statement and
the exhibits thereto, which may be inspected at the Commission's Public
Reference Room or through the Commission's Web site.
In a letter dated September 25, 1992, the staff of the Commission informed
Industries and Capital Markets that it would not recommend enforcement action
to the Commission if Capital Markets did not file periodic reports pursuant to
Sections 13 and 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), subject to Industries' compliance with the conditions set forth in the
letter. In reliance upon that letter, Capital Markets has not filed, and does
not intend to file, any documents under the Exchange Act. Furthermore, Capital
Markets does not intend to issue any periodic or other reports to holders of
any securities to be issued by Capital Markets. The Commission's staff also has
advised Capital Markets that Capital Markets does not need to include its
financial information in any registration statement on Form S-3 filed by
Capital Markets and Industries with respect to debt securities subject to the
Support Agreement.
This Prospectus does not include any separate financial statements of the
Trust. Capital Markets and the Trust do not consider that those financial
statements would be material to the holders of the Preferred Securities because
the Trust is a special purpose entity, with no operating history or independent
operations, that is not engaged in and does not propose to engage in any
activity other than holding, as trust assets, the Debentures of Capital Markets
and issuing its Trust Securities as described below. Furthermore, taken
together, Capital Markets' obligations under the Debentures, the related
Indenture, the Trust's Amended and Restated Declaration of Trust and the
related Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payment with respect to the Trust Securities. For
this reason, Capital Markets does not expect that the Trust will file reports
with the Commission pursuant to the Exchange Act.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Industries and Bay State with the Commission
pursuant to the Exchange Act are incorporated by reference and made a part of
this Prospectus:
(a) Industries' Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(b) Industries' Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1998, June 30, 1998 and September 30, 1998;
(c) The description of Industries' Common Shares and associated preferred
share purchase rights, contained in Industries' registration statement
on Form 8-B filed pursuant to Section 12 of the Exchange Act and any
amendments and reports filed for the purpose of updating that
description;
(d) Bay State's Annual Report on Form 10-K for the year ended September 30,
1997, as amended by Form 10-K/A filed on December 17, 1997;
(e) Bay State's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1997, March 31, 1998 and June 30, 1998;
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(f) Bay State's Current Reports on Form 8-K dated December 30, 1997 and
November 25, 1998; and
(g) All documents filed by Industries with the Commission 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 made by
this Prospectus.
Any statement contained in this Prospectus, or in a document filed after the
date of this Prospectus that becomes incorporated by reference in this
Prospectus, that modifies or supersedes any statement contained in a document
that is presently incorporated by reference in this Prospectus, will be
considered to be, for the purposes of this Prospectus, to be so modified or
superseded. Any statement that is considered to be modified or superseded only
will be considered to be a part of this Prospectus in its modified or
superseded form.
Each person who receives a copy of this Prospectus has the right to receive,
a copy of any or all of the information that has been incorporated by reference
in this Prospectus but not delivered with this Prospectus. Industries will
provide any copies without charge. If you would like any copies, please call or
write to Nina M. Rausch, Secretary, NIPSCO Industries, Inc., 5265 Hohman
Avenue, Hammond, Indiana 46320, (219) 853-5200.
FORWARD LOOKING INFORMATION
Certain of the matters discussed in this Prospectus or in any accompanying
Prospectus Supplement and in the documents incorporated by reference herein or
therein contain forward-looking statements within the meaning of the securities
laws. Forward-looking statements include terms such as "may," "will," "expect,"
"believe," "plan" and other similar terms. Industries, Capital Markets and the
Trust each cautions that, while each of them believes those statements to be
based on reasonable assumptions and makes those statements in good faith, there
can be no assurance that the actual results will not differ materially from
such assumptions or that the expectations set forth in the forward-looking
statements derived from such assumptions will be realized. Investors should be
aware of important factors that could have a material impact on future results.
These factors include, but are not limited to: the weather; the federal and
state regulatory environment; year 2000 issues; the economic climate; regional,
commercial, industrial and residential growth in the service territories served
by Industries' subsidiaries; customers' usage patterns and preferences; the
speed and degree to which competition enters the utility industry; changing
conditions in the capital and equity markets; and other uncertainties, all of
which are difficult to predict, and many of which are beyond the control of
Industries, Capital Markets and the Trust.
INDUSTRIES
NIPSCO Industries, Inc. is an energy and utility-based holding company that
provides electric energy, natural gas and water for residential, commercial and
industrial uses in Indiana and Ohio through its seven wholly-owned regulated
subsidiaries. These subsidiaries are Crossroads Pipeline Company, Harbour Water
Corporation, Indianapolis Water Company, Kokomo Gas and Fuel Company, Liberty
Water Company, Northern Indiana Fuel and Light Company, Inc. and Northern
Indiana Public Service Company. In addition, Industries owns a number of non-
utility subsidiaries, including IWC Resources Corporation, Capital Markets,
NIPSCO Development Company, Inc., NI Energy Services, Inc. and Primary Energy,
Inc.
Northern Indiana Public Service Company ("Northern Indiana"), Industries'
largest and dominant subsidiary, is a public utility operating company that
supplies electricity and natural gas to the public. Northern Indiana operates
in 30 counties in northern Indiana, serving an area of about 12,000 square
miles with a population of approximately 2.2 million. At September 30, 1998,
Northern Indiana was supplying natural gas to approximately 659,725 customers
and electricity to approximately 418,754 customers. Kokomo Gas and Fuel Company
("Kokomo Gas") and Northern Indiana Fuel and Light Company, Inc. ("NIFL") are
public
7
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utility operating companies that supply natural gas to the public. Kokomo Gas
operates in the City of Kokomo, Indiana and the surrounding six counties, while
NIFL operates in five counties in the northeast corner of Indiana. At September
30, 1998, Kokomo Gas was serving approximately 33,138 customers in its service
territory, and NIFL was serving approximately 33,656 customers in its service
territory. Both of the Kokomo Gas and NIFL service territories are contiguous
to Northern Indiana's service territory. Crossroads Pipeline Company is an
interstate natural gas pipeline. Capital Markets handles financing for ventures
of Industries and its subsidiaries (excluding Northern Indiana). NIPSCO
Development Company makes various investments, including real estate and
venture capital investments. NI Energy Services, Inc. coordinates the energy-
related diversification ventures of Industries. Primary Energy, Inc. arranges
energy-related projects with large industrial customers.
IWC Resources Corporation ("IWCR") is a holding company that owns and
operates eight subsidiaries, including three regulated water utility companies,
Indianapolis Water Company, Harbour Water Corporation and Liberty Water
Company. These water companies supply water for residential, commercial and
industrial uses, and fire protection service in Indianapolis, Indiana and the
surrounding areas. Together, these water companies serve a territory covering
over 300 square miles in central Indiana. At September 30, 1998, these
companies were providing service to approximately 246,080 customers.
In addition to its water utility companies, IWCR has five other wholly-owned
subsidiaries. These subsidiaries are SM&P Utility Resources, Inc., Miller
Pipeline Corporation, Waterway Holdings, Inc., Utility Data Corporation and IWC
Services, Inc. SM&P Utility Resources, Inc. performs underground utility
locating and marking services in Indiana and other states. Miller Pipeline
Corporation ("MPC") installs underground pipelines for natural gas utilities.
In addition, MPC sells products and services related to infrastructure
preservation and replacement. IWCR, principally through Waterway Holdings,
Inc., owns real estate that it expects to sell or develop in the future.
Utility Data Corporation provides customer relations, customer billing and
other data processing services for IWCR's water companies and for other water
and sewer utilities. IWC Services, Inc. provides laboratory water testing
services, principally for water utilities. Through IWC Services, Inc., IWCR is
the majority (52%) partner in the White River Environmental Partnership, which
entered into a 10-year contract, effective January 1998, to operate and
maintain two advanced wastewater treatment facilities, as well as a collection
system, for the city of Indianapolis, Indiana. White River Environmental
Partnership actively is seeking new markets and opportunities for contract
management services pursuant to expanded governmental privatization efforts.
On December 18, 1997, Industries entered into a definitive merger agreement
with Bay State Gas Company ("Bay State"), under which Industries will acquire
all of the common stock of Bay State in a transaction valued at approximately
$551 million. Bay State, one of the largest natural gas utilities in New
England, provides natural gas distribution service to more than 300,000
customers in Massachusetts, New Hampshire and Maine. The merger is expected to
be completed in late 1998 or early 1999.
Industries was incorporated in 1987 under the laws of the State of Indiana.
Industries' principal executive offices are located at 801 East 86th Avenue,
Merrillville, Indiana 46410. Its telephone number is (219) 853-5200.
CAPITAL MARKETS
NIPSCO Capital Markets, Inc. is a wholly-owned subsidiary of Industries that
engages in financing activities to generate funds for the business operations
of Industries and its wholly-owned subsidiaries (excluding Northern Indiana).
On April 4, 1989, Capital Markets and Industries entered into a Support
Agreement, which subsequently was amended as of May 15, 1989, December 10,
1990, and February 14, 1991 (as so amended, the "Support Agreement"). Under the
Support Agreement, Industries has agreed, among other things, to ensure the
timely
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payment of principal and interest owed on any debt securities issued by Capital
Markets, including any premium payments, with the limitation that no holder of
such debt securities will have recourse to or against the stock or assets of
Northern Indiana, or against any interest of Industries or Capital Markets
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 (the "Investment Company Act") granting an
exemption to Capital Markets from all of the provisions of the Investment
Company Act, subject to Capital Markets' compliance with the conditions set
forth therein.
Capital Markets was incorporated in 1989 under the laws of the State of
Indiana. Capital Markets' principal executive offices are located at 801 East
86th Avenue, Merrillville, Indiana 46410. Its telephone number is (219) 853-
5200.
THE TRUST
NIPSCO Capital Trust I is a statutory business trust that was created in
December 1998 under the Delaware Business Trust Act (the "Trust Act"). The
Trust currently is governed by (i) a declaration of trust dated as of December
17, 1998, that was executed by Capital Markets, as sponsor of the Trust, and by
certain trustees of the Trust and (ii) a certificate of trust dated as of
December 17, 1998 filed with the Secretary of State of the State of Delaware.
Prior to the issuance of the Preferred Securities, the declaration of trust
will be amended and restated in its entirety (as so restated, the
"Declaration"), substantially in the form filed as an exhibit to the
Registration Statement.
At such time as the Trust issues and sells the Preferred Securities, Capital
Markets will purchase the Common Securities in an aggregate liquidation amount
equal to at least three percent of the total capital of the Trust. The Common
Securities will constitute all of the common securities of the Trust. Upon the
sale and issuance of the Trust Securities, the Trust will use all of the
proceeds to purchase the Debentures. The Trust exists for the exclusive
purposes of (i) selling and issuing the Trust Securities, which represent
undivided beneficial ownership interests in the assets of the Trust, (ii) using
the proceeds from such sale and issuance to purchase the Debentures and (iii)
except as otherwise limited in the Declaration, engaging in only those other
activities necessary or incidental thereto. The Trust has a term of
approximately seven years but may be dissolved earlier as provided in the
Declaration.
The Trust's business and affairs will be conducted initially by five trustees
(the "Trustees") appointed by Capital Markets, as sole holder of the Common
Securities. Three of the Trustees (the "Regular Trustees") are employees,
officers or persons affiliated with Capital Markets. Pursuant to the
Declaration, the fourth Trustee is The Chase Manhattan Bank, a financial
institution that is unaffiliated with Capital Markets, which serves as
institutional trustee under the Declaration (the "Property Trustee") and as
indenture trustee for the purposes of complying with the provisions of the
Trust Indenture Act of 1939 (the "Trust Indenture Act"). The fifth Trustee is
Chase Manhattan Bank Delaware, who will serve as trustee in the State of
Delaware (the "Delaware Trustee") for the purpose of complying with the
provisions of Trust Act. The Chase Manhattan Bank also will act as trustee (the
"Guarantee Trustee") under the Capital Markets' guarantee of the Trust
Securities for the purposes of complying with the Trust Indenture Act. See
"Description of the Guarantee" and "Description of the Preferred Securities--
Voting Rights; Amendment of Declaration."
The Property Trustee will own and hold legal title to the Debentures for the
benefit of the Trust and the holders of the Trust Securities. The Property
Trustee will have the legal power to exercise all of the rights, powers and
privileges of a holder of Debentures under the Indenture. In addition, the
Property Trustee will establish and maintain exclusive control of a segregated
non-interest bearing trust account (the "Property Account") to hold all
payments made in respect of the Debentures for the benefit of the holders of
the Trust Securities. The Property Trustee will use funds from the Property
Account to make distribution payments and any payments on liquidation,
redemption or otherwise to the holders of the Trust Securities.
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Capital Markets, as holder of all of the Trust's outstanding Common
Securities, will have the right to appoint, remove or replace any Trustee and
to increase or decrease the number of Trustees, provided that the Trust always
will have at least three Trustees. Furthermore, Capital Markets, as issuer of
the Debentures, will pay all fees and expenses related to the Trust's ongoing
affairs and operations (including any taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes)),
including the offering of the Trust Securities. Capital Markets, as issuer of
the Debentures, also will be responsible for all of the Trust's obligations
(other than with respect to the Trust Securities). See "Description of the
Debentures--Payment of Fees and Expenses."
The rights of the holders of the Preferred Securities, including any economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Trust Act and the Trust Indenture Act. See "Description of the
Preferred Securities."
The Delaware Trustee's offices are located at 1201 Market Street, Wilmington,
Delaware 19801. The Trust's principal place of business is in care of Capital
Markets, 801 East 86th Avenue, Merrillville, Indiana 46410. Its telephone
number is (219) 853-5200.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of
Industries for the fiscal years ended December 31, 1993, 1994, 1995, 1996 and
1997, and for the twelve months ended September 30, 1998. For the purpose of
calculating this ratio, "earnings" consist of income from continuing operations
before income taxes plus fixed charges, and "fixed charges" consist of interest
on all indebtedness, amortization of debt expense, the portion of rental
expenses on operating leases deemed to be representative of the interest
factor, and preferred stock dividend requirements of consolidated subsidiaries.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, TWELVE MONTHS
------------------------ ENDED
1993 1994 1995 1996 1997 SEPT. 30, 1998(1)
---- ---- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges.......... 3.00 3.14 3.28 3.21 3.10 2.90
</TABLE>
- --------
(1) Results for the twelve months ended September 30, 1998 are not necessarily
indicative of results for the fiscal year ended December 31, 1998.
USE OF PROCEEDS
Except as may be set forth in the applicable Prospectus Supplement, the net
proceeds from the sale of any securities offered by Capital Markets will be
advanced to Industries and, together with the net proceeds from the sale of any
securities offered by Industries, will be used by Industries (i) to pay the
cash portion of the consideration payable in Industries' acquisition of Bay
State and (ii) to repay short-term indebtedness incurred to purchase Common
Shares in anticipation of the acquisition of Bay State. Pending application of
such net proceeds for specific purposes, such proceeds may be invested in
short-term or marketable securities. Information about any short-term
indebtedness to be repaid, or any specific allocations of proceeds to a
particular purpose that have been made at the date of any Prospectus
Supplement, will be described in the Prospectus Supplement.
The Trust will use all of the proceeds received from the sale of its Trust
Securities to purchase the Debentures from Capital Markets. Unless otherwise
set forth in the applicable Prospectus Supplement, the net proceeds to Capital
Markets from the sale of the Debentures will be advanced to Industries and used
by Industries for the purposes described in the preceding paragraph.
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DESCRIPTION OF DEBENTURES
The following description sets forth certain general terms and provisions of
the Debentures to which any Prospectus Supplement may relate. The particular
terms and provisions of the Debentures offered by a Prospectus Supplement and
the application of these general terms and provisions thereto will be described
in the applicable Prospectus Supplement.
The Debentures will be issued under an indenture dated as of February 14,
1997 (the "Indenture"), among Capital Markets, Industries and The Chase
Manhattan Bank, as trustee (the "Indenture Trustee"), which acts as indenture
trustee for the purposes of the Trust Indenture Act. The following summaries of
certain terms and provisions of the Debentures and the Indenture do not purport
to be complete and are subject to, and qualified in their entirety by reference
to, the Indenture and the form of Debenture that are or will be filed as
exhibits to the Registration Statement, and to the Trust Indenture Act.
Capitalized terms used in this section not otherwise defined in this Prospectus
have the meanings set forth in the Indenture. Certain material United States
federal income tax consequences applicable to the offering of the Debentures
will be described in the applicable Prospectus Supplement.
GENERAL
The Indenture does not limit the incurrence or issuance of other secured or
unsecured debt of Capital Markets, whether under the Indenture or any other
indenture that Capital Markets may enter into in the future or otherwise.
The applicable Prospectus Supplement will describe the following terms of the
series of Debentures being offered:
(i) the title of the Debentures;
(ii) any limit upon the aggregate principal amount of the Debentures;
(iii) the date or dates on which the principal of the Debentures is
payable, or the method of determination thereof;
(iv) the rate or rates, if any, at which the Debentures will bear
interest (including any reset rates and the method by which any such rates
will be determined), the date or dates on which any such interest will be
payable and any right of Capital Markets to defer any interest payment;
(v) the place or places where, subject to the terms of the Indenture as
described below, the principal and any premium or interest on the
Debentures will be payable ("Place of Payment"), and where, subject to the
terms of the Indenture as described below under "--Denominations,
Registration and Transfer," Capital Markets will maintain an office or
agency where Debentures may be presented for registration of transfer or
exchange, and where notices and demands to or upon Capital Markets in
respect of the Debentures and the Indenture may be made;
(vi) any period or periods within, or date or dates on which, the price
or prices at which and the terms and conditions upon which Debentures may
be redeemed, in whole or in part, at the option of Capital Markets pursuant
to any sinking fund or otherwise;
(vii) any obligation of Capital Markets to redeem or purchase the
Debentures pursuant to any sinking fund or analogous provision or at the
option of a holder, and the period or periods within which, the price or
prices at which, the currency or currencies (including currency unit or
units) in which and the other terms and conditions upon which the
Debentures will be redeemed or purchased, in whole or in part, pursuant to
such obligation;
(viii) the denominations in which the Debentures will be issuable;
(ix) if other than in U.S. Dollars, the currency or currencies (including
currency unit or units) in which the principal of or any premium or
interest on the Debentures will be payable, or in which the Debentures will
be denominated;
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(x) if other than the principal amount thereof, the portion of the
principal amount of the Debentures that will be payable upon declaration of
acceleration of the maturity thereof;
(xi) any additional events of default or covenants of Capital Markets or
Industries pertaining to the Debentures;
(xii) any index or indices used to determine the amount of payments of
principal of and premium, if any, on the Debentures and the manner in which
such amounts will be determined;
(xiii) subject to the terms described below under "--Global Debentures,"
whether the Debentures will be issued in whole or in part in global form
and, in such case, the depositary for such global Debentures;
(xiv) the appointment of any trustee, registrar, paying agent or agents;
(xv) the terms and conditions of any obligation or right of Capital
Markets or any holder to convert or exchange Debentures into other
securities; and
(xvi) any other terms of the Debentures not inconsistent with the
provisions of the Indenture.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the
Debentures will be issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof.
When the Debentures have been issued, Capital Markets will keep at one of its
offices or agencies a register in which, subject to such reasonable regulations
as it may prescribe, Capital Markets will provide for the registration and
transfer of the Debentures. That office or agency will be appointed the
security registrar for the purpose of registering and transferring the
Debentures. Capital Markets will appoint the Indenture Trustee as securities
registrar under the Indenture.
The holder of any registered Debenture may exchange the Debenture, at its
option, for registered Debentures of the same series having the same stated
maturity date and original issue date, in any authorized denominations, in like
tenor and in the same aggregate principal amount. Such holder may exchange such
Debentures by surrendering them at the office or agency of Capital Markets that
has been appointed as security registrar for the Debentures. The Debentures may
be presented for exchange or for registration of transfer (with the form of
transfer endorsed thereon or a satisfactory and duly executed written
instrument of transfer), at the office of the securities registrar, without
service charge and upon payment of any taxes and other governmental charges as
described in the Indenture.
When a holder of a registered Debenture surrenders such Debenture to be
registered for transfer, Capital Markets will execute, and the Indenture
Trustee will authenticate and deliver to such holder, in the name of the
designated transferee or transferees, one or more new registered Debentures of
the same series having the same stated maturity date and original issue date,
in any authorized denominations and of like tenor and aggregate principal
amount.
If any Debentures of any series are redeemed, Capital Markets will not be
required to issue, register the transfer of or exchange any such Debentures
during the 15 business days immediately preceding the date upon which notice of
such redemption is given (which notice will identify the serial numbers of the
Debentures being redeemed). Furthermore, if any registered Debentures are
selected to be either partially or fully redeemed, then Capital Markets will
not be required to issue, register or exchange any such Debentures (except for
the unredeemed portion of any Debenture being redeemed in part).
GLOBAL DEBENTURES
Unless otherwise specified in the applicable Prospectus Supplement, the
Debentures may be issued in whole or in part in global form ("Global
Debentures") that will be deposited with, or on behalf of, a
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depositary identified in the applicable Prospectus Supplement. Global
Debentures may be issued only in fully registered form and in either temporary
or permanent form. Unless and until a Global Debenture is exchanged in whole or
in part for the individual Debentures represented thereby, the depositary
holding such Global Debenture may transfer such Global Debenture only to its
nominee or successor depositary (or vice versa) and only as a whole. Unless
otherwise indicated in the applicable Prospectus Supplement for the Debentures,
the depositary for the Global Debentures will be The Depository Trust Company.
See "Book-Entry Issuance." 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 Global Debentures.
The specific terms of the depositary arrangement for the Debentures will be
described in the applicable Prospectus Supplement. Capital Markets anticipates
that the description of the depositary set forth below under "Book-Entry
Issuance" generally will apply to any depositary arrangements. Capital Markets
expects that the applicable depositary or its nominee, upon receipt of any
payment of principal, premium or interest in respect of a permanent Global
Debenture, immediately will credit the accounts of its participants
("Participants") with payments in amounts proportionate to their respective
beneficial interests in the aggregate principal amount of such Global Debenture
as shown on the records of the depositary or its nominee. Capital Markets also
expects that payments by Participants to owners of beneficial interests in a
Global Debenture held through such Participants ("Beneficial Owners") will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name." Such payments will be the responsibility of such
Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if at any
time the applicable depositary is unwilling, unable or ineligible to continue
as depositary for the Debentures, Capital Markets will appoint a successor
depositary with respect to the Debentures. If a successor depositary is not
appointed by Capital Markets within 90 days after Capital Markets receives such
notice or becomes aware of such ineligibility, Capital Markets will issue
individual Debentures of such series in exchange for the Global Debenture
representing such individual Debentures. In addition, unless otherwise
specified in the applicable Prospectus Supplement, Capital Markets may
determine at any time and in its sole discretion, subject to any limitations
described in the applicable Prospectus Supplement, to have the Debentures no
longer represented by one or more Global Debentures. In such event, Capital
Markets will issue individual Debentures of such series in exchange for such
Global Debenture or Global Debentures. Furthermore, if Capital Markets so
specifies with respect to the Debentures, a Beneficial Owner may receive, on
terms acceptable to Capital Markets, the Indenture Trustee and the depositary,
individual Debentures in exchange for such beneficial interests, subject to any
limitations described in the applicable Prospectus Supplement. In any such
instance, a Beneficial Owner will be entitled to physical delivery of
individual Debentures equal in principal amount to such beneficial interest and
to have such Debentures registered in such owner's name. Individual Debentures
so issued will be issued in denominations of $25 and integral multiples thereof
unless otherwise indicated in the applicable Prospectus Supplement or otherwise
specified by Capital Markets.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of and any premium or interest on the Debentures will be made at
the office of the Indenture Trustee or at the office of such paying agent or
paying agents as Capital Markets may designate from time to time in the
applicable Prospectus Supplement. Capital Markets may at any time designate
additional paying agents or rescind the designation of any paying agent.
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of any interest on a Debenture will be made to the person or entity in whose
name such Debenture is registered at the close of business on the Regular
Record Date for such interest, except in the case of interest which is payable,
but is not punctually paid or duly provided for, on any Interest Payment Date
("Defaulted Interest"). At its election, Capital Markets may make payment of
Defaulted Interest (i) to the persons in whose names the Debentures are
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registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which will be fixed as provided in the Indenture or
(ii) in any other lawful manner not inconsistent with the requirements of any
securities exchange on which such Debentures may be listed, and upon such
notice as may be required by such exchange, if, after Capital Markets notifies
the Indenture Trustee of the proposed payment, the Indenture Trustee deems such
manner of payment to be practicable.
OPTION TO DEFER INTEREST PAYMENTS
If so provided in the applicable Prospectus Supplement, so long as an event
of default with respect to the Debentures (an "Indenture Event of Default") has
not occurred and is not continuing, Capital Markets will have the right, at any
time and from time to time during the term of the Debentures, to defer the
payment of interest for such number of consecutive interest payment periods as
may be specified in the applicable Prospectus Supplement (each, an "Extension
Period"), subject to the terms, conditions and covenants, if any, specified in
such Prospectus Supplement. At the end of such Extension Period, Capital
Markets will pay all interest accrued and unpaid, together with interest
thereon compounded quarterly at the rate specified for the Debentures, to the
extent permitted by applicable law. During any Extension Period, Capital
Markets and Industries may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to any of Capital Markets' or Industries' capital stock or (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of Capital Markets or Industries that
rank on a parity with or junior in interest to the Debentures or make any
guarantee payments with respect to any guarantee by Capital Markets or
Industries of the debt securities of any subsidiary of Capital Markets or
Industries if such guarantee ranks on a parity with or junior in interest to
the Debentures (other than (a) purchases or acquisitions of capital stock of
Capital Markets or Industries in connection with the satisfaction by Capital
Markets or Industries of its obligations under any employee benefit plans or
pursuant to any contract or security outstanding on the date of such event
requiring Capital Markets or Industries to purchase capital stock of Capital
Markets or Industries, (b) as a result of a reclassification of Capital
Markets' or Industries' capital stock for another class or series of Capital
Markets' or Industries' capital stock, (c) the purchase of fractional interests
in shares of Capital Markets' or Industries' capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (d) dividends or distributions in capital stock of
Capital Markets or Industries, (e) redemptions or repurchases of any rights
pursuant to a rights agreement and (f) payments under the Guarantee).
Prior to the termination of any Extension Period, Capital Markets may further
defer payments of interest by extending the Extension Period; provided that the
total duration of any Extension Period may not exceed 20 consecutive quarters
or extend beyond the stated maturity of the Debentures. Upon the termination of
any Extension Period and the payment of all amounts then due, Capital Markets
may commence a new Extension Period, subject to the terms set forth in this
section. No interest will be due and payable during an Extension Period. If the
Property Trustee is the sole holder of the Debentures, Capital Markets will
give the Regular Trustees and the Property Trustee notice of its selection of
such Extension Period one Business Day prior to the earlier of (i) the date
distributions on the Preferred Securities are payable or (ii) the date the
Regular Trustees are required to give notice, if applicable, to the NYSE (or
other applicable self-regulatory organization) or to holders of the Preferred
Securities of the record or payment date of such distribution. The Regular
Trustees will give notice of Capital Markets' selection of such Extension
Period to the holders of the Preferred Securities. If the Property Trustee is
not the sole holder of the Debentures, Capital Markets will give the holders of
the Debentures notice of its selection of such Extension Period ten Business
Days prior to the earlier of (i) the Interest Payment Date or (ii) the date
upon which Capital Markets is required to give notice, if applicable, to the
NYSE (or other applicable self-regulatory organization) or to holders of the
Debentures as of the record or payment date of such related interest payment.
MODIFICATION OF INDENTURE
From time to time, Capital Markets, Industries and the Indenture Trustee may
modify the Indenture without the consent of any holders of Debentures with
respect to certain matters, including:
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(i) to evidence the succession of another corporation to Capital Markets
or Industries and the assumption by any such successor of the covenants of
Capital Markets or Industries in the Indenture and the Debentures;
(ii) to add to the covenants of Capital Markets and Industries for the
benefit of the holders of the Debentures, or to surrender any right or
power therein conferred upon Capital Markets or Industries;
(iii) to cure any ambiguity or correct or supplement any provision that
may be defective or inconsistent with any other provision of the Indenture,
provided that such action will not adversely affect the interests of the
holders of the Debentures in any material respect;
(iv) to conform the Indenture to any amendment of the Trust Indenture
Act;
(v) to add any additional events of default;
(vi) to change or eliminate any provisions of the Indenture, provided
that any such change or elimination will become effective only when there
is no security outstanding of any series prior to the execution of such
modification that is entitled to the benefit of such provision;
(vii) to secure the Debentures;
(viii) to establish the form or terms of securities of any series and any
related coupons as permitted by the Indenture;
(ix) to effect the assumption by Industries or one of its subsidiaries of
the obligations of Capital Markets under the Indenture; or
(x) to evidence or provide for the acceptance of appointment of a
successor trustee with respect to the securities of one or more series, to
contain such provisions necessary to confirm that all the rights, powers,
trusts and duties that the predecessor trustee is not retiring will
continue to be vested in the predecessor trustee, and to add to or change
any Indenture provisions necessary to provide for or facilitate the
administration of the trusts by more than one trustee.
In addition, Capital Markets, Industries and the Indenture Trustee may modify
certain rights, covenants and obligations of Capital Markets and the rights of
holders of the Debentures under the Indenture with the written consent of the
holders of at least a majority in aggregate principal amount of Debentures.
However, unless each affected holder of Debentures consents, Capital Markets,
Industries and the Indenture Trustee may not extend the maturity of the
Debentures, reduce the interest rate or extend the time for payment of
interest, change the optional redemption or repurchase provisions in a manner
adverse to any holder of Debentures, otherwise modify the terms of payment of
the principal of, or interest on, the Debentures or reduce the percentage
required for modification.
INDENTURE EVENTS OF DEFAULT
Any one or more of the following events that has occurred and is continuing
constitutes an Indenture Event of Default with respect to the Debentures
(whatever the reason for such Indenture Event of Default and whether it is
voluntary or involuntary or 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):
(i) failure to pay any interest on any Debenture for a period of 30 days
after such interest becomes due and payable (subject to a valid deferral of
interest payments during an Extension Period);
(ii) failure to pay the principal of (or premium, if any, on) the
Debentures for a period of three Business Days after such principal (or
premium) becomes due, whether at maturity, upon redemption, by declaration
or otherwise;
(iii) failure to deposit any sinking fund payment for a period of three
Business Days after such deposit becomes due (if applicable to the
Debentures);
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(iv) failure to observe or perform any other covenant or warranty under
the Indenture or the Support Agreement (other than a covenant or warranty
included in or pursuant to the Indenture solely for the benefit of one or
more series of debt securities other than the Debentures) for a period of
60 days after written notice has been given, by registered or certified
mail, to Capital Markets and Industries by the Indenture Trustee, or to
Capital Markets, Industries and the Indenture Trustee by the holders of at
least 25% in principal amount of the Debentures;
(v) failure to pay in excess of $5,000,000 of the principal or interest
of indebtedness under any bond, debenture, note or other evidence of
indebtedness for money borrowed by Capital Markets (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 Markets, whether such indebtedness now exists or shall
hereafter be created, 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 million 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 Markets by the Indenture Trustee or to Capital Markets and the
Indenture Trustee by the holders of at least 25% in principal amount of the
Debentures;
(vi) certain events in bankruptcy, insolvency or reorganization of
Capital Markets, Industries or Northern Indiana; and
(vii) any other Indenture Event of Default with respect to the
Debentures.
The holders of not less than a majority in outstanding principal amount of
the Debentures have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee.
The Indenture Trustee or the holders of not less than 33% in aggregate
outstanding principal amount of the Debentures may declare the principal due
and payable immediately upon an Indenture Event of Default. The holders of a
majority in aggregate outstanding principal amount of the Debentures may annul
such declaration and waive the default if the default (other than the non-
payment of the principal of Debentures that has become due solely by such
acceleration) has been cured and there has been deposited with the Indenture
Trustee a sum sufficient to pay all overdue interest and all installments of
principal due otherwise than by acceleration, interest upon overdue interest at
the rates prescribed in the Debentures (to the extent lawful), and all sums
paid or advanced by the Indenture Trustee.
The holders of not less than a majority in outstanding principal amount of
the Debentures affected thereby may waive, on behalf of the holders of all of
the Debentures, any past default under the Indenture except for a default (i)
in the payment of the principal of or interest on any Debenture (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been deposited
with the Indenture Trustee) or (ii) in respect of a covenant or provision that
cannot be modified or amended without the consent of the holder of each
outstanding Debenture affected thereby.
In the event an Indenture Event of Default shall occur and be continuing as
to the Debentures at any time they are held by the Trust, the Property Trustee
will have the right to declare the principal of and the interest on such
Debentures, and any other amounts payable under the Indenture, to be forthwith
due and payable and to enforce its other rights as a creditor with respect to
the Debentures. The holders of Preferred Securities in certain circumstances
have the right to direct the Property Trustee to exercise its rights as the
holder of the Debentures. If the Property Trustee fails to enforce its rights
under the Debentures after a holder of Preferred Securities has made a written
request, the holder of Preferred Securities may institute a legal proceeding
directly against Capital Markets to enforce the Property Trustee's rights under
the Indenture without first instituting any legal proceeding against the
Property Trustee or any other person or entity. Notwithstanding the foregoing,
if an Indenture Event of Default has occurred and is continuing and such event
is attributable to the failure of Capital Markets to pay interest or principal
on the Debentures on the date such interest or principal is
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otherwise payable (or in the case of redemption, the redemption date), then a
holder of Preferred Securities may institute a proceeding directly against
Capital Markets (a "Direct Action") to enforce payment to such holder of the
principal or interest on the Debentures having an aggregate principal amount
equal to the aggregate liquidation amount of the Preferred Securities of such
holder.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that neither Capital Markets nor Industries may
consolidate with or merge into any other person or entity or convey, transfer
or lease its properties and assets substantially as an entirety to any person
unless (i) the corporation formed by any such consolidation or continuing in
such merger, or the person that acquires by conveyance or transfer, or that
leases, its properties and assets substantially as an entirety will be a
corporation organized and existing under the laws of any domestic jurisdiction
and will expressly assume, in the case of Capital Markets, its obligations
under the Debentures and the Indenture and, in the case of Industries, its
obligations under the Indenture and the Support Agreement, (ii) immediately
after giving effect to such transaction, no Indenture Event of Default, and no
event that, after notice or lapse of time, would become an Indenture Event of
Default, will have happened and be continuing and (iii) Capital Markets or
Industries will have delivered to the Indenture 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.
Capital Markets covenants and agrees that if, upon any consolidation or
merger of Capital Markets with or into any other corporation, or upon any
consolidation or merger of any other corporation with or into Capital Markets,
or upon any sale or conveyance of all or substantially all of the property and
assets of Capital Markets to any other corporation, any property of Capital
Markets or any subsidiary or any indebtedness issued by any subsidiary owned by
Capital Markets or by any subsidiary immediately prior thereto would thereupon
become subject to any mortgage, security interest, pledge, lien or other
encumbrance not permitted by the Indenture, Capital Markets, 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 Capital Markets or such subsidiary then entitled thereto) by a
direct lien on such property of Capital Markets or any subsidiary or such
indebtedness issued by a subsidiary, prior to all liens other than any
theretofore existing thereon.
SATISFACTION AND DISCHARGE
The Indenture provides that when all Debentures not previously delivered to
the Indenture Trustee for cancellation (i) have become due and payable, (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 Indenture Trustee for the giving of notice of redemption by the
Indenture Trustee in the name, and at the expense of, Capital Markets, and
Capital Markets deposits or causes to be deposited with the Indenture Trustee,
as trust funds in trust dedicated solely for such purpose, an amount in the
currency or currencies in which the Debentures are payable sufficient to pay
and discharge the entire indebtedness on the Debentures not previously
delivered to the Indenture Trustee for cancellation, for the principal (and
premium, if any) and interest to the date of the deposit or to the stated
maturity, as the case may be, then the Indenture will cease to be of further
effect (except as to Capital Markets' obligations to pay all other sums due
pursuant to the Indenture and to provide the officers' certificates and
opinions of counsel described therein), and Capital Markets will be deemed to
have satisfied and discharged the Indenture. At the expense of Capital Markets,
the Indenture Trustee will execute proper instruments acknowledging such
satisfaction and discharge.
REDEMPTION
Unless otherwise indicated in the applicable Prospectus Supplement, the
Debentures will not be subject to any sinking fund.
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Unless otherwise indicated in the applicable Prospectus Supplement, Capital
Markets may redeem, at its option, the Debentures in whole at any time or in
part from time to time, at the redemption price set forth in the applicable
Prospectus Supplement plus accrued and unpaid interest to the date fixed for
redemption. If the Debentures are so redeemable only on or after a specified
date or upon the satisfaction of additional conditions, then the applicable
Prospectus Supplement will specify such date or describe such conditions.
Notice of any redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of Debentures to be redeemed at
such holder's registered address. Unless Capital Markets defaults in the
payment of the redemption price, interest will cease to accrue on such
Debentures or portions thereof called for redemption on and after the
redemption date.
GOVERNING LAW
The Indenture and the Debentures will be governed by and construed in
accordance with the laws of the State of New York.
PAYMENT OF FEES AND EXPENSES
Capital Markets will pay all fees and expenses related to (i) the offering of
the Trust Securities and the Debentures, (ii) the organization, maintenance and
dissolution of the Trust, (iii) the retention of the Regular Trustees and (iv)
the enforcement by the Property Trustee of the rights of the holders of the
Preferred Securities.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee will have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Indenture Trustee has no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any holder of a Debenture, unless the Indenture Trustee
is offered reasonable security or indemnity by such holder against the costs,
expenses and liabilities that might be incurred thereby. The Indenture Trustee
is not required to expend or risk its own funds or otherwise incur any personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Indenture Trustee reasonably believes
that repayment of funds or adequate indemnity is not reasonably assured to it.
DESCRIPTION OF PREFERRED SECURITIES
The following description sets forth certain general terms and provisions of
the Preferred Securities to which any Prospectus Supplement may relate. The
particular terms and provisions of the Preferred Securities offered by a
Prospectus Supplement and the application of these general terms and provisions
thereto will be described in the applicable Prospectus Supplement.
The Regular Trustees, on behalf of the Trust and pursuant to the Declaration,
will issue one class of Preferred Securities and one class of Common
Securities. The Trust Securities will represent undivided beneficial ownership
interests in the assets of the Trust. The following summaries of certain terms
of the Preferred Securities and certain provisions of the Declaration do not
purport to be complete, and reference is hereby made to the Trust Indenture Act
and the copy of the Declaration, including definitions of certain terms used
therein, that is filed as an exhibit to the Registration Statement. Capitalized
terms used in this section not otherwise defined in this Prospectus have the
meanings set forth in the Declaration. Certain material United States federal
income tax consequences applicable to the offering of the Preferred Securities
will be described in the applicable Prospectus Supplement.
GENERAL
Except as described below under "--Subordination of Common Securities," the
Preferred Securities will rank on a parity, and payments will be made thereon
proportionately, with the Common Securities. The Property Trustee will hold
legal title to the Debentures in trust for the benefit of the holders of the
Trust Securities. The Guarantee Agreement executed by Capital Markets for the
benefit of the holders of the Preferred Securities (the "Guarantee") will be a
guarantee with respect to the Preferred Securities but will not
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guarantee the payment of Distributions or any amounts payable on redemption or
liquidation of the Preferred Securities when the Trust does not have funds on
hand available to make such payments. See "Description of the Guarantee."
Certain material U.S. federal income tax consequences and special
considerations applicable to the Preferred Securities will be described in the
applicable Prospectus Supplement.
DISTRIBUTIONS
Distributions on each Preferred Security will accumulate and be payable at a
rate specified in the applicable Prospectus Supplement. The amount of
Distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months and the actual number of days elapsed per 30-day
month unless otherwise specified in the applicable Prospectus Supplement.
Distributions that are in arrears will accumulate additional distributions at
the rate per annum if and as specified in the applicable Prospectus Supplement
("Additional Amounts"). The term "Distributions" means cumulative cash
distributions that accumulate at the per annum rate specified in the applicable
Prospectus Supplement, together with any Additional Amounts unless otherwise
stated.
Distributions on the Preferred Securities will be cumulative, will accumulate
from the date of original issuance and will be payable on such dates as are
specified in the applicable Prospectus Supplement. If the date on which any
Distributions on the Trust Securities are payable (each, a "payment date") is
not a Business Day (as defined below), then payment of such Distributions will
be made on the next Business Day (without any interest or other payment in
respect of any such delay), provided that if such next Business Day falls in
the next calendar year, then payment of such Distributions will be made on the
Business Day immediately preceding the payment date. Each date on which
Distributions are payable is hereinafter referred to as a "Distribution Date."
A "Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in New York City are authorized or required by law
or executive order to remain closed, or a day on which the Indenture Trustee,
or the principal office of the Property Trustee, is closed for business.
If provided in the applicable Prospectus Supplement, Capital Markets will
have the right under the Indenture to defer payments of interest on the
Debentures from time to time by extending the applicable interest payment
period for a period or periods that will be specified in the applicable
Prospectus Supplement (each, an "Extension Period"). If Capital Markets
exercises its right to defer interest payments on the Debentures, then any
payments of Distributions on the Preferred Securities also would be deferred.
During an Extension Period, interest will continue to accrue on the Debentures
(compounded quarterly), and, as a result, Distributions would continue to
accumulate at the rate per annum if and as specified in the applicable
Prospectus Supplement. During any Extension Period, Capital Markets and
Industries may not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of Capital Markets' or Industries' capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of Capital Markets or Industries that rank on a parity with or
junior in interest to the Debentures or make any guarantee payments with
respect to any guarantee by Capital Markets or Industries of the debt
securities of any subsidiary of Capital Markets or Industries if such guarantee
ranks on a parity with or junior in interest to the Debentures (other than (a)
purchases or acquisitions of capital stock of Capital Markets or Industries in
connection with the satisfaction by Capital Markets or Industries of its
obligations under any employee benefit plans or pursuant to any contract or
security outstanding on the date of such event requiring Capital Markets or
Industries to purchase capital stock of Capital Markets or Industries, (b) as a
result of a reclassification of Capital Markets' or Industries' capital stock
or the exchange or conversion of one class or series of Capital Markets' or
Industries' capital stock for another class or series of Capital Markets' or
Industries' capital stock, (c) the purchase of fractional interests in shares
of Capital Markets' or Industries' capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (d) dividends or distributions in capital stock of Capital Markets
or Industries, (e) redemptions or repurchases of any rights pursuant to a
rights agreement and (f) payments under the Guarantee). Prior to the
termination of any Extension Period, Capital Markets may further extend the
Extension Period, but the total duration of any such Extension Period may not
exceed 20
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consecutive quarters or extend beyond the stated maturity of the Debentures.
Once any Extension Period terminates and Capital Markets has paid all amounts
then due, Capital Markets may commence a new Extension Period, provided that
such Extension Period together with all extensions thereof may not exceed 20
quarters or extend beyond the stated maturity of the Debentures. See
"Description of the Debentures--Option to Defer Interest Payments." Once an
Extension Period has terminated, any deferred Distributions, including
accumulated Additional Amounts, will be paid to those holders of record of the
Trust Securities appearing on the books and records of the Trust on the first
record date following the termination of such Extension Period.
It is expected that any revenue available for the payment of Distributions to
holders of the Preferred Securities will be limited to payments made to the
Trust by Capital Markets under the Debentures. If Capital Markets does not make
interest payments on the Debentures, then the Property Trustee will not have
any funds available to pay Distributions on the Preferred Securities. The
payment of Distributions (if and to the extent the Trust has funds legally
available for the payment of such Distributions and cash sufficient to make
such payments) is guaranteed by Capital Markets as set forth under the
Guarantee. See "Description of the Guarantee."
The Property Trustee will pay Distributions to the holders of the Preferred
Securities as such holders appear on the Trust's securities register on the
relevant record dates. As long as the Preferred Securities are represented by
one or more Global Securities, the relevant record dates will be the close of
business on the Business Day next preceding each Distribution Date, unless a
different regular record date is established or provided for the corresponding
interest payment date on the Debentures. Subject to any applicable laws and
regulations and the provisions of the Declaration, unless otherwise specified
in the applicable Prospectus Supplement, each such payment will be made as
described under "Book-Entry Issuance." If any Preferred Securities are not
represented by Global Securities, then the relevant record date for such
Preferred Securities will be the date, at least 15 days prior to the relevant
Distribution Date, that is specified in the applicable Prospectus Supplement.
REDEMPTION OR EXCHANGE
Mandatory Redemption. Unless otherwise specified in the applicable Prospectus
Supplement, if the Debentures held by the Trust are repaid or redeemed in whole
or in part, either upon their maturity date or earlier, then the Property
Trustee will use the proceeds from such repayment or redemption to redeem Trust
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures being repaid or redeemed. The redemption
price per Trust Security will be equal to the aggregate stated amount of the
Trust Securities being redeemed plus any accumulated and unpaid Distributions
thereon to the date of redemption plus the related amount of the premium, if
any, paid by Capital Markets upon the concurrent redemption of the Debentures
(the "Redemption Price"). In the event of a partial redemption, the Trust
Securities will be redeemed among all of the holders of Trust Securities on a
pro rata basis. Holders of the Trust Securities will receive at least 30 days
but not more than 60 days notice of such redemption.
Tax Event Redemption. If a Tax Event occurs and is continuing, Capital
Markets will have the right to redeem the Debentures in whole (but not in part)
and thereby cause a mandatory redemption of the Trust Securities in whole (but
not in part) at the Redemption Price within 90 days following the occurrence of
such Tax Event. In the event a Tax Event has occurred and is continuing and
Capital Markets does not elect to redeem the Debentures (thereby causing a
mandatory redemption of such Preferred Securities) or to liquidate the Trust
(causing the Debentures to be distributed to holders of the Trust Securities in
exchange therefor upon liquidation of the Trust as described above), the
Preferred Securities will remain outstanding.
"Tax Event" means the receipt by Capital Markets and the Trust of an opinion
of counsel, rendered by a law firm having a recognized national tax practice,
to the effect that, as a result of any amendment to, change in or announced
proposed change in the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative decision, pronouncement, judicial
decision or action interpreting or applying such laws or regulations, which
amendment
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or change is effective or such proposed change, pronouncement, action or
decision is announced on or after the date on which the Preferred Securities
are issued and sold, there is more than an insubstantial risk that (i) the
Trust is, or within 90 days of the date of such opinion will be, subject to the
United States federal income tax with respect to income received or accrued on
the Debentures, (ii) interest payable by Capital Markets on the Debentures is
not, or within 90 days of the date of such opinion, will not be, deductible by
Capital Markets, in whole or in part, for United States federal income tax
purposes, or (iii) the Trust is, or within 90 days of the date of such opinion
will be, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
Distribution of Debentures. Unless otherwise specified in the applicable
Prospectus Supplement, Capital Markets will have the right to dissolve the
Trust at any time and, after satisfaction of any liabilities to creditors of
the Trust as provided by applicable law, to cause the Debentures to be
distributed pro rata to the holders of the Trust Securities in liquidation of
the Trust.
After the date fixed for any distribution of Debentures, (i) the Preferred
Securities will no longer be deemed to be outstanding and (ii) any certificates
representing the Preferred Securities will be deemed to represent Debentures in
a principal amount equal to the liquidation amount of the Preferred Securities,
bearing accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on the Preferred Securities, until such certificates are
presented to the Regular Trustees or their agent for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or for the Debentures that may be distributed in exchange for
Preferred Securities upon dissolution or liquidation of the Trust. Accordingly,
the Preferred Securities that an investor may purchase, or the Debentures that
such investor may receive upon dissolution or liquidation of the Trust, may
trade at a discount to the price that such investor paid to purchase the
Preferred Securities offered hereby.
REDEMPTION PROCEDURES
Any Preferred Securities being redeemed will be redeemed by the Trust at the
applicable Redemption Price with the proceeds received by the Trust from the
contemporaneous redemption of the Debentures by Capital Markets. Redemptions of
Preferred Securities will be made and the applicable Redemption Price will be
payable only to the extent that the Trust has funds on hand available for the
payment of such Redemption Price.
If the Trust notifies the holders of the Preferred Securities of a redemption
and if the Preferred Securities to be redeemed are issued in global form, then
on the applicable redemption date, the Property Trustee will deposit
irrevocably with the depositary for the Preferred Securities funds sufficient
to pay the applicable redemption price, to the extent funds are available. In
addition, the Property Trustee will give the depositary irrevocable
instructions and authority to pay the redemption price to the beneficial owners
of the Preferred Securities. If the Preferred Securities are not issued in
global form, then the Property Trustee will pay the applicable Redemption Price
to the holders of the Preferred Securities by check mailed to their respective
addresses appearing on the register of the Trust on the redemption date. In
addition, the Property Trustee will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Preferred Securities upon surrender of their certificates evidencing the
Preferred Securities. Notwithstanding the foregoing, Distributions payable on
or prior to a redemption date for the Preferred Securities will be payable to
the holders of the Preferred Securities on the relevant record dates for the
related Distribution Dates. If a notice of redemption has been given and funds
have been deposited as required, then upon the date of such deposit, all of the
rights of the holders of the Preferred Securities to be redeemed will cease,
except for the right of such holders to receive the Redemption Price (without
interest thereon), and the Preferred Securities will cease to be outstanding.
If the redemption date is not a Business Day, then payment of the applicable
Redemption Price will be made on the next Business Day (and without any
interest or other payment in respect of any such delay). If, however, the next
Business Day falls in the next calendar year, then payment of the Redemption
Price will be made on the Business Day immediately preceding the redemption
date.
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If any payments for the redemption of any Preferred Securities are improperly
withheld or refused and not paid either by the Trust or by Capital Markets
pursuant to the Guarantee, then Distributions on the Preferred Securities will
continue to accumulate at the then applicable rate, from the redemption date
originally established by the Trust until the date upon which such redemption
payments actually are paid, in which case the actual payment date will be the
date fixed for redemption for purposes of calculating the applicable redemption
price.
Subject to applicable law (including, without limitation, U.S. federal
securities laws), Capital Markets or its subsidiaries may purchase at any time
and from time to time outstanding Preferred Securities by tender, in the open
market or by private agreement.
Any notice of the redemption of Trust Securities or the distribution of
Debentures in exchange for Trust Securities will be mailed to each holder of
Preferred Securities being so redeemed at least 30 days but not more than 60
days before the applicable redemption date, at such holder"s registered
address. Unless Capital Markets defaults in the payment of the redemption price
on the Debentures, interest will cease to accrue on the Debentures or portions
thereof (and Distributions will cease to accumulate on the Preferred Securities
or portions thereof) called for redemption on and after the redemption date.
SUBORDINATION OF COMMON SECURITIES
The payment of Distributions on, and any payment upon redemption of, the
Preferred Securities and Common Securities, as applicable, will be made pro
rata based on their respective liquidation amounts. If, however, an Indenture
Event of Default (which constitutes a "Trust Enforcement Event" under the
Declaration) has occurred and continues on any Distribution Date or redemption
date, then the amounts payable on such date will not be made on any of the
Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of any Common Securities will be made until
all accumulated and unpaid Distributions or redemption payments, as the case
may be, on all of the outstanding Preferred Securities for which Distributions
are to be paid or that have been called for redemption, as the case may be, are
fully paid. See "Description of Debentures--Indenture Events of Default." All
funds available to the Property Trustee first will be applied to the payment in
full in cash of all Distributions on, or the redemption price of, the Preferred
Securities then due and payable. The Trust will not issue any securities or
other interests in the assets of the Trust other than the Preferred Securities
and the Common Securities.
In the event that a Trust Enforcement Event has occurred and is continuing
with respect to the Preferred Securities, then Capital Markets, as sole holder
of the Common Securities, will be deemed to have waived any right to act with
respect to any such Trust Enforcement Event until the effect of such Trust
Enforcement Event with respect to the Preferred Securities has been cured,
waived or otherwise eliminated. Until such Trust Enforcement Event has been so
cured, waived or otherwise eliminated, the Property Trustee will act solely on
behalf of the holders of the Preferred Securities and not on behalf of Capital
Markets, as holder of the Common Securities, and only the holders of the
Preferred Securities will have the right to direct the Property Trustee to act
on their behalf. See "--Trust Enforcement Events; Notice."
DISSOLUTION OF THE TRUST AND DISTRIBUTIONS UPON DISSOLUTION
Unless otherwise specified in the applicable Prospectus Supplement pursuant
to the Declaration, the Trust will automatically dissolve upon the expiration
of its term or, if earlier, shall dissolve on the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of Capital Markets or
Industries; (ii) the written direction to the Property Trustee from Capital
Markets at any time to dissolve the Trust and to distribute the Debentures in
exchange for the Trust Securities; (iii) redemption of all of the Preferred
Securities as described under "--Redemption or Exchange--Mandatory Redemption";
and (iv) the entry of an order for the dissolution of the Trust by a court of
competent jurisdiction.
If an early dissolution occurs as described in clause (i), (ii) or (iv)
above, the Trust will be liquidated by the Trustees as expeditiously as the
Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, to the
holders of the Trust Securities in
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exchange therefor Debentures, unless such distribution is determined by the
Property Trustee not to be practical, in which event the holders of the Trust
Securities will be entitled to receive out of the assets of the Trust
distributions in cash or other immediately available funds to the extent such
funds are available for distribution after satisfaction of the Trust's
liabilities to any creditors (the "Liquidation Distributions"). The amount of
each Liquidation Distribution will be equal to the aggregate of the stated
liquidation amount plus accumulated and unpaid Distributions thereon to the
date of payment. If, however, Debentures are to be distributed in connection
with such Liquidation, then the holders of the Trust Securities will receive
Debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of the Trust Securities, with an interest rate identical to
the distribution rate of, and accrued and unpaid interest equal to accumulated
and unpaid Distributions on, such Trust Securities.
If the Liquidation Distribution can be paid only in part because the Trust
has insufficient assets available to pay the aggregate Liquidation Distribution
in full, then the amounts payable directly by the Trust on the Trust Securities
will be paid on a pro rata basis. Capital Markets, as sole holder of the Common
Securities, will be entitled to receive Liquidation Distributions on a pro rata
basis with the Holders of the Preferred Securities, except that if an Indenture
Event of Default has occurred and is continuing, then the Preferred Securities
will have a preference over the Common Securities with regard to such
Liquidation Distributions.
TRUST ENFORCEMENT EVENTS; NOTICE
Under the Declaration, holders of Trust Securities have certain rights in the
event that any Indenture Event of Default has occurred and continues with
respect to the Trust Securities issued thereunder. See "Description of
Debentures--Indenture Event of Default." If a Trust Enforcement Event has
occurred and is continuing, the Preferred Securities will have a preference
over the Common Securities upon dissolution of the Trust, as described above.
The Property Trustee will transmit by mail, first class postage prepaid,
notice of such Trust Enforcement Event to the holders of the Trust Securities
within 90 days of the occurrence of the Trust Enforcement Event. Capital
Markets and the Regular Trustees are required to file annually with the
Property Trustee a certificate as to whether or not they are in compliance with
all the conditions and covenants applicable to them under the Declaration as
well as any reports that may be required to be filed by them under the Trust
Indenture Act.
REMOVAL OF TRUSTEES
Any Trustee may be removed with or without cause at any time by the holder of
the Common Securities. The removal of a Property Trustee, however, will not be
effective until a successor Trustee possessing the qualifications to act as a
Property Trustee has accepted an appointment as Property Trustee in accordance
with the provisions of the Declaration.
MERGER OR CONSOLIDATION OF TRUSTEES
Any entity into which the Property Trustee, the Delaware Trustee or any
Regular Trustee that is not a natural person may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which such Trustee may be a party, or any entity
succeeding to all or substantially all the corporate trust business of such
Trustee, will be the successor of such Trustee under the Declaration, provided
that such entity is otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate with, convert into, amalgamate or merge with or
into, be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described below. At the request of Capital Markets and with the consent of a
majority of the Regular Trustees, and without the consent of the holders of the
Preferred Securities, the Delaware Trustee or the Property Trustee, the Trust
may consolidate with, convert into, amalgamate or merge with or into, be
replaced by or convey, transfer or lease its properties substantially as an
entirety to a trust organized as such under the laws of any state. Such
consolidation, conversion, amalgamation, merger, replacement, conveyance,
transfer or lease will be subject, however, to the following limitations:
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(i) if the Trust is not the successor entity, then the successor entity
either must (a) expressly assume all of the Trust"s obligations with
respect to the Trust Securities or (b) substitute for the Trust Securities
other securities having substantially the same terms as the Trust
Securities (the "Successor Securities"), so long as such Successor
Securities rank the same as the Trust Securities with respect to
distributions and payments upon liquidation, redemption and otherwise;
(ii) Capital Markets must expressly appoint a trustee of a successor
entity possessing the same powers and duties as the Property Trustee as the
holder of the Debentures;
(iii) the Preferred Securities or any Successor Securities must be
listed, or any Successor Securities must be listed upon notification of
issuance, on any national securities exchange or with any other
organization on which the Preferred Securities are then listed or quoted;
(iv) such consolidation, conversion, amalgamation, merger, replacement,
conveyance, transfer or lease must not cause the Preferred Securities
(including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization;
(v) such consolidation, conversion, amalgamation, merger, replacement,
conveyance, transfer or lease must not adversely affect the rights,
preferences and privileges of the holders of the Preferred Securities
(including any Successor Securities) in any material respect;
(vi) such successor entity must have a purpose substantially identical to
that of the Trust;
(vii) prior to such consolidation, conversion, amalgamation, merger,
replacement, conveyance, transfer or lease, Capital Markets must have
received an opinion of independent counsel to the Trust experienced in such
matters to the effect that (a) such consolidation, conversion,
amalgamation, merger, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of
the Trust Securities (including any Successor Securities) in any material
respect; (b) following such consolidation, conversion, amalgamation,
merger, replacement, conveyance, transfer or lease, neither the Trust nor
such successor entity will be required to register as an investment company
under the Investment Company Act and (c) following such consolidation,
conversion, amalgamation, merger, replacement, conveyance, transfer or
lease, the Trust (or the successor entity) will continue to be classified
as a grantor trust for U.S. federal income tax purposes;
(viii) Capital Markets or any permitted successor or assignee must own
all of the Common Securities and must guarantee the obligations of such
successor entity under the Successor Securities, at least to the extent
provided by the Guarantee; and
(ix) such successor entity must expressly assume all of the obligations
of the Trust.
Notwithstanding the foregoing, unless holders of 100% in aggregate liquidation
amount of the Trust Securities give their consent, the Trust will not
consolidate with, convert into, amalgamate or merge with or into, or be
replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to, any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, conversion, amalgamation, merger, replacement, conveyance,
transfer or lease would cause the Trust or the successor entity to be
classified as other than a grantor trust for U.S. federal income tax purposes
or would cause each holder of Trust Securities not to be treated as owning an
undivided beneficial ownership interest in the Debentures.
VOTING RIGHTS; AMENDMENT OF DECLARATION
Except as provided below and under "Description of the Guarantee--Amendments;
Assignment" and as otherwise required by the Declaration, the Business Trust
Act, the Trust Indenture Act and other applicable law, the holders of the Trust
Securities will have no voting rights.
Subject to the requirement of the Property Trustee obtaining a tax opinion in
certain circumstances set forth in the last sentence of this paragraph, the
holders of a majority in aggregate liquidation amount of the Preferred
Securities, voting separately as a class, have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Property Trustee, or to direct the exercise of any
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trust or power conferred upon the Property Trustee under the Declaration. This
includes the right to direct the Property Trustee, as holder of the Debentures,
to (i) exercise the remedies available to it under the Indenture, (ii) consent
to any amendment or modification of the Indenture or the Debentures where such
consent will be required or (iii) waive any past default and its consequences
that is waivable under the Indenture; provided that if an Indenture Event of
Default has occurred and is continuing, then the holders of 25% of the
aggregate liquidation amount of the Preferred Securities may direct the
Property Trustee to declare the principal of and interest on the Debentures due
and payable; and provided further that where a consent or action under the
Indenture would require the consent or act of the holders of more than a
majority of the aggregate principal amount of Debentures affected thereby, the
Property Trustee only may give such consent or take such action at the
direction of the holders of at least the same proportion in aggregate stated
liquidation amount of the Preferred Securities. The Property Trustee will
notify all holders of the Preferred Securities of any notice of any Indenture
Event of Default that it has received from Capital Markets. Such notice will
state that such Indenture Event of Default also constitutes an Trust
Enforcement Event. Except with respect to directing the time, method and place
of conducting a proceeding for a remedy, the Property Trustee will have no
obligation to take any of the actions described in clause (i) or (ii) above
unless it first has obtained an opinion of independent tax counsel experienced
in such matters to the effect that, as a result of such action, the Trust will
not fail to be classified as a grantor trust for U.S. federal income tax
purposes and that each holder of Trust Securities will be treated as owning an
undivided beneficial ownership interest in the Debentures.
In the event the consent of the Property Trustee, as the holder of the
Debentures, is required under the Indenture with respect to any amendment or
modification of the Indenture, the Property Trustee will request the direction
of the holders of the Trust Securities with respect to such amendment or
modification and will vote with respect to such amendment or modification as
directed by the holders of a majority in stated liquidation amount of the Trust
Securities voting together as a single class; provided that where a consent
under the Indenture would require the consent of the holders of more than a
majority of the aggregate principal amount of the Debentures, the Property
Trustee only may give such consent at the direction of the holders of at least
the same proportion in aggregate stated liquidation amount of the Trust
Securities. The Property Trustee will not take any such action in accordance
with the directions of the holders of the Trust Securities unless the Property
Trustee has obtained an opinion of independent tax counsel to the effect that
the Trust will not be classified as other than a grantor trust for United
States federal income tax purposes as a result of such action, and that each
holder of Trust Securities will be treated as owning an undivided beneficial
ownership interest in the Debentures.
A waiver of an Indenture Event of Default with respect to the Debentures will
constitute a waiver of the corresponding Trust Enforcement Event.
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Preferred Securities or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth (i) the date of such meeting, (ii) a
description of any resolution proposed for adoption at such meeting on which
such holders are entitled to vote and (iii) instructions for the delivery of
proxies.
No vote or consent of the holders of Preferred Securities will be required
for the Trust to redeem and cancel Preferred Securities or distribute
Debentures in accordance with the Declaration and the terms of the Trust
Securities.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by Capital Markets, the Trustees or any
entity directly or indirectly controlled by, or under direct or indirect common
control with, Capital Markets or any Trustee will not be entitled to vote or
consent and will, for purposes of such vote or consent, be treated as if such
Preferred Securities were not outstanding.
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Except during the continuance of an Indenture Event of Default, the holders
of the Preferred Securities will have no rights to appoint or remove the
Trustees, who may be appointed, removed or replaced solely by Capital Markets
as the holder of all of the Common Securities. If an Indenture Event of Default
has occurred and is continuing, the Property Trustee and the Delaware Trustee
may be removed and replaced by the holders of a majority in liquidation amount
of the Preferred Securities.
GLOBAL PREFERRED SECURITIES
Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Securities may be issued in whole or in part in global form ("Global
Preferred Securities") that will be deposited with, or on behalf of, a
depositary identified in the applicable Prospectus Supplement. Global Preferred
Securities may be issued only in fully registered form and in either temporary
or permanent form. Unless and until a Global Preferred Security is exchanged in
whole or in part for the individual Preferred Securities represented thereby,
the depositary holding such Global Preferred Security may transfer such Global
Preferred Security only to its nominee or successor depositary (or vice versa)
and only as a whole. Unless otherwise indicated in the applicable Prospectus
Supplement for the Preferred Securities, the depositary for the Global
Preferred Securities will be The Depository Trust Company. See "Book-Entry
Issuance." 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
Global Preferred Securities.
The specific terms of the depositary arrangement for the Preferred Securities
will be described in the applicable Prospectus Supplement. Capital Markets
anticipates that the description of the depositary set forth below under "Book-
Entry Issuance" generally will apply to any depositary arrangements. Capital
Markets expects that the applicable depositary or its nominee, upon receipt of
any payment of liquidation amount, premium or Distributions in respect of a
permanent Global Preferred Security representing any of the Preferred
Securities, immediately will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the aggregate
principal amount of such Global Preferred Security as shown on the records of
the depositary or its nominee. Capital Markets also expects that payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name." Such payments will
be the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if at any
time the depositary is unwilling, unable or ineligible to continue as a
depositary for the Preferred Securities, the Trust will appoint a successor
depositary with respect to the Preferred Securities. If a successor depositary
is not appointed by the Trust within 90 days after the Trust receives such
notice or becomes aware of such ineligibility, the Trust's election that the
Preferred Securities be represented by one or more Global Securities will no
longer be effective, and a Regular Trustee on behalf of the Trust will execute,
and the Property Trustee will authenticate and deliver, Preferred Securities in
definitive registered form, in any authorized denominations, in an aggregate
stated liquidation amount equal to the principal amount of the Global Preferred
Securities representing the Preferred Securities in exchange for such Global
Preferred Securities. In addition, the Trust may at any time and in its sole
discretion, subject to any limitations described in the applicable Prospectus
Supplement, determine not to have any Preferred Securities represented by one
or more Global Preferred Securities, and, in such event, a Regular Trustee on
behalf of the Trust will execute and the Property Trustee will authenticate and
deliver Preferred Securities in definitive registered form, in an aggregate
stated liquidation amount equal to the principal amount of the Global Preferred
Securities representing such Preferred Securities, in exchange for such Global
Preferred Securities.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities will be made to the
applicable depositary, which will credit the relevant Participants' accounts on
the applicable Distribution dates or, if the Preferred Securities are not held
by a depositary, such payments will be made by check mailed to the address of
the holder entitled thereto
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as such address will appear on the Trust's security register. Unless otherwise
specified in the applicable Prospectus Supplement, the paying agent for the
Preferred Securities initially will be the Property Trustee. The paying agent
will be permitted to resign as paying agent upon 30 days' written notice to the
Property Trustee and Capital Markets.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but the Trust may require payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange of Preferred Securities.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee will not be liable for any action taken, suffered or
omitted to be taken by it without negligence, in good faith and reasonably
believed by it to be authorized or within the discretion, rights or powers
conferred upon it by the Declaration. The Property Trustee will be under no
obligation to exercise any rights or powers vested in it by the Declaration at
the request of a holder of Trust Securities, unless such holder provides the
Property Trustee security and indemnity, reasonably satisfactory to the
Property Trustee, against the costs and expenses and liabilities that might be
incurred.
DESCRIPTION OF THE GUARANTEE
The following description sets forth certain general terms and provisions of
the Guarantee to which any Prospectus Supplement may relate. The particular
terms and provisions of the Guarantee and the application of these general
terms and provisions thereto will be described in the applicable Prospectus
Supplement.
Pursuant to and for the purposes of compliance with the Trust Indenture Act,
the Guarantee will qualify as an indenture, and The Chase Manhattan Bank will
act as trustee under the Guarantee (the "Guarantee Trustee") and hold the
Guarantee for the benefit of the holders of the Trust Securities. The following
summaries of certain terms and provisions of the Guarantee do not purport to be
complete and are subject to, and qualified in their entirety by reference to,
the form of Guarantee (including the definitions therein of certain terms) that
is filed as an exhibit to the Registration Statement, and to the Trust
Indenture Act. Capitalized terms used in this section not otherwise defined in
this Prospectus have the meanings set forth in the Guarantee.
GENERAL
To the extent set forth in the Guarantee and except to the extent paid by the
Trust, Capital Markets will irrevocably and unconditionally agree to pay the
holders of the Trust Securities the Guarantee Payments (as defined below), in
full, as and when due, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert. The payments subject to the
Guarantee (the "Guarantee Payments") include:
(i) any accumulated and unpaid Distributions that are required to be paid
on the Trust Securities, to the extent the Trust has funds available
therefor;
(ii) the redemption price, including all accumulated and unpaid
Distributions to the date of redemption, with respect to the Trust
Securities, to the extent the Trust has funds available therefor;
(iii) the repayment price, including all accumulated and unpaid
Distributions to the date of repayment, to the extent the Trust has funds
available therefor; and
(iv) upon a voluntary or involuntary dissolution, winding-up or
termination of the Trust (other than in connection with the distribution of
Debentures to the holders in exchange for the Trust Securities, as
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provided in the Declaration), the lesser of (a) the aggregate of the stated
liquidation amount and all accumulated and unpaid Distributions on the
Trust Securities to the date of payment, to the extent the Trust has funds
available therefor, and (b) the amount of assets of the Trust remaining
available for distribution to holders of the Trust Securities in
liquidation of the Trust.
Capital Markets' obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by Capital Markets to the holders of
Preferred Securities or by causing the Trust to pay such amounts to such
holders.
If a Trust Enforcement Event has occurred and is continuing, the rights of
holders of the Common Securities to receive Guarantee Payments will be
subordinated to the rights of holders of Preferred Securities to receive
Guarantee Payments. See "Description of the Preferred Securities--Subordination
of Common Securities."
The Guarantee will apply only to the extent the Trust has funds available to
make payments with respect to the Trust Securities. If Capital Markets does not
make interest payments on the Debentures owned by the Trust, the Trust will not
have funds available to pay Distributions on the Preferred Securities.
Through the Guarantee, the Debentures and the Indenture, taken together,
Capital Markets has fully and unconditionally guaranteed all of the Trust's
obligations under the Trust Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
such guarantee. It is only the combined operation of the documents that has the
effect of providing a full and unconditional guarantee of the Trust's
obligations under the Declaration. See "Relationship Among the Preferred
Securities, the Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute a guarantee of payment and not of collection.
The beneficiaries of the Guarantee may institute a legal proceeding directly
against Capital Markets to enforce its rights under the Guarantee without
instituting a legal proceeding against any other person or entity.
CERTAIN COVENANTS OF CAPITAL MARKETS
Capital Markets will covenant that, so long as any Trust Securities remain
outstanding, if an Event of Default occurs under the Guarantee or a Trust
Enforcement Event occurs under the Declaration and written notice of such event
has been given to Capital Markets, then Capital Markets and Industries may not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to any of Capital Markets'
or Industries' capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of
Capital Markets or Industries that rank on a parity with or junior in interest
to the Debentures or make any guarantee payments with respect to any guarantee
by Capital Markets or Industries of the debt securities of any subsidiary of
Capital Markets or Industries if such guarantee ranks on a parity with or
junior in interest to the Debentures (other than (a) purchases or acquisitions
of capital stock of Capital Markets or Industries in connection with the
satisfaction by Capital Markets or Industries of its obligations under any
employee benefit plans or the satisfaction by Capital Markets or Industries of
its obligations pursuant to any contract or security outstanding on the date of
such event requiring Capital Markets or Industries to purchase capital stock of
Capital Markets or Industries, (b) as a result of a reclassification of Capital
Markets' or Industries' capital stock for another class or series of Capital
Markets' or Industries' capital stock, (c) the purchase of fractional interests
in shares of Capital Markets' or Industries' capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (d) dividends or distributions in capital stock of
Capital Markets or Industries, (e) redemptions or repurchases of any rights
pursuant to a rights agreement and (f) payments under the Guarantee).
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AMENDMENTS; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights of
holders of the Trust Securities in any material respect (that do not require
the consent of holders), the Guarantee may be amended only with the prior
approval of the holders of at least a majority in liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all the outstanding Trust Securities. All
guarantees and agreements contained in the Guarantee will bind the successors,
assigns, receivers, trustees and representatives of Capital Markets and will
inure to the benefit of the holders of the Trust Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of
Capital Markets to perform any of its payment or other obligations thereunder.
The holders of a majority in stated liquidation amount of the Trust
Securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Guarantee Trustee in respect of
the Guarantee or to direct the exercise of any trust or power conferred upon
the Guarantee Trustee under the Guarantee. If the Guarantee Trustee fails to
enforce the Guarantee, any holder of Trust Securities may institute a legal
proceeding directly against Capital Markets to enforce its rights under the
Guarantee, without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person. Notwithstanding the foregoing, if
Capital Markets has failed to make a Guarantee Payment, a holder of Trust
Securities may directly institute a proceeding against Capital Markets for
enforcement of the Guarantee for such payment.
Capital Markets, as guarantor, is required to file annually with the
Guarantee Trustee a certificate indicating whether or not Capital Markets is in
compliance with all of the conditions and obligations applicable to it under
the Guarantee.
TERMINATION
The Guarantee will terminate (i) upon full payment of the redemption price of
all of the Trust Securities, (ii) upon full payment of the repayment price of
all of the Trust Securities, (iii) upon distribution of the Debentures held by
the Trust to the holders of the Trust Securities or (iv) upon full payment of
the amounts payable in accordance with the Declaration upon liquidation of the
Trust. The Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any holder of the Trust Securities must return
payment of any sums paid under the Trust Securities or the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, will undertake to perform only those duties specifically set
forth in the Guarantee and, after a default that has not been cured or waived,
will exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provisions, the
Guarantee Trustee will be under no obligation to exercise any of the rights or
powers vested in it by the Guarantee at the request or direction of any holder
of the Trust Securities, unless such holder provides the Guarantee Trustee
security and indemnity, reasonably satisfactory to the Guarantee Trustee,
against the costs, expenses (including attorneys' fees and expenses and the
expenses of the Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred thereby. The foregoing will not relieve the
Guarantee Trustee, upon the occurrence of an event of default under the
Guarantee, of its obligation to exercise the rights and powers vested in it by
the Guarantee.
GOVERNING LAW
The Guarantee will be governed by, construed and interpreted in accordance
with the laws of the State of New York.
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RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE DEBENTURESAND THE GUARANTEE
To the extent set forth in the Guarantee and to the extent funds are
available, Capital Markets will irrevocably guarantee the payment of
Distributions and other amounts due on the Trust Securities. See "Description
of the Guarantee." If and to the extent Capital Markets does not make payments
on the Debentures, the Trust will not have sufficient funds to pay
Distributions or other amounts due on the Trust Securities. The Guarantee does
not cover any payment of Distributions or other amounts due on the Trust
Securities unless the Trust has sufficient funds for the payment of such
Distributions or other amounts. In such event, a holder of Trust Securities may
institute a legal proceeding directly against Capital Markets to enforce
payment of such Distributions or other amounts to such holder after the
respective due dates. Taken together, Capital Markets' obligations under the
Debentures, the Indenture and the Guarantee provide a full and unconditional
guarantee of payments of Distributions and other amounts due on the Trust
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only
the combined operation of these documents that provides a full and
unconditional guarantee of the Trust's obligations under the Trust Securities.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other amounts are made when due on the
Debentures, such payments will be sufficient to cover Distributions and
payments due on the Trust Securities because of the following factors: (i) the
aggregate principal amount of the Debentures will be equal to the sum of the
aggregate stated liquidation amount of the Trust Securities; (ii) the interest
rate and the interest and other payment dates on the Debentures will match the
distribution rate and distribution and other payment dates for the Trust
Securities; (iii) Capital Markets, as issuer of the Debentures, will pay, and
the Trust will not be obligated to pay, directly or indirectly, all costs,
expenses, debts and obligations of the Trust (other than with respect to the
Trust Securities); and (iv) the Declaration further provides that the Trust
will not engage in any activity that is not consistent with the limited
purposes of the Trust.
Notwithstanding anything to the contrary in the Indenture, Capital Markets
has the right to set-off any payment it is otherwise required to make
thereunder against and to the extent it has already made, or is concurrently on
the date of such payment making, a related payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
The Declaration provides that if Capital Markets fails to make interest or
other payments on the Debentures when due (taking account of any Extension
Period), the holders of the Preferred Securities may direct the Property
Trustee to enforce its rights under the Indenture. See "Description of
Preferred Securities-- Voting Rights; Amendment of Declaration." If the
Property Trustee fails to enforce its rights under the Indenture in respect of
an Indenture Event of Default, any holder of record of Preferred Securities
may, to the fullest extent permitted by applicable law, institute a legal
proceeding against Capital Markets to enforce the Property Trustee's rights
under the Indenture without first instituting any legal proceeding against the
Property Trustee or any other person or entity. Notwithstanding the foregoing,
if a Trust Enforcement Event has occurred and is continuing and such event is
attributable to the failure of Capital Markets to pay interest or principal on
the Debentures on the date such interest or principal is otherwise payable,
then a holder of Preferred Securities may institute a Direct Action against
Capital Markets for payment.
If Capital Markets fails to make payments under the Guarantee, a holder of
Preferred Securities may institute a proceeding directly against Capital
Markets for enforcement of the Guarantee for such payments.
LIMITED PURPOSE OF TRUST
The Preferred Securities evidence undivided beneficial ownership interests in
the Trust, and the Trust exists for the sole purpose of issuing and selling the
Trust Securities and using the proceeds to purchase
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Debentures. A principal difference between the rights of a holder of Preferred
Securities and a holder of Debentures is that a holder of Debentures is
entitled to receive from Capital Markets the principal amount of and interest
accrued on Debentures held, while a holder of Preferred Securities is entitled
to receive Distributions and other payments from the Trust (or from Capital
Markets under the Guarantee) only if and to the extent the Trust has funds
available for the payment of such Distributions and other payments.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution, winding-up or liquidation of
the Trust involving the redemption or repayment of the Debentures, the holders
of the Trust Securities will be entitled to receive, out of assets held by the
Trust, subject to the rights of creditors of the Trust, if any, the Liquidation
Distribution in cash. Because Capital Markets is the guarantor under the
Guarantee and, as issuer of the Debentures, has agreed to pay for all costs,
expenses and liabilities of the Trust (other than the Trust's obligations to
the holders of the Trust Securities), the positions of a holder of Trust
Securities and a holder of the Debentures relative to other creditors and to
shareholders of Capital Markets in the event of liquidation or bankruptcy of
Capital Markets would be substantially the same.
DESCRIPTION OF COMMON SHARES
The following description sets forth certain general terms and provisions of
the Common Shares and certain provisions of the Indiana Business Corporations
Law (the "Indiana BCL"). The particular terms and provisions of the Common
Shares offered by a Prospectus Supplement and the application of these general
terms and provisions thereto will be described in the applicable Prospectus
Supplement.
The following summaries of certain terms and provisions of the Common Shares
do not purport to be complete and are subject to, and qualified in their
entirety by reference to, applicable Indiana law and to the provisions of
Industries' Amended and Restated Articles of Incorporation (the "Restated
Articles") and its Amended and Restated By-Laws (the "Restated By-Laws"),
copies of which have been filed as exhibits to the Registration Statement.
GENERAL
The authorized capital stock of Industries consists of 400,000,000 Common
Shares, of which 117,525,257 Common Shares were issued and outstanding as of
October 31, 1998, and 20,000,000 preferred shares, without par value, of which
no shares are issued and outstanding as of the date of this Prospectus. Two
million preferred shares have been designated Series A Junior Participating
Preferred Shares and reserved for issuance upon exercise of the preferred share
purchase rights issued pursuant to the Share Purchase Rights Plan described
below. Subject to the limitations described below and the prior rights of
holders of Industries' preferred shares, holders of Common Shares are entitled
to receive dividends when and as declared by the Board of Directors of
Industries. Holders of Common Shares are entitled to one vote per share on each
matter submitted to a vote at a meeting of shareholders. Holders of Common
Shares are not entitled, as a matter of right, to subscribe for, purchase or
receive any new or additional issue of Industries' capital stock or securities
convertible into capital stock of Industries. In the event of any voluntary or
involuntary liquidation, distribution or sale of assets, dissolution or winding
up of Industries, the holders of Common Shares will be entitled to receive the
remaining assets after payment to the holders of preferred shares of the
preferential amounts, if any, to which they are entitled.
The Common Shares are listed on the NYSE, the CSE and the PE. The transfer
agent and registrar for the Common Shares is Harris Trust and Savings Bank.
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LIMITATION ON DIVIDENDS
Holders of Common Shares will not receive any dividends on the Common Shares
until after Industries has provided for the payment of all preferential
dividends on Industries' preferred shares and complied with any requirements to
set aside amounts for any sinking fund provisions, redemption provisions or
purchase accounts with respect to Industries' preferred shares.
If Capital Markets exercises its right, if any, to defer payments of interest
on the Debentures from time to time by extending the applicable interest
payment period and accordingly causes the deferral of payments of Distributions
on the Preferred Securities, Industries may not declare, set aside or pay any
dividend or distribution on any shares of any class or series of its capital
stock, except for dividends or distributions in shares of its capital stock or
in rights to acquire shares of its capital stock. See "Description of the
Preferred Securities--Distributions."
CERTAIN BUSINESS COMBINATIONS AND SHARE PURCHASES
Chapters 42 and 43 of the Indiana BCL regulate "control share acquisitions"
of securities of, and "business combinations" with, certain Indiana
corporations, including, in some instances, Industries.
Under Chapter 42 of the Indiana BCL, a "control share acquisition" is deemed
to occur when a person accumulates beneficial ownership of shares of a
corporation subject to the statute that, when added to all other shares of such
corporation beneficially owned by the acquiring person, would entitle the
acquiring person, upon acquisition of such shares, to vote or direct the voting
of shares of the corporation having voting power in the election of directors
within any of the following ranges: (i) one-fifth or more but less than one-
third of all voting power; (ii) one-third or more but less than a majority of
all voting power; or (iii) a majority or more of all voting power. Shares
acquired in a control share acquisition have the same voting rights as all
other shares of the same class or series of the corporation only to the extent
authorized by the affirmative vote of the holders of a majority of all of the
shares entitled to vote generally in the election of directors, excluding
shares held by the acquiring person, any officer of such corporation or any
employee of such corporation who is also a director of the corporation. The
acquiring person may cause a special shareholder meeting to be held to consider
whether the acquiring person can vote its shares. If no such request for a
shareholders' meeting is made, consideration of the voting rights of the
acquiring person's shares must be taken up at the next special or annual
shareholders' meeting of the corporation. In the event the acquiring person
fails to file a statement requesting such a meeting or the remaining
shareholders vote not to accord voting rights to the acquiring person's shares,
the corporation may redeem all of the acquiring person's shares for fair value.
In Indiana such a redemption must be authorized in the corporation's articles
or bylaws before a control share acquisition has occurred. The Restated By-Laws
authorize such a redemption. If voting rights are accorded to the acquiring
person and the acquiring person acquires beneficial ownership of a majority of
the shares of the corporation entitled to vote on the election of directors,
each shareholder of record who has not voted in favor of according the
acquiring person such voting rights may demand payment and an appraisal for his
or her stock at fair value. Regardless of the foregoing, full voting rights
will be restored to the shares of an acquiring person upon the transfer of
beneficial ownership of such shares to another person, unless such transfer
itself constitutes a control share acquisition.
Chapter 43 of the Indiana BCL regulates "business combinations" involving
certain Indiana corporations having a class of voting shares registered
pursuant to the Exchange Act and an "interested shareholder." An "interested
shareholder" is deemed to be, subject to certain limitations: (i) a person who
is the beneficial owner of 10% or more of the voting power of the outstanding
voting shares of the corporation; or (ii) an affiliate or associate of the
corporation who at any time within the five-year period immediately preceding
the date of the business combination was the beneficial owner of 10% or more of
the voting power of the then outstanding shares of the corporation. A "business
combination" includes: a merger, sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 10% or more of the assets, outstanding stock
or earning power of the corporation, to or with an interested shareholder; any
transaction resulting in the issuance or
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transfer to an interested shareholder of any stock of the corporation or its
subsidiaries having 5% or more of the aggregate market value of all outstanding
shares (except pursuant to the exercise of certain warrants or rights to
purchase shares, or pro rata dividends or distributions); any proposal for
liquidation or dissolution by the interested shareholder; any transaction
involving the corporation or its subsidiaries that would result in increasing
the proportionate share of the stock of the corporation or its subsidiaries
owned by an interested shareholder; and any receipt by an interested
shareholder of the benefit (except proportionately as a shareholder) of loans,
guarantees or other financial benefits. The corporation may not engage in any
business combination with an interested shareholder for a period of five years
following the date such shareholder became an interested shareholder, unless
prior to that date the board of directors approved either the business
combination or the transaction that resulted in the shareholder becoming an
interested shareholder. Subsequent to the expiration of the five year
prohibition, a combination will be allowed only if (i) prior to the interested
shareholder's share acquisition date, the board of directors approved either
the business combination or the transaction that resulted in the shareholder
becoming an interested shareholder, (ii) the combination is approved by
disinterested shareholders or (iii) shareholders, other than the interested
shareholder, receive certain amounts and types of consideration in the event a
business combination with the interested shareholder that has not been approved
takes place after the expiration of the five-year period.
A corporation may elect not to be governed by the business combination
provisions by amendment to its articles of incorporation. Industries has not
adopted such an amendment. The Restated Articles contain provisions similar to
those of Chapter 43 of the Indiana BCL. Under the Restated Articles, any
business combination that is proposed by an interested shareholder must be
approved by 80% of the outstanding voting shares, unless certain fair price and
procedural requirements are met, the business combination is approved by
Industries' Board before the interested shareholder becomes an interested
shareholder, or the business combination is approved by the affirmative vote of
the holders of the majority of the outstanding voting shares that are not
beneficially owned by the interested shareholder no earlier than five years
after such person becomes an interested shareholder.
The provisions in Chapter 43, the Indiana BCL and the Restated Articles, in
effect, encourage a party seeking to control Industries, in advance of the
party becoming an interested shareholder, to negotiate and reach an agreement
with Industries' Board as to the terms of its proposed business combination.
Without such a prior agreement with Industries' Board, it could take over five
years for a party who is an interested shareholder to obtain approval of its
proposed business combination unless such proposed business combination is
approved by the requisite 80% or two-thirds vote or satisfies the fair price
and procedural requirements. As a result of these restrictions on business
combinations with interested shareholders, takeovers that might be favored by a
majority of Industries' shareholders may be impeded or prevented. On the other
hand, the negotiation of terms of a takeover transaction in advance is likely
to result in more favorable terms for all of the shareholders of Industries
than are likely to be offered in takeovers initiated without advance
negotiations.
BOARD OF DIRECTORS
The Restated Articles provide that Industries' Board shall consist of ten
persons and be divided into three classes serving staggered three-year terms.
As a result, approximately one-third of Industries' Board is elected each year.
The Restated Articles provide that a director of Industries may only be removed
for cause by the directors or shareholders and that vacancies shall be filled
by a majority vote of the remaining directors.
The existence of Industries' staggered Board requires a substantial
shareholder to negotiate with the existing Board before attempting a takeover
of Industries because, without the cooperation of the existing Board, it could
take such a shareholder up to two years to acquire control of the Board. This
provision enables Industries' Board, and ultimately its shareholders, to
negotiate with potential acquirors from a strong position and protects
Industries' shareholders against unfair or unequal treatment that could arise
from an unsolicited attempt to acquire the respective companies. On the other
hand, the additional time required to obtain control of Industries' Board may
discourage takeover bids that a majority of Industries' shareholders might deem
desirable.
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SHAREHOLDER MEETINGS; ACTION BY WRITTEN CONSENT; SHAREHOLDER PROPOSALS
The Restated By-Laws provide that the Chairman, President or Industries'
Board may call a special meeting of shareholders and that the Chairman must
call a special meeting of shareholders upon the written request of a majority
of Industries' Board or the holders of at least 25% of the outstanding voting
stock.
Under the Indiana BCL, any action required to be taken at meeting of
shareholders may be taken without a meeting if all shareholders entitled to
vote on the matter consent to the action in writing and the written consents
are filed with the records of the meetings of shareholders.
The Restated By-Laws provide that nominations for election to Industries'
Board and the proposal of business to be considered by the shareholders at an
annual meeting of shareholders may be made by any shareholder of record who
gives notice to Industries prior to the date set forth for such notice in
Industries' proxy statement for the preceding annual meeting of shareholders.
The notice must contain, for director nominees, the information required
pursuant to Regulation 14A of the Exchange Act in regard to such nominees, or
for business proposed to be brought before the meeting, a brief description of
the business and, in either case, certain information regarding the shareholder
making the proposal.
AMENDMENT OF RESTATED ARTICLES
The Restated Articles provide that the provisions relating to directors,
business combinations, indemnification and amendment of the Restated Articles
may not be amended, altered, changed or repealed unless such amendment,
alteration, change or repeal is approved by the affirmative vote of the holders
of not less than 75% of the outstanding shares entitled to vote thereon. This
requirement of a 75% vote is greater than the general voting requirement under
the Indiana BCL and, in effect, could give certain minority shareholders of
Industries, including the members of Industries' Board in their capacity as
shareholders, a veto power over subsequent changes to provisions relating to
directors, business combinations, indemnification and amendment of the Restated
Articles, ultimately making it more difficult to amend such provisions, even if
a majority of the holders of Common Shares favors such changes.
AMENDMENT OF BY-LAWS
The Restated By-Laws provide that they may be altered, amended or repealed by
an affirmative vote of a majority of a quorum of Industries' Board at any
meeting of the Board.
SHARE PURCHASE RIGHTS PLAN
In February 1990, Industries adopted a Share Purchase Rights Plan and issued,
as a dividend, one preferred share purchase right (a "Right") for each
outstanding Common Share. Each Common Share issued since the date of that
dividend also includes one Right (including shares to be issued in connection
with any offering of Common Shares pursuant to this Prospectus, except in the
unlikely event that the Rights are redeemed or separately certificated prior to
the closing of any such offering).
Each Right entitles its holder to purchase one-two-hundredth ( 1/200) of an
Industries' Series A Junior Participating Preferred Share at a price of $30 per
one-two-hundredth of a share, subject to adjustment. Currently, the Rights are
not exercisable. The Rights will become exercisable if a person or group
acquires 20% or more of the voting power of Industries or announces a tender or
exchange offer following which such person or group would hold 25% or more of
Industries' voting power. If such an acquisition were consummated, or if
Industries were acquired by such person or group in a merger or other business
combination, then each Right would be exercisable for that number of
Industries' Common Shares or the acquiring company's shares of common stock
having a market value of two times the exercise price of the Right. Industries
may redeem the Rights at a price of $.005 per Industries Right prior to the
occurrence of an event that causes the Rights to be exercisable for Common
Shares. The Rights will expire on March 12, 2000.
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DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
Industries may issue Stock Purchase Contracts, including contracts obligating
holders to purchase from Industries, and Industries to sell to the holders, a
specified number of Common Shares at a future date or dates. The consideration
per Common Share may be fixed at the time the Stock Purchase Contracts are
issued or may be determined by reference to a specific formula set forth in the
Stock Purchase Contracts. Industries may issue the Stock Purchase Contracts
separately or as Stock Purchase Units consisting of (i) a Stock Purchase
Contract and (ii) Preferred Securities or debt obligations of third parties,
including U.S. Treasury securities. Such Preferred Securities or debt
obligations will serve as collateral to secure the holders' obligations to
purchase the Common Shares under the Stock Purchase Contracts. The Stock
Purchase Contracts may require Industries to make periodic payments to the
holders of the Stock Purchase Contracts. Such payments may be unsecured or
prefunded on some basis. The Stock Purchase Contracts may require holders to
secure their obligations thereunder in a specified manner.
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units, including, if applicable,
collateral arrangements and depositary arrangements relating to such Stock
Purchase Contracts or Stock Purchase Units. That Prospectus Supplement also
will describe certain United States federal income tax consequences and special
considerations applicable to the offering of the Stock Purchase Contracts or
Stock Purchase Units.
DESCRIPTION OF MEDIUM-TERM NOTES
The following description sets forth certain general terms and provisions of
the Medium-Term Notes to which any Prospectus Supplement or Pricing Supplement
may relate. The particular terms and provisions of the Medium-Term Notes and
the application of these general terms and provisions thereto will be described
in the applicable Prospectus Supplement or Pricing Supplement.
The Medium-Term Notes will be issued as a series of Debt Securities under the
Indenture, which is subject to and governed by the Trust Indenture Act. The
following summaries of certain terms and provisions of the Medium-Term Notes
and the Indenture do not purport to be complete and are subject to, and
qualified in their entirety by reference to, the forms of Medium-Term Notes and
the Indenture that are filed as exhibits to this Registration Statement, and to
the Trust Indenture Act. Capitalized terms used in this section not otherwise
defined in this Prospectus have the meanings set forth in the Medium-Term Notes
or the Indenture, as the case may be. Certain material United States federal
income tax consequences applicable to the offering of the Medium-Term Notes
will be described in the applicable Prospectus Supplement or Pricing
Supplement.
The term "Debt Securities," as used in this Prospectus, refers to all debt
securities, including the Debentures described above and the Medium-Term Notes,
issued and issuable from time to time under the Indenture. The following
description of the Medium-Term Notes will apply to each series of Medium-Term
Note offered hereby unless otherwise specified in the applicable Prospectus
Supplement or Pricing Supplement.
GENERAL
All Debt Securities, including the Medium-Term Notes, issued and to be issued
under the Indenture will be unsecured general obligations of Capital Markets
and will rank on a parity with all other unsecured and unsubordinated
indebtedness of Capital Markets from time to time outstanding. The Indenture
does not limit the aggregate principal amount of Debt Securities that may be
issued thereunder, and Capital Markets may issue Debt Securities thereunder
from time to time in one or more series up to the aggregate principal amount
authorized by Capital Markets for each series. From time to time, Capital
Markets may provide for the issuance of Medium-Term Notes or other Debt
Securities under the Indenture, without the consent of holders of Debt
Securities already outstanding, in addition to the Medium-Term Notes offered
hereby.
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The Medium-Term Notes currently are limited to up to an aggregate principal
amount of $250 million, 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
Prospectus Supplement or 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 Capital Markets' option, 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 Prospectus Supplement or Pricing Supplement,
interest-bearing Medium-Term Notes will either be Fixed Rate Notes or Floating
Rate Notes, as specified in the applicable Prospectus Supplement or Pricing
Supplement. Capital Markets also may issue Discount Notes, Indexed Notes and
Amortizing Notes (as such terms are hereinafter defined).
Unless otherwise specified in the applicable Prospectus Supplement or Pricing
Supplement, the Medium-Term Notes will be denominated in, and payments of
principal and any premium and/or interest in respect thereof will be made in
United States dollars. The Medium-Term Notes also may be denominated in, and
payments of principal and any premium or interest in respect thereof may be
made in, one or more foreign or composite currencies. See "Special Provisions
Relating to Foreign Currency Notes--Payment of Principal and Any Premium or
Interest." The currency or composite currency in which a particular Note is
denominated (or, if such currency or composite currency is no longer legal
tender for the payment of public and private debts, such other currency or
composite currency of the relevant country that then is 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 Prospectus Supplement or Pricing
Supplement, purchasers are required to pay for the Medium-Term Notes in the
applicable Specified Currencies. At the present time, there are limited
facilities in the United States for the conversion of United States dollars
into foreign or composite currencies and vice versa, and commercial banks do
not generally offer non-United States dollar checking or savings account
facilities in the United States. Capital Markets believes that, with respect to
Notes offered through agents, and unless otherwise specified in the applicable
Prospectus Supplement or 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 subject to such terms and 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 Capital Markets with respect to the Medium-Term
Notes may differ depending upon, among other factors, the aggregate principal
amount of Medium-Term Notes purchased in any single transaction. Medium-Term
Notes with different variable terms other than interest rates also may be
offered concurrently to different investors. Capital Markets may change the
interest rates or formulas and other terms of the Medium-Term Notes from time
to time, but no such change will affect any Note previously issued or as to
which an offer to purchase already has been accepted by Capital Markets.
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.
Unless otherwise specified in the applicable Prospectus Supplement or Pricing
Supplement, the minimum denominations of each Medium-Term Note (other than a
Foreign Currency Note) will be $1,000 and integral multiples thereof. The
minimum denominations of each Foreign Currency Note will be specified in the
applicable Prospectus Supplement or Pricing Supplement.
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Capital Markets will make payments of principal of and any premium or
interest on Book-Entry Notes through the Indenture Trustee to the depositary.
See "--Book-Entry Notes." In the case of Certificated Notes, Capital Markets
will pay principal of and any premium due on the Maturity Date in immediately
available funds upon presentation and surrender of the Certificated Note (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 Capital Markets for such purpose
in the Borough of Manhattan, The City of New York, which currently is the
corporate trust office of the Indenture Trustee. Capital Markets will make any
payment of interest due on the Maturity Date of a Certificated Note to the
person to whom payment of the principal thereof and premium, if any, thereon
will be made. Capital Markets will make any payment of interest due on a
Certificated Note on any Interest Payment Date (as hereinafter defined) other
than the Maturity Date by check mailed to the address of its holder entitled
thereto as such address will appear in the Security Register of Capital
Markets. Notwithstanding the foregoing, a holder of $10 million (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 any interest payments 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
Indenture Trustee not less than 15 days prior to such Interest Payment Date.
Such wire transfer instructions will 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 and
Any Premium or Interest."
As used in this "Description of Medium-Term Notes," "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. With respect to Foreign
Currency Notes, "Business Day" is also not a day on which banking institutions
are authorized or required by law, regulation or executive order to close in
the Principal Financial Center (as hereinafter defined) of the country issuing
the Specified Currency (unless the Specified Currency is European Currency
Units ("ECU"), in which case such day also is not a day that appears as an ECU
non-settlement day on the display designated as "ISDE" on the Reuters 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 Medium-Term Notes as to which LIBOR is
an applicable Interest Rate Basis, such day is also a London Business Day.
"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. However, with respect to United States dollars,
Australian dollars, Canadian dollars, German marks, Dutch guilders, Italian
lire and Swiss francs, the "Principal Financial Center" will be New York City,
Sydney, Toronto, Frankfurt, Amsterdam, Milan (solely in the case of clause (i)
above) and Zurich, respectively, unless otherwise specified in the applicable
Prospectus Supplement or 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 Capital Markets for
such purpose in the Borough of Manhattan, The City of New York, which currently
is the corporate trust office of the Indenture Trustee. Neither Capital Markets
nor the Indenture Trustee will charge a service fee for any such registration
of transfer or exchange of the Medium-Term Notes, but Capital Markets 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).
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REDEMPTION AT THE OPTION OF CAPITAL
Unless otherwise specified in the applicable Prospectus Supplement or Pricing
Supplement, the Medium-Term Notes will not be subject to any sinking fund.
Capital Markets may redeem the Medium-Term Notes at its option prior to the
Stated Maturity Date if an Initial Redemption Date is specified in the
applicable Prospectus Supplement or Pricing Supplement. If so specified,
Capital Markets may redeem the Medium-Term Notes at its option on any date on
or after the applicable Initial Redemption Date in whole, or from time to time
thereafter in part in increments of $1,000 or such other minimum denomination
specified in such Prospectus Supplement or Pricing Supplement (provided that
any remaining principal amount thereof will be at least $1,000 or such minimum
denomination). Such redemption will be at the applicable Redemption Price (as
hereinafter defined), together with unpaid interest accrued thereon to the date
of redemption; provided that Capital Markets gives holders of Notes written
notice not more than 60 nor less than 30 calendar days prior to the date of
redemption in accordance with the provisions of the Indenture. With respect to
a Medium-Term Note, "Redemption Price" means an amount equal to the Initial
Redemption Percentage specified in the applicable Prospectus Supplement or
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 will decline upon
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 Medium-Term
Notes."
REPAYMENT AT THE OPTION OF THE HOLDER
If the applicable Prospectus Supplement or Pricing Supplement specifies one
or more Optional Repayment Dates, then the Medium-Term Notes will be repayable
by Capital Markets at the option of the holders thereof prior to the Stated
Maturity Date. If so specified, the Medium-Term Notes will be subject to
repayment at the option of the holders thereof on any Optional Repayment Date
in whole or in part. Such repayment will be in increments of $1,000 or such
other minimum denomination specified in the applicable Prospectus Supplement or
Pricing Supplement (provided that any remaining principal amount thereof will
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,
the Indenture Trustee must receive the Medium-Term Note with the duly completed
form entitled "Option to Elect Repayment" at its office 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 Medium-Term Notes."
Only the depositary may exercise the repayment option with respect to 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 through which they own their interests 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 Indenture
Trustee as described above. In order to ensure that such Global Security and
election form are received by the Indenture 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 interests for the
respective deadlines for such Participants. All instructions given to
Participants from Beneficial Owners of Global Securities relating to the
exercise of such repayment option will be irrevocable. In addition, at the time
such instructions are given, each such Beneficial Owner will 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 Indenture Trustee. See
"--Book-Entry Notes."
If applicable, Capital Markets will comply with the requirements of Section
14(e) of the Exchange Act and the rules promulgated thereunder, and any other
securities laws or regulations in connection with any such repayment.
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Capital Markets may purchase at any time Medium-Term Notes at any price or
prices in the open market or otherwise. In its discretion, Capital Markets may
hold such Medium-Term Notes, resell them or surrender them to the Indenture
Trustee for cancellation.
INDENTURE EVENTS OF DEFAULT
Any one or more of the following events that has occurred and is continuing
constitutes an Indenture Event of Default with respect to the Notes (whatever
the reason for such Indenture Event of Default and whether it is voluntary or
involuntary or 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):
(i) failure to pay any interest on any Notes for a period of 30 days
after such interest becomes due and payable (subject to a valid deferral of
interest payments during an Extension Period);
(ii) failure to pay the principal of (or premium, if any, on) the Notes
for a period of three Business Days after such principal (or premium)
becomes due, whether at maturity, upon redemption, by declaration or
otherwise;
(iii) failure to deposit any sinking fund payment for a period of three
Business Days after such deposit becomes due (if applicable to the Notes);
(iv) failure to observe or perform any other covenant or warranty under,
the Indenture or Support Agreement (other than a covenant or warranty
included in or pursuant to the Indenture solely for the benefit of one or
more series of debt securities other than the Notes) for a period of 30
days after written notice has been given to Capital Markets or Industries
as provided in the Indenture;
(v) failure to pay in excess of $5 million of the principal or interest
of indebtedness under any bond, debenture, note or other evidence of
indebtedness for money borrowed by Capital Markets (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 Capital Markets (including this Indenture), whether such indebtedness
now exists or shall hereafter be created, 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 million
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 Markets by the Indenture Trustee
or to Capital Markets and the Indenture Trustee by the Holders of at least
25% in principal amount of the Debentures;
(vi) certain events in bankruptcy, insolvency or reorganization of
Capital Markets, Industries or Northern Indiana; and
(vii) any other Indenture Event of Default with respect to the Notes.
The holders of not less than a majority in outstanding principal amount of
the Notes have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee. The Indenture
Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the Notes may declare the principal due and payable immediately upon
an Indenture Event of Default. The holders of a majority in aggregate
outstanding principal amount of the Notes may annul such declaration and waive
the default if the default (other than the non-payment of the principal of
Notes that has become due solely by such acceleration) has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Indenture Trustee.
The holders of not less than a majority in outstanding principal amount of
the Notes affected thereby may waive, on behalf of the holders of all of the
Notes, any past default under the Indenture except for a default (i) in the
payment of the principal of or interest on any Note (unless such default has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been
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deposited with the Indenture Trustee) or (ii) in respect of a covenant or
provision that cannot be modified or amended without the consent of the holder
of each outstanding Note affected thereby.
In the event an Indenture Event of Default shall occur and be continuing as
to the Notes at any time they are held by the Trust, the Property Trustee will
have the right to declare the principal of and the interest on such Notes, and
any other amounts payable under the Indenture, to be forthwith due and payable
and to enforce its other rights as a creditor with respect to the Notes. The
holders of Preferred Securities in certain circumstances have the right to
direct the Property Trustee to exercise its rights as the holder of the Notes.
Notwithstanding the foregoing, if an Indenture Event of Default has occurred
and is continuing and such event is attributable to the failure of Capital
Markets to pay interest or principal on the Notes on the date such interest or
principal is otherwise payable (or in the case of redemption, the redemption
date), then a holder of Preferred Securities may institute a proceeding
directly against Capital Markets (a "Direct Action") to enforce payment to such
holder of the principal or interest on the Notes having an aggregate principal
amount equal to the aggregate liquidation amount of the Preferred Securities of
such holder.
INTEREST
General
Unless otherwise specified in the applicable Prospectus Supplement or 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 Prospectus Supplement or Pricing Supplement, until
the principal thereof is paid or duly made available for payment. Unless
otherwise specified in the applicable Prospectus Supplement or 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 Prospectus Supplement or Pricing
Supplement, the first interest payment on any such Note originally issued
between a Record Date (as hereinafter defined) and the related Interest Payment
Date will be made on the Interest Payment Date immediately following the next
Record Date to the holder on such next Record Date. Unless otherwise specified
in the applicable Prospectus Supplement or Pricing Supplement, a "Record Date"
will 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 Prospectus
Supplement or Pricing Supplement (each, an "Interest Payment Date" with respect
to Fixed Rate Notes) and on the Maturity Date. Unless otherwise specified in
the applicable Prospectus Supplement or 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, then the required payment of principal and
any premium or interest will be made on the next 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 Business Day.
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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 include, as
described below, (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 Prospectus Supplement or Pricing Supplement. The applicable
Prospectus Supplement or Pricing Supplement will specify certain terms with
respect to which each Floating Rate Note is being delivered, including (i)
whether such Floating Rate Note is a "Regular Floating Rate Note," a "Floating
Rate/Fixed Rate Note" or an "Inverse Floating Rate Note," (ii) the Fixed Rate
Commencement Date, if applicable, (iii) the Fixed Interest Rate, if applicable,
(iv) the Interest Rate Basis or Bases, (v) the Initial Interest Rate, if any,
the Initial Interest Reset Date, Interest Reset Dates, Interest Payment Dates,
Index Maturity, Maximum Interest Rate and/or Minimum Interest Rate, if any, and
(vi) the 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, then the applicable Prospectus Supplement or Pricing Supplement also will
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 Prospectus Supplement or 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 will be payable will be reset
as of each Interest Reset Date; provided 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 Prospectus
Supplement or Pricing Supplement, such Floating Rate Note will bear
interest at the rate determined by reference to the applicable Interest
Rate Basis or Bases (a) plus or minus the applicable Spread, if any, and/or
(b) multiplied by the applicable Spread Multiplier, if any. Commencing on
the Initial Interest Reset Date, the rate at which interest on such
Floating Rate/Fixed Rate Note will be payable will be reset as of each
Interest Reset Date; provided 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 will be the Fixed Interest Rate, if such rate is specified in the
applicable Prospectus Supplement or Pricing Supplement or, if no such Fixed
Interest Rate is specified, the interest rate in effect 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 Prospectus
Supplement or 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 that, unless otherwise specified in the
applicable Prospectus Supplement or 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
will be payable will be reset as of each Interest Reset Date; provided 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
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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 Prospectus Supplement or 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 Prospectus Supplement or Pricing Supplement,
the interest rate in effect on each day will 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 Prospectus Supplement or 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 Prospectus Supplement or Pricing
Supplement, the Interest Reset Dates for Floating Rate Notes will 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
Prospectus Supplement or Pricing Supplement; and (vi) annually, the third
Wednesday of the month specified in the applicable Prospectus Supplement or
Pricing Supplement; provided 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
otherwise would be a day that is not a Business Day, then such Interest Reset
Date will be postponed to the next Business Day, except that for a Floating
Rate Note as to which LIBOR is an applicable Interest Rate Basis and such
Business Day falls in the next 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 defined below) 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). 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 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 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
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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 that 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 also may 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, in no event will the interest rate on
Floating Rate Notes 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 Prospectus Supplement or
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 Prospectus Supplement or 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 Prospectus Supplement or
Pricing Supplement; and (iv) annually, on the third Wednesday of the month of
each year specified in the applicable Prospectus Supplement or 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 otherwise would be a
day that is not a Business Day, then such Interest Payment Date will be
postponed to the next 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 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, then the required payment of
principal and any premium or interest will be made on the next 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 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 Prospectus Supplement or 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 Prospectus Supplement or 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 Prospectus Supplement or Pricing
Supplement applied.
Unless otherwise specified in the applicable Prospectus Supplement or Pricing
Supplement, The Chase Manhattan Bank will be the "Calculation Agent." Upon
request of the holder of any Floating Rate Note, the
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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 Interest Reset Date with respect to such
Floating Rate Note. Unless otherwise specified in the applicable Prospectus
Supplement or 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 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 Prospectus Supplement or Pricing
Supplement, the Calculation Agent will determine each Interest Rate Basis in
accordance with the following provisions.
CD Rate. Unless otherwise specified in the applicable Prospectus Supplement
or 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 Prospectus Supplement or 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 Prospectus Supplement or Pricing Supplement as published by the
Federal Reserve Bank of New York in its daily statistical release "Composite
3:30 P.M. Quotations for U.S. Government Securities" or any successor
publication ("Composite Quotations") under the heading "Certificates of
Deposit." If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 P.M., New York City time, on the related Calculation Date,
then the CD Rate on such CD Rate Interest Determination Date will be calculated
by the Calculation Agent and will be the arithmetic mean of the secondary
market offered rates as of 10:00 A.M., New York City time, on such CD Rate
Interest Determination Date, of three leading nonbank dealers in negotiable
United States dollar certificates of deposit in New York City (which may
include any agents through which the Notes are offered, 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 Prospectus Supplement or Pricing
Supplement in an amount that is representative for a single transaction in that
market at that time; provided that if the dealers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, then 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 Prospectus Supplement
or 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 Prospectus Supplement or 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
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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
U.S. 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 New York City (which may include any agents through which the Notes
are offered, 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 New York City (from five such Reference Dealers selected by the
Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an original maturity of
the number of years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100 million. If three or four (and not
five) of such Reference Dealers are quoting as described above, then the CMT
Rate will be based on the arithmetic mean of the offered rates obtained and
neither the highest nor the lowest of such quotes will be eliminated; and if
fewer than three Reference Dealers so selected by the Calculation Agent are
quoting as mentioned herein, then 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, then 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
Prospectus Supplement or 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 Prospectus Supplement or Pricing Supplement, then the Designated CMT
Telerate Page will 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 Prospectus Supplement or Pricing Supplement with respect to
which the CMT Rate will be calculated or, if no such maturity is specified in
the applicable Prospectus Supplement or Pricing Supplement, two years.
Commercial Paper Rate. Unless otherwise specified in the applicable
Prospectus Supplement or 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 Prospectus
Supplement or 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 Prospectus
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Supplement or 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 New
York City (which may include any agents through which the Notes are offered, or
their affiliates) selected by the Calculation Agent for commercial paper having
the Index Maturity specified in the applicable Prospectus Supplement or Pricing
Supplement placed for an industrial issuer whose bond rating is "Aa" or the
equivalent, from a nationally recognized statistical rating organization;
provided that if the dealers so selected by the Calculation Agent are not
quoting as mentioned in this sentence, then 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:
DX360
X 100
360-(DXM)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the applicable Interest Reset Period.
Eleventh District Cost of Funds Rate. Unless otherwise specified in the
applicable Prospectus Supplement or 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 will 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, then 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 Prospectus
Supplement or 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
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transaction in overnight United States dollar federal funds arranged by three
leading brokers of federal funds transactions in New York City (which may
include any agents through which the Notes are offered, 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 that if the
brokers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, then 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 Prospectus Supplement or
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 Prospectus Supplement or
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 will be used) for deposits in the Designated
LIBOR Currency having the Index Maturity specified in such Prospectus
Supplement or 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 Prospectus Supplement or Pricing Supplement
or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable Prospectus Supplement or Pricing Supplement as the method for
calculating LIBOR, the rate for deposits in the Designated LIBOR Currency
having the Index Maturity specified in such Prospectus Supplement or
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, then 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 any agents through which
the Notes are offered) 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 Prospectus Supplement or
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 Prospectus Supplement
or 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 that if the banks so selected by the Calculation Agent
are not quoting as mentioned in this sentence, then 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 Prospectus Supplement or Pricing Supplement as
to which LIBOR will be calculated or, if no such currency or composite
currency is specified in the applicable Prospectus Supplement or Pricing
Supplement, United States dollars.
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Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Prospectus Supplement or Pricing Supplement, the display on the
Reuters Monitor Money Rates Service (or any successor service) on the page
specified in such Prospectus Supplement or 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
Prospectus Supplement or Pricing Supplement or neither "LIBOR Reuters" nor
"LIBOR Telerate" is specified in the applicable Prospectus Supplement or
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 Prospectus Supplement or 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 Prospectus
Supplement or 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 will 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) at such bank's prime rate or base lending rate as in
effect for such Prime Rate Interest Determination Date. If fewer than four such
rates appear on the Reuters Screen USPRIME1 Page for such Prime Rate Interest
Determination Date, then the Prime Rate will 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 any agents through which the Notes are offered,) in
New York City selected by the Calculation Agent. If fewer than four such
quotations are so provided, then the Prime Rate will 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 New York City 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 that if the banks or trust companies so selected by the
Calculation Agent are not quoting as mentioned in this sentence, then the Prime
Rate determined as of such Prime Rate Interest Determination Date will be the
Prime Rate in effect on such Prime Rate Interest Determination Date.
"Reuters Screen USPRIME1 Page" means the display on the Reuters Monitor Money
Rates Service (or any successor service) on the "USPRIME1" page (or such other
page as may replace such page on such service) for the purpose of displaying
prime rates or base lending rates of major United States banks.
Treasury Rate. Unless otherwise specified in the applicable Prospectus
Supplement or 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 Prospectus Supplement or 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 U.S.
Department of the Treasury. In the event that the results of the Auction of
Treasury Bills having the Index Maturity specified in the applicable Prospectus
Supplement or Pricing Supplement are
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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 any agents through which the
Notes are offered, 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 Prospectus Supplement or Pricing
Supplement; provided that if the dealers so selected by the Calculation Agent
are not quoting as mentioned in this sentence, then 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 Medium-Term Notes, including the
specification and determination of one or more Interest Rate Bases, the
calculation of the interest rate applicable to a Floating Rate Note, the
Interest Payment Dates, the Stated Maturity Date, any redemption or repayment
provisions or any other term relating thereto, may be modified and/or
supplemented as specified under "Other/Additional Provisions" on the face
thereof or in an Addendum relating thereto, if so specified on the face thereof
and described in the applicable Prospectus Supplement or Pricing Supplement.
DISCOUNT MEDIUM-TERM NOTES
Capital Markets may offer Notes ("Discount Notes") from time to time that
have an Issue Price (as specified in the applicable Prospectus Supplement or
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) multiplied by, in
the event of any redemption of such Discount Note (if applicable), 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 Prospectus Supplement or Pricing
Supplement, for purposes of determining the amount of any 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 United
States federal income tax purposes. Certain United States federal income tax
consequences and special considerations applicable to any such Debentures will
be described in the applicable Prospectus Supplement or Pricing Supplement.
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INDEXED NOTES
Capital Markets may offer Notes ("Indexed Notes") from time to time with the
amount of principal and any premium 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 Prospectus Supplement or
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 and any premium or interest payable with
respect to 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 Prospectus
Supplement or Pricing Supplement.
AMORTIZING NOTES
Capital Markets may offer Notes ("Amortizing Notes") from time to time with
the amount of principal thereof and interest thereon payable in installments
over the term of such Notes. Unless otherwise specified in the applicable
Prospectus Supplement or 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, including a table setting forth repayment information for
such Amortizing Notes, and certain United States federal income tax
considerations associated with an investment in Amortizing Notes will be
specified in the applicable Prospectus Supplement or Pricing Supplement.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes of like tenor and terms up to $200,000
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, a 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. Unless otherwise indicated in the
applicable Prospectus Supplement or Pricing Supplement, the depositary for the
Book-Entry Notes will be The Depository Trust Company. See "Book-Entry
Issuance."
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 enti-
tled to receive physical delivery of Certificated Notes and will not be consid-
ered the holders thereof for any purpose under the Indenture, and no Global Se-
curity representing Book-Entry Notes will be exchangeable or transferable. Ac-
cordingly, 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 Secu-
rity representing Book-Entry Notes.
Unless otherwise specified in the applicable Prospectus Supplement or 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
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Capital Markets that it is unwilling or unable to continue as depositary for
the Global Securities or Capital Markets becomes aware that the depositary has
ceased to be a clearing agency registered under the Exchange Act and, in any
such case, Capital Markets will not have appointed a successor to the
depositary within 90 days thereafter, (ii) Capital Markets, in its sole
discretion, determines that the Global Securities will be exchangeable for
Certificated Notes or (iii) an Event of Default (or event that with the giving
of notice or lapse of time would constitute an Event of Default) has occurred
and is continuing with respect to the Notes under the Indenture. Upon any such
exchange, the Certificated Notes will be registered in the names of the
Beneficial Owners of the Global Security or Securities representing Book-Entry
Notes, which names will be provided by the depositary's relevant Participants
(as identified by the depositary) to the Trustee.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
General. Unless otherwise specified in the applicable Prospectus Supplement
or Pricing Supplement, Foreign Currency Notes will not be sold in, or to
residents of, the country issuing the applicable currency. The information set
forth in this Prospectus is directed to prospective purchasers who are United
States residents and, with respect to Foreign Currency Notes, is by necessity
incomplete. The applicable Prospectus Supplement or Pricing Supplement will
describe certain United Stated federal income tax considerations associated
with an investment in Foreign Currency Notes. Capital Markets 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 and any
premium or interest on Foreign Currency Notes. Such persons should consult
their own financial and legal advisors with regard to such matters.
Payment of Principal and Any Premium or Interest. Unless otherwise specified
in the applicable Prospectus Supplement or Pricing Supplement, Capital Markets
is obligated to make payments of principal and any premium or interest on a
Foreign Currency Note in the Specified Currency. Any such amounts payable by
Capital Markets in the Specified Currency will be converted by the exchange
rate agent named in the applicable Prospectus Supplement or Pricing Supplement
(the "Exchange Rate Agent") into United States dollars for payment to holders
unless otherwise specified in the applicable Prospectus Supplement or Pricing
Supplement or the holder of such Foreign Currency Note elects to receive, in
the manner hereinafter described, 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 New York City
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 Capital Markets 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 and any premium or interest in the
Specified Currency by submitting a written request for such payment to the
Indenture Trustee at its corporate trust office in New York City 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. 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 Indenture Trustee, but written notice of any such revocation must
be received by the Indenture 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.
Holders of Foreign Currency Notes to be held in the name of a
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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 Prospectus Supplement or 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 and any premium or interest in the Specified
Currency must notify the Participant through which it owns its interest on or
prior to the applicable Record Date or at least 15 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 12 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 and any premium or interest on Foreign Currency
Notes that 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 "--General." Any payments of interest on Foreign Currency Notes that 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 and any premium or interest on Foreign Currency
Notes that 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 15 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 Capital Markets for such purpose in the Borough
of Manhattan, New York City, which currently is the corporate trust office of
the Indenture Trustee, in time for the Indenture 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 and any premium or interest in respect thereof
due to the imposition of exchange controls or other circumstances beyond the
control of Capital Markets, Capital Markets 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 Prospectus Supplement or 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 and any, premium or
interest in respect thereof due to the imposition of exchange controls or other
circumstances beyond the control of Capital Markets, Capital Markets 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") will 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 will be calculated by aggregating
the United States dollar equivalents of the Component Currencies. The United
States dollar equivalent of each of the Component Currencies will 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 Prospectus Supplement or 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 will be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, then the amounts
of those currencies as Component Currencies will 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, then the amount of the
original Component Currency will be replaced by the amounts of such two or more
currencies, the sum of which will 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 New York City 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 will be
at its sole discretion and will, 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 foreign currency
judgment 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.
Capital Markets 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.
DESCRIPTION OF THE SUPPORT AGREEMENT
The Support Agreement between Capital Markets and Industries provides that,
during the term of the agreement, Industries will own all of the voting stock
of Capital Markets and that Industries will cause Capital Markets 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.
Furthermore, if during the term of the Support Agreement Capital Markets is
unable to pay in a timely fashion any principal of or premium or interest on
any debt securities issued by Capital Markets or any other obligations of
Capital Markets, then Industries will provide to Capital Markets, at the
request of Capital Markets or any person, firm or corporation to which Capital
Markets is indebted for money borrowed or otherwise (each, a "lender"), funds
to make such payments.
The Support Agreement also provides that any lender to Capital Markets will
have the right to demand that Capital Markets enforce its rights against
Industries under the Support Agreement. If Capital Markets fails
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or refuses to act in a timely manner to enforce those rights, or if Capital
Markets defaults in the timely payment of principal of or premium or interest
on any debt owed to a lender, then that lender may proceed directly against
Industries to enforce Capital Markets' rights under the Support Agreement or to
obtain payment of such defaulted principal, premium or interest. In no event,
however, will a lender have any recourse to or against the stock or assets of
Northern Indiana, or against any interest of Capital Markets or Industries
therein.
In enforcing the rights of Capital Markets or any of its lenders under the
Support Agreement, the assets of Industries (other than the stock and assets of
Northern Indiana) are available as recourse to any lender or holder of Capital
Markets' debt. These assets include cash dividends paid to Industries by any of
its subsidiaries (including dividends paid by Northern Indiana). The carrying
value of the assets of Industries other than the assets of Northern Indiana
reflected in the consolidated financial statements of Industries at September
30, 1998 was approximately $1.3 billion.
For purposes of the Support Agreement, each holder of a Debenture and each
holder of a Medium-Term Note would be considered a "lender." Funds to pay the
principal of and interest on the Debentures and on the Medium-Term Notes
pursuant to the Support Agreement would come from earnings in the form of
dividends paid to Industries by Northern Indiana and the other subsidiaries of
Industries and the proceeds of refinancing transactions. During the next few
years, it is expected that the majority of Industries' earnings that ultimately
would be available to pay the principal of and interest on the Debentures and
the Medium-Term Notes will depend upon dividends paid to Industries by Northern
Indiana. Under its indenture of mortgage, Northern Indiana may not declare or
pay any dividends on any class of capital stock (other than preferred or
preference stock) except out of Northern Indiana's earned surplus or net
profits. At September 30, 1998, Northern Indiana had approximately $146.8
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 Debentures and
the Medium-Term Notes, to participate in any distribution of the assets of any
subsidiary (other than Capital Markets) upon that subsidiary's liquidation or
reorganization or otherwise necessarily will be subject to the prior claims of
creditors of that subsidiary, except to the extent that Industries' claims as a
creditor may be recognized. Northern Indiana's indenture of mortgage does not
limit the amount of indebtedness that Capital Markets, Industries or any of
Industries' other subsidiaries may incur.
Industries and Capital Markets may amend or terminate the Support Agreement
at any time by written amendment or agreement, provided that (i) any amendment
affecting the terms described above may be made only with the advance written
consent of all of Capital Markets' lenders, (ii) any amendment to any other
term of the Support Agreement that would adversely affect the rights of the
lenders may be made only with the advance written consent of all lenders
affected by such amendment and (iii) the Support Agreement may not be
terminated until all of Capital Markets' debt obligations, including its
obligations under the Debentures and the Medium-Term Notes, have been fully
paid and satisfied.
The Support Agreement is governed by, and will be construed and interpreted
in accordance with, the laws of the State of Indiana.
BOOK ENTRY ISSUANCE
Unless otherwise specified in the applicable Prospectus Supplement or Pricing
Supplement, the securities, including the Debentures, the Preferred Securities,
the Stock Purchase Contracts, the Stock Purchase Units and the Medium-Term
Notes, may be issued in whole or in part in global form ("Global Securities").
Such Global Securities may be issued only in fully registered form and in
either temporary or permanent form. Specific terms for each security described
in this Prospectus will be set forth in the applicable Prospectus Supplement or
Pricing Supplement relating to that security.
Unless otherwise specified in the applicable Prospectus Supplement or Pricing
Supplement, the depositary for the Global Securities will be The Depository
Trust Company ("DTC").
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The Global Securities will be issued as fully registered securities
registered in the name of Cede & Co. (DTC's partnership nominee). One or more
fully registered Global Securities will be issued for each issue of securities,
each in the aggregate principal or stated amount of such issue, and will be
deposited with DTC.
DTC 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. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
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 DTC ("Direct Participants") include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. DTC is
owned by a number of its Direct Participants and by the NYSE, the American
Stock Exchange, Inc. and the National Association of Securities Dealers, Inc.
Access to DTC'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 DTC and its Participants are
on file with the Commission.
Purchases of securities under DTC's system must be made by or through Direct
Participants, which will receive a credit for such securities on DTC's records.
The ownership interest of each actual purchaser of each 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 DTC of their purchases, but Beneficial Owners are expected to receive
written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Direct Participants or Indirect
Participants through which such Beneficial Owners entered into the
transactions. Transfers of ownership interests in the securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their securities, except in the event that use of the book-entry system for the
securities is discontinued.
To facilitate subsequent transfers, all Global Securities that are deposited
with, or on behalf of, DTC are registered in the name of DTC's nominee, Cede &
Co. The deposit of Global Securities with, or on behalf of, DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such securities 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 DTC to Direct Participants,
by Direct Participants to Indirect Participants and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the Global
Securities. Under its usual procedures, DTC will mail an Omnibus Proxy to
Industries (in the case of Stock Purchase Contracts or Stock Purchase Units),
Capital Markets (in the case of Debentures or Medium-Term Notes) or the Trust
(in the case of the Preferred Securities) 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 securities are
credited on the applicable record date (identified in a listing attached to the
Omnibus Proxy).
Redemption proceeds, distributions, principal payments and any premium,
interest or other payments on the Global Securities will be made to Cede & Co.,
as nominee of DTC. DTC's practice is to credit Direct Participants' accounts on
the applicable payment date in accordance with their respective holdings shown
on
55
<PAGE>
DTC's records unless DTC 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 DTC,
Industries, the Trust, the applicable Trustee or the purchase contract agent,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of redemption payments, principal and any premium,
interest or other payments to DTC is the responsibility of Industries and the
purchase contract agent (in the case of payments under the Stock Purchase
Contracts), Capital Markets and the applicable paying agent (in the case of
Debentures or Medium-Term Notes) or the Trust and the applicable paying agent
(in the case of the Preferred Securities), disbursement of such payments to
Direct Participants will be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners will be the responsibility of Direct
Participants and Indirect Participants.
If applicable, redemption notices will be sent to Cede & Co. If less than all
of the securities of like tenor and terms are being redeemed, DTC's practice is
to determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed. Any Preferred Securities to be redeemed will be
selected by DTC on a pro rata basis in accordance with DTC's customary
procedures.
A Beneficial Owner will give notice of any option to elect to have its
interest in a Global Security repaid by Capital Markets, through its
Participant, to the Indenture Trustee, and will effect delivery of such
interest by causing the Direct Participant to transfer the Participant's
interest in the Global Security or Securities on DTC's records, to the
Indenture Trustee. The requirement for physical delivery in connection with a
demand for repayment will be deemed satisfied when the ownership rights in the
Global Security or Securities are transferred by Direct Participants on DTC's
records.
DTC's management is aware that some computer applications, systems and the
like for processing data that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter "Year 2000
problems." DTC has informed its Participants and other members of the financial
community that it has developed and is implementing a program so that its
systems, as the same relate to the timely payment of distributions (including
principal and interest payments) to security holders, book-entry deliveries,
and settlement of trades within DTC, continue to function appropriately. This
program includes a technical assessment and a remediation plan, each of which
is complete. Additionally, DTC's plan includes a testing phase, which is
expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information of the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed its Participants and other members of the
financial community that it is contacting (and will continue to contact) third
party vendors from whom DTC acquires services to: (i) impress upon them the
importance of such services being Year 2000 compliant; and (ii) determine the
extent of their efforts for Year 2000 remediation (and, as appropriate,
testing) of their services. In addition, DTC is in the process of developing
such contingency plans as it deems appropriate.
The foregoing information with respect to DTC has been provided to its
Participants and other members of the financial community for information
purposes only and is not intended to serve as a representation, warranty, or
contract modification of any kind.
DTC may discontinue providing its services as securities depositary with
respect to the Global Securities at any time by giving reasonable notice to the
applicable issuer or the applicable trustee. Under such circumstances, in the
event that a successor securities depositary is not obtained, certificates for
the securities are required to be printed and delivered.
Industries, Capital Markets or the Trust, as the case may be, may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor securities depository). In that event, certificates for the
securities will be printed and delivered.
56
<PAGE>
The information in this section concerning DTC and DTC's system has been
obtained from sources that Capital Markets, the Trust and Industries believe to
be reliable, but Capital Markets, the Trust and Industries take no
responsibility for the accuracy thereof.
PLAN OF DISTRIBUTION
Industries, Capital Markets or the Trust may sell securities through agents
or dealers, to or through underwriters and directly to investors. Furthermore,
the distribution of securities may be effected from time to time in one or more
transactions at a fixed price or prices, which may be changed, or from time to
time at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Each Prospectus Supplement or
Pricing Supplement will describe the method of distribution of the offered
securities.
Agents designated by Capital Markets may solicit offers to purchase Medium-
Term Notes from time to time. The applicable Prospectus Supplement or Pricing
Supplement will name any such agent involved in the offer or sale of the
Medium-Term Notes and set forth any commissions payable to such agent. Unless
otherwise indicated in such Prospectus Supplement or Pricing Supplement, any
such agent will act on a reasonable best efforts basis for the period of its
appointment. Any such agent may be deemed to be an underwriter (as that term is
defined in the Securities Act) of the Medium-Term Notes so offered and sold.
If securities are sold by means of an underwritten offering, Industries,
Capital Markets and/or the Trust will execute an underwriting agreement with an
underwriter or underwriters once an agreement for such sale is reached. The
applicable Prospectus Supplement will set forth the names of the managing
underwriter or underwriters, as well as any other underwriters, the respective
amounts underwritten and the terms of the transaction, including commissions,
discounts and any other compensation payable to the underwriters and any
dealers. For any sale of securities involving underwriters, such 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 fixed public offering prices or at varying prices to be
determined at the time of sale by the underwriters and Industries, Capital
Markets or the Trust, as the case may be. Securities may be offered to the
public either through underwriting syndicates represented by managing
underwriters or directly by one or more underwriters. Unless otherwise
indicated in the applicable Prospectus Supplement, the underwriting agreement
will provide that the obligations of the underwriters are subject to certain
conditions precedent and that the underwriters will be obligated to purchase
all securities being sold if any are purchased.
Industries, Capital Markets or the Trust, as the case may be, may grant to
the underwriters options to purchase additional securities, to cover any over-
allotments, at the initial public offering price (with additional underwriting
commissions or discounts), as may be set forth in the applicable Prospectus
Supplement. Such Prospectus Supplement will set forth the terms of such over-
allotment option.
If securities are sold through a dealer, then Industries, Capital Markets or
the Trust, as the case may be, will sell all of such securities to the dealer
as principal. The dealer then may resell those securities to the public at
varying prices to be determined by the dealer at the time of resale. Any such
dealer may be deemed to be an underwriter (as that term is defined in the
Securities Act) of the securities so offered and sold. The applicable
Prospectus Supplement will set forth the name of the dealer and the terms of
the transaction.
Industries, Capital Markets or the Trust, as the case may be, may solicit
offers to purchase securities directly from investors, institutional or
otherwise. Such investors may be deemed to be underwriters within the meaning
of the Securities Act with respect to any resale of the securities so offered
and sold. In such event, the applicable Prospectus Supplement will set forth
the name of the investor and the terms of such transaction.
Securities also may be offered and sold, if so indicated in the applicable
Prospectus Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or
otherwise, by one or more firms ("remarketing firms"), acting as principals for
their own
57
<PAGE>
accounts or as agents for Industries, Capital Markets or the Trust, as
applicable. The applicable Prospectus Supplement will identify any remarketing
firm and its compensation and will describe the terms of its agreement, if any,
with Industries, Capital Markets or the Trust. Remarketing firms may be deemed
to be underwriters (as that term is defined in the Securities Act) in
connection with the securities remarketed.
If so indicated in the applicable Prospectus Supplement, Industries, Capital
Markets or the Trust, as the case may be, may authorize agents and underwriters
to solicit from certain institutions offers to purchase the securities pursuant
to delayed delivery contracts providing for payment and delivery on the date or
dates stated in the applicable Prospectus Supplement. Each such delayed
delivery contract will be for an amount not less than, and the amount of
Securities sold pursuant to such contract will be not less nor more than, the
respective amounts stated in the applicable Prospectus Supplement. Such delayed
delivery contracts will be subject only to those conditions set forth in the
applicable Prospectus Supplement. Such Prospectus Supplement will indicate any
commission payable to underwriters and agents soliciting offers to purchase
securities pursuant to delayed delivery contracts that are accepted by
Industries, Capital Markets or the Trust, as the case may be.
Agents, underwriters, dealers and remarketing firms may be entitled to
indemnification by Industries, Capital Markets or the Trust, as the case may
be, pursuant to agreements made with Industries, Capital Markets or the Trust.
Such agreements may indemnify such agents, underwriters, dealers and
remarketing firms against certain liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments that such agents,
underwriters, dealers and remarketing firms may be required to make in respect
thereof.
Each series of securities will be a new issue and will have no established
trading market, except for the Common Shares, which are listed on the NYSE, the
CSE and the PE. Capital Markets or the Trust may elect to list any series of
securities on an exchange, or Industries may elect to list the Common Shares on
any additional exchange, but, unless otherwise specified in the applicable
Prospectus Supplement, none of Industries, Capital Markets or the Trust will be
obligated to do so. No assurance can be given as to the liquidity of the
trading market for any of the securities.
Agents, underwriters, dealers and remarketing firms may be customers of,
engage in transactions with, or perform services for Industries, Capital
Markets and Industries' subsidiaries in the ordinary course of business.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for Capital
Markets, Industries and the Trust by Schiff Hardin & Waite, Chicago, Illinois.
Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Declaration and the creation of the Trust
will be passed upon by Richards, Layton & Finger, P.A.
EXPERTS
The consolidated financial statements and schedules of Industries and its
subsidiaries incorporated by reference in this Prospectus from Industries' 1997
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998, June 30, 1998 and September 30, 1998 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
Prospectus in reliance upon the authority of such firm as experts in giving
such reports.
The consolidated financial statements of Bay State and its subsidiaries
incorporated by reference in this Prospectus from Bay State's 1997 Annual
Report on Form 10-K, as amended by Form 10-K/A filed on December 17, 1997, have
been audited by KPMG Peat Marwick LLP, independent certified public
accountants, as indicated in their reports with respect thereto, and are
incorporated by reference in this Prospectus in reliance upon such reports and
upon the authority of said firm as experts in accounting and auditing.
58
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the issuance and distribution of the
securities covered hereby are as follows (all amounts other than the Securities
and Exchange Commission filing fee are estimated):
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee................... $236,300
Exchange listing fees........................................... 36,150
Trustees' fees.................................................. 8,000
Accounting fees and expenses.................................... 50,000
Legal fees and expenses......................................... 250,000
Transfer Agent and Registrar fees............................... 50,000
Printing and engraving expenses................................. 150,000
Miscellaneous................................................... 4,550
--------
Total....................................................... $785,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Industries' Restated By-Laws provide for the indemnification by Industries of
each of director and officer of Industries and Capital Markets 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
Markets. Under the Restated By-Laws as well as the Indiana Business Corporation
Law (the "Indiana BCL"), Industries is required to indemnify the directors and
officers of Industries and Capital Markets against expenses (including
attorneys' fees), judgments, penalties, fines 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 or
Capital Markets, as the case may be, 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 of Capital Markets or, with respect to a criminal action or
proceeding, has no reasonable cause to believe that his or her conduct was
unlawful.
The Restated By-Laws 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 directors who are not at the time parties to
such action, suit or proceeding, by a majority vote of a committee designated
by Industries' board of directors consisting of two or more directors who are
not at the time parties to such action (only if a quorum cannot be obtained),
by special legal counsel or by a vote of shareholders (excluding any shares
owned by or under the control of persons who are parties to such action, suit
or proceeding).
As authorized under the Restated By-Laws and the Indiana BCL, Industries and
its subsidiaries (including Capital Markets) maintain insurance that insures
directors and officers for acts committed in their capacities as such directors
or officers that are determined to be not indemnifiable under Industries'
indemnity provisions.
II-1
<PAGE>
Under the Trust Declaration, Capital Markets will agree to indemnify each of
the trustees or predecessor trustees of the Trust with respect to the
Declaration of Trust and to hold each such trustee harmless against any loss,
damage, claim, liability or expense, incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the Declaration of Trust, 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 under the Trust Declaration of
Trust.
ITEM 16. EXHIBITS
Reference is made to information contained in the Exhibit Index filed as a
part of this Registration Statement.
ITEM 17. UNDERTAKINGS
Each of the undersigned registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(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 securities offered (if the total
dollar value of 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;
(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 that paragraphs (1)(i) and (1)(ii) 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 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment will be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will 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 securities being registered which remain unsold at the
termination of the offering.
Each of the undersigned registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of such
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement will
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will be deemed to be
the initial bona fide offering thereof.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, 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 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
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 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 TOWN OF MERRILLVILLE, STATE OF INDIANA, ON DECEMBER 17,
1998.
NIPSCO Capital Markets, Inc.
(Registrant)
/s/ Stephen P. Adik
By __________________________________
Stephen P. Adik
President
POWER OF ATTORNEY
EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY CONSTITUTES AND APPOINTS
STEPHEN P. ADIK THE TRUE AND LAWFUL ATTORNEY-IN-FACT AND AGENT OF THE
UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR AND IN THE
NAME, PLACE AND STEAD OF THE UNDERSIGNED, IN ANY AND ALL CAPACITIES, TO SIGN
ANY AND ALL AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) TO THIS
REGISTRATION STATEMENT, AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO, AND
OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE
COMMISSION, AND HEREBY GRANTS TO SUCH ATTORNEY-IN-FACT AND AGENT FULL POWER AND
AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE AND
NECESSARY TO BE DONE, FULLY TO ALL INTENTS AND PURPOSES AS THE UNDERSIGNED
MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID
ATTORNEY-IN-FACT AND AGENT OR HIS SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR
CAUSE TO BE DONE BY VIRTUE HEREOF.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Gary L. Neale Chairman and Director December 17, 1998
____________________________________
Gary L. Neale
/s/ Stephen P. Adik President and Director December 17, 1998
____________________________________ (Principal Executive
Stephen P. Adik Officer)
/s/ Francis P. Girot, Jr. Treasurer December 17, 1998
____________________________________ (Principal Financial
Francis P. Girot, Jr. Officer)
/s/ Arthur A. Paquin Controller December 17, 1998
____________________________________ (Principal Accounting
Arthur A. Paquin Officer)
Executive Vice President and December 17, 1998
____________________________________ Director
Jeffrey W. Yundt
/s/ Patrick J. Mulchay Executive Vice President and December 17, 1998
____________________________________ Director
Patrick J. Mulchay
</TABLE>
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 TOWN OF MERRILLVILLE, STATE OF INDIANA, ON DECEMBER 17,
1998.
NIPSCO Capital Trust I
(Registrant)
NIPSCO Capital Markets, Inc.,
Sponsor
By: _________________________________
/s/ Stephen P. Adik
By __________________________________
Stephen P. Adik
President
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 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 TOWN OF MERRILLVILLE, STATE OF INDIANA, ON DECEMBER 17,
1998.
NIPSCO Industries, Inc.
(Registrant)
/s/ Gary L. Neale
By __________________________________
Gary L. Neale
Chairman and President
POWER OF ATTORNEY
EACH PERSON WHOSE SIGNATURE APPEARS BELOW HEREBY CONSTITUTES AND APPOINTS
STEPHEN P. ADIK THE TRUE AND LAWFUL ATTORNEY-IN-FACT AND AGENT OF THE
UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR AND IN THE
NAME, PLACE AND STEAD OF THE UNDERSIGNED, IN ANY AND ALL CAPACITIES, TO SIGN
ANY AND ALL AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) TO THIS
REGISTRATION STATEMENT, AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO, AND
OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE
COMMISSION, AND HEREBY GRANTS TO SUCH ATTORNEY-IN-FACT AND AGENT FULL POWER AND
AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE AND
NECESSARY TO BE DONE, FULLY TO ALL INTENTS AND PURPOSES AS THE UNDERSIGNED
MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID
ATTORNEY-IN-FACT AND AGENT OR HIS SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR
CAUSE TO BE DONE BY VIRTUE HEREOF.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Gary L. Neale Chairman, President and December 17, 1998
____________________________________ Director (Principal
Gary L. Neale Executive Officer)
/s/ Stephen P. Adik Executive Vice President December 17, 1998
____________________________________ (Principal Financial
Stephen P. Adik Officer and Principal
Accounting Officer)
/s/ Steven C. Beering Director December 17, 1998
____________________________________
Steven C. Beering
/s/ Arthur J. Decio Director December 17, 1998
____________________________________
Arthur J. Decio
/s/ James T. Morris Director December 17, 1998
____________________________________
James T. Morris
/s/ Denis E. Ribordy Director December 17, 1998
____________________________________
Denis E. Ribordy
/s/ Ian M. Rolland Director December 17, 1998
____________________________________
Ian M. Rolland
/s/ Edmund A. Schroer Director December 17, 1998
____________________________________
Edmund A. Schroer
/s/ John W. Thompson Director December 17, 1998
____________________________________
John W. Thompson
/s/ Robert J. Welsh Director December 17, 1998
____________________________________
Robert J. Welsh
/s/ Carolyn Y. Woo Director December 17, 1998
____________________________________
Carolyn Y. Woo
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
The following documents are filed as part of the Registration Statement or
are incorporated by reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------
<C> <S> <C>
1.1* Form of Underwriting Agreement
3.1 Amended and Restated By-Laws of Industries dated as of June
23, 1998
4.1 Indenture dated February 14, 1997 among NIPSCO Capital
Markets, Inc., NIPSCO Industries, Inc. and The Chase Manhattan
Bank, as Trustee (incorporated by reference to Exhibit 4.1 to
the Registration Statement on Form S-3 filed by Capital
Markets and Industries on February 25, 1997 (Registration No.
333-22347))
4.2 Form of Floating Rate Medium-Term Note (incorporated by
reference to Exhibit 4.3 to the Registration Statement on Form
S-3 filed by Capital Markets and Industries on February 25,
1997 (Registration No. 333-22347))
4.3 Form of Fixed Rate Medium-Term Note (incorporated by reference
to Exhibit 4.4 to the Registration Statement on Form S-3 filed
by Capital Markets and Industries on February 25, 1997
(Registration No. 333-22347))
4.4 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. dated as of
April 4, 1989 (incorporated by reference to Exhibit 4.2 to the
Registration Statement on Form S-3 filed by NIPSCO Capital
Markets, Inc. and NIPSCO Industries, Inc. on November 13, 1992
(Registration No. 33-54516))
4.5* Form of Guarantee Agreement to be delivered by NIPSCO Capital
Markets, Inc.
4.6 Certificate of Trust of Capital Markets
4.7 Declaration of Trust of NIPSCO Capital Trust I, dated December
, 1998
4.8* Form of Amended and Restated Declaration of Trust of NIPSCO
Capital Trust I
4.9* Form of Preferred Security (included as Exhibit A to the Form
of Amended and Restated Declaration of Trust to be filed as
Exhibit 4.8)
4.10* Form of Purchase Contract Agreement
4.11* Form of Pledge Agreement
5.1* Opinion of Schiff Hardin & Waite
5.2* Opinion of Richards, Layton & Finger, P.A.
8.1* Tax Opinion of Schiff Hardin & Waite
12.1 Statement Regarding Computation of Ratio of Earnings to Fixed
Charges
23.1 Consent of Arthur Andersen LLP
23.2* Consent of KPMG Peat Marwick LLP
23.3* Consent of Schiff Hardin & Waite (included in the opinion to
be filed as Exhibit 5.1)
23.4* Consent of Richards, Layton & Finger, P.A. (included in the
opinion to be filed as Exhibit 5.2)
24.1 Powers of Attorney (contained in signature pages of
Registration Statement)
25.1 Form T-1 Statement of Eligibility of The Chase Manhattan Bank
as the Indenture Trustee
25.2 Form T-1 Statement of Eligibility of The Chase Manhattan Bank
as the Guarantee Trustee
25.3 Form T-1 Statement of Eligibility of The Chase Manhattan Bank
as Property Trustee under the Amended and Restated Declaration
of Trust of NIPSCO Capital Trust I
</TABLE>
- --------
*To be filed by amendment or by Current Report on Form 8-K
II-6
<PAGE>
EXHIBIT 3.1
NIPSCO INDUSTRIES, INC.
BY-LAWS
Effective June 23, 1998
<PAGE>
BY-LAWS
OF
NIPSCO INDUSTRIES, INC.
ARTICLE I.
OFFICES.
SECTION 1.1. Registered Office. The registered office of the Corporation
in the State of Indiana shall be at 5265 Hohman Avenue, in the City of Hammond,
County of Lake.
SECTION 1.2. Principal Business Office. The principal business office of
the Corporation shall be at 801 East 86th Avenue, in the Town of Merrillville,
County of Lake, in the State of Indiana.
ARTICLE II.
SHAREHOLDERS' MEETINGS.
SECTION 2.1. Place of Meetings. Meetings of the shareholders of the
Corporation shall be held at such place, within or without the State of Indiana,
as may be specified by the Board of Directors in the notice of such meeting, but
if no such designation is made, then at the principal business office of the
Corporation.
SECTION 2.2. Annual Meetings. The annual meeting of the shareholders
shall be held in each year on the second Wednesday in the month of April, if not
a legal holiday, and if a legal holiday, then on the next succeeding business
day that is not a legal holiday or on such other day as the Board of Directors
may determine; at the hour of ten o'clock a.m. or at such other time as the
Board of Directors
<PAGE>
may determine, for the purpose of electing Directors and for the transaction of
such other business as may legally come before the meeting.
If for any reason any annual meeting shall not be held at the time herein
provided, the same may be held at any time thereafter, upon notice as
hereinafter provided, or the business thereof may be transacted at any special
meeting of shareholders called for that purpose.
SECTION 2.3. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the Chairman, the President, or the Board of Directors, and shall be called
by the Chairman at the request in writing of a majority of the Board of
Directors, or at the request in writing of the shareholders holding at least
one-fourth of all the shares outstanding and entitled to vote on the business
proposed to be transacted thereat. All requests for special meetings of
shareholders shall state the time, place and the purpose or purposes thereof.
SECTION 2.4. Notice of Shareholders' Meetings. Notice of each meeting of
shareholders, stating the date, time and place, and, in the case of special
meetings, the purpose or purposes for which such meeting is called, shall be
given to each shareholder entitled to vote thereat not less than 10 nor more
than 60 days before the date of the meeting unless otherwise prescribed by
statute.
SECTION 2.5. Record Dates. (a) In order that the Corporation may
determine the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of shares
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a future date as the record date, which shall not be
2
<PAGE>
more than 60 nor less than 10 days before the date of such meeting or any other
action requiring a determination by shareholders.
(b) If a record date has not been fixed as provided in preceding subsection
(a), then:
(i) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held; and
(ii) The record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
(c) Only those who shall be shareholders of record on the record date so
fixed as aforesaid shall be entitled to such notice of, and to vote at, such
meeting and any adjournment thereof, or to receive payment of such dividend or
other distribution, or to receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding the transfer of any shares on the
books of the Corporation after the applicable record date; provided, however,
the Corporation shall fix a new record date if a meeting is adjourned to a date
more than 120 days after the date originally fixed for the meeting.
SECTION 2.6. Quorum and Adjournment. The holders of a majority of all the
capital shares issued and outstanding and entitled to vote at any meeting of the
shareholders, represented by the holders thereof in person or by proxy, shall be
requisite at all meetings of the shareholders to constitute a quorum for the
election of Directors or for the transaction of other business, unless otherwise
provided by law or
3
<PAGE>
by the Corporation's Articles of Incorporation, as amended (the "Articles of
Incorporation"). Whether or not there is such a quorum, the chairman of the
meeting or the shareholders present or represented by proxy representing a
majority of the shares present or represented may adjourn the meeting from time
to time without notice other than an announcement at the meeting. At such
adjourned meeting at which the requisite number of voting shares shall be
present or represented, any business may be transacted which might have been
transacted at the meeting originally called.
SECTION 2.7. Voting by Shareholders; Proxies. Every shareholder shall
have the right at every shareholders' meeting to one vote for each share
standing in his name on the books of the Corporation, except as otherwise
provided by law or by the Articles of Incorporation, and except that no share
shall be voted at any meeting upon which any installment is due and unpaid, or
which belongs to the Corporation. Election of directors at all meetings of the
shareholders at which directors are to be elected shall be by ballot, and a
plurality of the votes cast thereat shall be necessary to elect any Director.
If a quorum exists, action on a matter (other than the election of directors)
submitted to shareholders entitled to vote thereon at any meeting shall be
approved if the votes cast favoring the action exceed the votes cast opposing
the action, unless a greater number of affirmative votes is required by law or
by the Articles of Incorporation. A shareholder may vote either in person or by
proxy executed in writing by the shareholder or a duly authorized attorney in
fact. No proxy shall be valid after eleven months from the date of its
execution unless a longer time is expressly provided therein. All voting at
meetings of shareholders shall be by ballot, except that the presiding officer
of the meeting may call for a viva voce vote on any matter other than the
election of directors, unless the holder or holders of ten percent (10%) or more
of the shares entitled to vote demands or demand a vote by ballot.
4
<PAGE>
SECTION 2.8. List of Shareholders. The Secretary shall make, or cause the
agent having charge of the stock transfer books of the Corporation to make, at
least five (5) days before each meeting of shareholders, a complete list of the
shareholders entitled by the Articles of Incorporation to vote at said meeting,
arranged in alphabetical order, with the address and number of shares so
entitled to vote held by each, which list shall be on file at the principal
business office of the Corporation and subject to inspection by any shareholder
within the usual business hours during said five (5) days either at the
principal business office of the corporation or a place in the city where the
meeting is to be held, which place shall be specified in the notice of meeting,
or, if not so specified, at the place where said meeting is to be held. Such
list shall be produced and kept open at the time and place of the meeting and
subject to the inspection of any shareholder during the holding of such meeting.
SECTION 2.9. Conduct of Business. (a) Presiding Officer. The Chairman,
when present, and in the absence of the Chairman the President, shall be the
presiding officer at all meetings of shareholders, and in the absence of the
Chairman and the President, the Board of Directors shall choose a presiding
officer. The presiding officer of the meeting shall have plenary power to
determine procedure and rules of order and make definitive rulings at meetings
of the shareholders.
(b) Annual Meetings of Shareholders. (i) Nominations of persons for
election to the Board of Directors of the Corporation and the proposal of
business to be considered by the shareholders may be made at an annual meeting
of shareholders (A) pursuant to the Corporation's notice of meeting, (B) by or
at the direction of the Board of Directors or (C) by any shareholder of the
Corporation who was a shareholder of record at the time of giving of notice
provided for in this Section 2.9, who is entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section 2.9.
5
<PAGE>
(ii) For nominations or other business to be properly brought before
any annual meeting by a shareholder pursuant to clause (C) of paragraph (b)(i)
of this Section 2.9, the shareholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a shareholder's
notice shall be delivered to the Secretary at the principal business office of
the Corporation not later than 150 days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced by more than 30 days or delayed by more
than 60 days from such anniversary date, notice by the shareholder to be timely
must be so delivered not later than the 150th day prior to such annual meeting
or the 10th day following the day on which public announcement of the date of
such meeting is first made. Such shareholder's notice shall set forth (A) as to
each person whom the shareholder proposes to nominate for election or reelection
as a director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (B) as to any other business that the shareholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such shareholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (C) as to
the shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (x) the name and address of such
shareholder, as they appear on the Corporation's books, and of such beneficial
owner and (y) the class and number of shares of the Corporation which are owned
beneficially and of record by such shareholder and such beneficial owner.
6
<PAGE>
(iii) The notice procedures of this Section 2.9 shall not apply to any
annual meeting if (A) with respect to annual meetings of shareholders subsequent
to the 1994 annual meeting of shareholders, the Corporation shall not have set
forth in its proxy statement for the preceding annual meeting of shareholders
the date by which notice of nominations by shareholders of persons for election
as directors or of other business proposed to be brought by shareholders at the
next annual meeting of shareholders must be received by the Corporation to be
considered timely pursuant to this Section 2.9 or (B) with respect to the 1994
annual meeting of shareholders, the Corporation shall have failed to issue a
public announcement setting forth such information not less than 30 days prior
to the date by which a shareholder's notice must be received by the Corporation
to be considered timely pursuant to this Section 2.9.
(c) Special Meetings of Shareholders. Only such business shall be
conducted at a special meeting of shareholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of shareholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (A) by or at the direction of the Board of
Directors or (B) by any shareholder of the Corporation who is a shareholder of
record at the time of giving of notice provided for in this Section 2.9, who is
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Section 2.9. Nominations by shareholders of persons for election
to the Board of Directors may be made at such a special meeting of shareholders
if a shareholder's notice containing the information set forth in paragraph
(b)(ii) of this Section 2.9 shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the 150th day prior to such
Special Meeting or the 10th day following the date on which public announcement
is first made of the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting.
7
<PAGE>
(d) General. (i) Only such persons who are nominated in accordance with
the procedures set forth in this Section 2.9 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of shareholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 2.9. The presiding officer at the meeting shall have
the power and duty to determine whether a nomination or any business proposed to
be brought before the meeting was made in accordance with the procedures set
forth in this Section 2.9 and, if any proposed nomination or business is not in
compliance with this Section 2.9, to declare that such defective proposal shall
be disregarded.
(ii) For purposes of this Section 2.9, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Sections 13, 14 or 15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this Section 2.9, a
shareholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 2.9. Nothing in this Section 2.9 shall be deemed to affect
any rights of shareholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
SECTION 2.10. Organization of Meetings. The Secretary, who may call on
any officer or officers of the Corporation for assistance, shall make all
necessary and appropriate arrangements for all meetings of shareholders, receive
all proxies and ascertain and report to each meeting of shareholders the number
of shares present, in person and by proxy. In the absence of the Secretary, the
Assistant Secretary shall perform the foregoing duties. The certificate and
report of the Secretary or Assistant Secretary, as
8
<PAGE>
to the regularity of such proxies and as to the number of shares present, in
person and by proxy, shall be received as prima facie evidence of the number of
shares present in person and by proxy for the purpose of establishing the
presence of a quorum at such meeting and for organizing the same, and for all
other purposes.
SECTION 2.11. Inspectors. At every meeting of shareholders it shall be
the duty of the presiding officer to appoint three (3) shareholders of the
Corporation inspectors of election to receive and count the votes of
shareholders. Each inspector shall take an oath to fairly and impartially
perform the duties of a inspector of the election and to honestly and truly
report the results thereof. Such inspectors shall be responsible for tallying
and certifying the vote taken on any matter at each meeting which is required to
be tallied and certified by them in the resolution of the Board of Directors
appointing them or the appointment of the presiding officer at such meeting as
the case may be. Except as otherwise provided by these By-Laws or by law, such
inspectors shall also decide all questions touching upon the qualification of
voters, the validity of proxies and ballots, and the acceptance and rejection of
votes. The Board of Directors shall have the authority to make rules
establishing presumptions as to the validity and sufficiency of proxies.
SECTION 2.12. Minutes of Shareholder Meetings. The presiding officer,
secretary, and inspectors of election serving at a shareholders' meeting shall
constitute a committee to correct and approve the minutes of such meeting. The
approval thereof shall be evidenced by an endorsement thereon signed by a
majority of the committee.
9
<PAGE>
ARTICLE III.
BOARD OF DIRECTORS.
SECTION 3.1. Powers. The Board of Directors shall have the general
direction, management and control of all the property, business and affairs of
the Corporation and shall exercise all the powers that may be exercised or
performed by the Corporation, under the statutes, the Articles of Incorporation,
and these By-Laws.
SECTION 3.2. Number, Election and Term of Office. The Board of Directors
shall consist of ten (10) members, classified with respect to the time for which
they shall severally hold office by dividing them into three classes, and after
being so classified one-third (1/3) of the Directors, or as near as may be,
shall be elected annually for a term of three (3) years.
SECTION 3.3. Vacancies. Any vacancy in the Board of Directors caused by
death, resignation or other reason shall be filled for the remainder of the
Director's term by a majority vote of the remaining Directors although less than
a quorum, or by the sole remaining director, and any director so chosen shall
hold office for a term expiring at the annual meeting of shareholders at which
the term of office of the class of directors to which such director has been
elected expires. All Directors of the Corporation shall hold office until their
successors are duly elected and qualified.
SECTION 3.4. Annual Meetings. A meeting of the Directors whose terms
have not expired and the newly elected Directors, to be known as the annual
meeting of the Board of Directors, for the election of officers and for the
transaction of such other business as may properly come before the meeting,
shall be held on the same day as the annual meeting of the shareholders, at that
time and place determined by the Board of Directors or at such date, time and
place otherwise set by the Chairman.
10
<PAGE>
SECTION 3.5. Regular Meetings. Regular monthly meetings of the Board of
Directors shall be held from time to time (either within or without the state)
as the Board may by resolution determine, without call and without notice, and
unless otherwise determined all such regular monthly meetings shall be held at
the principal business office of the Corporation on the fourth Tuesday of each
and every month at 10:30 a.m.
SECTION 3.6. Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman, by the President, or by the Chairman
upon the written request of any four (4) Directors by giving, or causing the
Secretary to give, to each Director, notice in accordance with Article IV of
these By-Laws.
SECTION 3.7. Quorum. At all meetings of the Board of Directors, a
majority of the Directors shall constitute a quorum for the transaction of
business and the act of a majority of those present shall be necessary and
sufficient for the taking of any action thereat, but a less number may adjourn
the meeting from time to time until a quorum is present.
SECTION 3.8. Action by Written Consent. Unless otherwise restricted by
statute, the Articles of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a written consent thereto is
signed by all directors or by all members of such committee, as the case may be,
and such written consent is filed with the minutes of proceedings of the Board
of Directors or of such committee.
SECTION 3.9. Attendance by Conference Telephone. Members of the Board of
Directors or any committee thereof may participate in a meeting of such Board of
Directors or committee by means of
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conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
in a meeting shall constitute presence in person at such meeting.
SECTION 3.10. Committees. (a) The Board of Directors may from time to
time, in its discretion, by resolution passed by a majority of the Board,
designate, and appoint, from the directors, committees of one or more persons
which shall have and may exercise such lawfully delegable powers and duties
conferred or authorized by the resolutions of designation and appointment. The
Board of Directors shall have power at any time to change the members of any
such committee, to fill vacancies, and to discharge any such committee.
(b) Unless the Board of Directors shall provide otherwise, the presence of
one-half of the total membership of any committee of the Board of Directors
shall constitute a quorum for the transaction of business at any meeting of such
committee and the act of a majority of those present shall be necessary and
sufficient for the taking of any action thereat.
ARTICLE IV.
NOTICES.
SECTION 4.1. Notices. Notices to directors and shareholders shall be in
writing and delivered personally or mailed to their addresses appearing on the
records of the Corporation or, if to directors, by telegram, cable, telephone,
telecopy, facsimile or a nationally recognized overnight delivery service.
Notice to directors of special meetings by mail shall be given at least two days
before the meeting. Notice to directors of special meetings by telegram, cable,
personal delivery, telephone, telecopy or facsimile
12
<PAGE>
shall be given a reasonable time before the meeting, but in no event less than
one hour before the meeting. Notice by mail or recognized overnight delivery
service shall be deemed to be given when sent to the director at his or her
address appearing on the records of the Corporation. Notice by telegram or cable
shall be deemed to be given when the telegram or cable addressed to the director
at his or her address appearing on the records of the Corporation is delivered
to the telegraph company. Notice by telephone, telecopy or facsimile shall be
deemed to be given when transmitted by telephone, telecopy or facsimile to the
telephone, telecopy or facsimile number appearing on the records of the
Corporation for the director (regardless of whether the director shall have
personally received such telephone call or telecopy or facsimile message).
SECTION 4.2. Waiver of Notice. Whenever any notice is required, a waiver
thereof signed by the person entitled to such notice, whether before or after
the time stated therein, and filed with the minutes or corporate records, shall
be deemed equivalent thereto. Attendance of any person at any meeting of
shareholders or directors shall constitute a waiver of notice of such meeting,
except when such person attends only for the express purpose of objecting, at
the beginning of the meeting (or in the case of a director's meeting, promptly
upon such director's arrival), to the transaction of any business at the meeting
and does not thereafter vote for or assent to action taken at the meeting.
13
<PAGE>
ARTICLE V.
OFFICERS.
SECTION 5.1. Designation; Number; Election. The officers of the
Corporation shall be chosen by the Board of Directors and may consist of a
Chairman, a President, one or more Vice Presidents, a Secretary, one or more
Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, a
Controller, one or more Assistant Controllers, and an Auditor. One person may
hold any two offices except those of Chairman or President, and Secretary.
SECTION 5.2. Term of Office; Vacancies; Removal. Such officers shall be
elected by the Board of Directors at its annual meeting, and shall hold office
for one year and/or until their respective successors shall have been duly
elected. The Board of Directors may from time to time, elect or appoint such
other officers and agents as it shall deem necessary, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
may be prescribed by the Board of Directors. Vacancies among the officers of the
Corporation shall be filled by the Board of Directors. Any officer or agent
elected or appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the whole Board of Directors.
SECTION 5.3. Compensation of Officers. The Board of Directors or a
committee of the Board shall have the authority to fix the compensation of the
officers of the Corporation.
SECTION 5.4. Chairman. The Chairman shall be the chief executive officer
of the Company and shall have general authority and supervision over the
management and direction of the affairs of the Company, and supervision of all
departments and of all officers of the Company. The Chairman shall,
14
<PAGE>
subject to the other provisions of these by-laws, have such other powers and
perform such other duties as usually devolve upon the chief executive officer of
a company or as may be prescribed by the Board of Directors, and shall, when
present, preside at all meetings of the shareholders and of the Board of
Directors. When the Board of Directors is not in session, the Chairman shall
have authority to suspend the authority of any other officer or officers,
subject, however, to the pleasure of the Board of Directors at its next meeting.
In case of the absence, disability, death, resignation or removal from office of
the Chairman, the powers and duties of the Chairman shall for the time being
devolve upon and be exercised by the President, unless otherwise ordered by the
Board of Directors.
SECTION 5.5. President. The President shall be the chief operating
officer of the Corporation and shall have such general authority and supervision
over the management and direction of the affairs of the Corporation, subject to
the authority of the Chairman, as shall usually devolve upon a chief operating
officer of a corporation. The President shall, subject to the other provisions
of these By-Laws, have such other powers and perform such other duties as
usually devolve upon the President of a corporation, and such further duties as
may be prescribed for the President by the Chairman or the Board of Directors.
In case of the absence, disability, death, resignation or removal from office of
the President, the powers and duties of the President shall, for the time being,
devolve upon and be exercised by the Chairman, and in case of the absence,
disability, death, resignation, or removal from office of both the Chairman and
the President, the powers and duties of the President shall for the time being
devolve upon and be exercised by the Vice President so appointed by the Board
of Directors.
SECTION 5.6. Vice Presidents. Each of the Vice Presidents shall have such
powers and duties as may be prescribed by the Board of Directors, the Chairman
or the President.
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<PAGE>
SECTION 5.7. Secretary. The Secretary shall attend and keep the minutes
of all meetings of the Board of Directors and of the shareholders. The Secretary
shall have charge and custody of the corporate records and corporate seal of the
Corporation, and shall in general perform all the duties incident to the office
of secretary of a corporation, subject at all times to the direction and control
of the Board of Directors, the Chairman and the President.
SECTION 5.8. Assistant Secretaries. Each of the Assistant Secretaries
shall have such duties and powers as may be prescribed by the Board of Directors
or be delegated by the Chairman or the President. In the absence or disability
of the Secretary, the powers and duties of the Secretary shall devolve upon such
one of the Assistant Secretaries as the Board of Directors, the Chairman or the
President may designate, or, if there be but one Assistant Secretary, then upon
such Assistant Secretary; and such Assistant Secretary shall thereupon have and
exercise such powers and duties during such absence or disability of the
Secretary.
SECTION 5.9. Treasurer. The Treasurer shall have charge of, and shall be
responsible for, the collection, receipt, custody and disbursement of the funds
of the Corporation, and shall also have the custody of all securities belonging
to the Corporation. The Treasurer shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, taking proper receipts or making
proper vouchers for such disbursements, and shall at all times preserve the same
during the term of office. When necessary or proper, the Treasurer shall
endorse, on behalf of the Corporation, all checks, notes, or other obligations
payable to the Corporation or coming into possession of the Treasurer for and on
behalf of the Corporation, and shall deposit the funds arising therefrom,
together with all other funds of the Corporation coming into possession of the
Treasurer, in the name and to the credit of the Corporation in such bank or
banks as the Board of Directors shall from time to time by resolution direct.
The Treasurer shall perform
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<PAGE>
all duties which are incident to the office of treasurer of a corporation,
subject at all time to the direction and control of the Board of Directors, the
Chairman and the President.
The Treasurer shall give the Corporation a bond if required by the Board of
Directors in a sum, and with one or more sureties, satisfactory to the Board,
for the faithful performance of the duties of the office of Treasurer, and for
the restoration to the Corporation, in case of the death, resignation,
retirement or removal from office of the Treasurer, of all books, papers,
vouchers, money or other property of whatever kind in the possession or under
the control of the Treasurer belonging to the Corporation.
SECTION 5.10. Assistant Treasurers. Each of the Assistant Treasurers
shall have such powers and duties as may be prescribed by the Board of Directors
or be delegated by the Chairman or the President. In the absence or disability
of the Treasurer, the powers and duties shall devolve upon such one of the
Assistant Treasurers as the Board of Directors, the Chairman or the President
may designate, or, if there be but one Assistant Treasurer, then upon such
Assistant Treasurer who shall thereupon have and exercise such powers and duties
during such absence or disability of the Treasurer. Each Assistant Treasurer
shall likewise give the Corporation a bond if required by the Board of Directors
upon like terms and conditions as the bond required of the Treasurer.
SECTION 5.11. Controller. The Controller shall have control over all
accounts and records pertaining to moneys, properties, materials and supplies.
The Controller shall have executive direction of the bookkeeping and accounting
departments, and shall have general supervision over the records in all other
departments pertaining to moneys, properties, materials and supplies. The
Controller shall have charge of the preparation of the financial budget, and
such other powers and duties as are commonly
17
<PAGE>
incident to the office of controller of a corporation, subject at all times to
the direction and control of the Board of Directors, the Chairman and the
President.
SECTION 5.12. Assistant Controllers. Each of the Assistant Controllers
shall have such powers and duties as may be prescribed by the Board of Directors
or be delegated by the Chairman or the President. In the absence or disability
of the Controller, the powers and duties of the Controller shall devolve upon
such one of the Assistant Controllers as the Board of Directors, the Chairman or
the President may designate, or, if there be but one Assistant Controller, then
upon such Assistant Controller who shall thereupon have and exercise such powers
and duties during such absence or disability of the Controller.
SECTION 5.13. Auditor. The Auditor shall review and monitor the
activities of the Corporation and its subsidiaries, including development of and
compliance with policies and procedures, and shall in general perform all the
duties incident to the office of auditor of a corporation, subject at all times
to direction and control of the Board of Directors, the Chairman and the
President.
ARTICLE VI.
CONDUCT OF BUSINESS.
SECTION 6.1. Contracts, Deeds and Other Instruments. All agreements
evidencing obligations of the Corporation, including but not limited to
contracts, trust deeds, promissory notes, sight drafts, time drafts and letters
of credit (including applications therefor), may be signed by any one of the
Chairman, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary, any Assistant Secretary, any other person authorized
by a resolution of the Board of Directors, and any other person
18
<PAGE>
authorized by the Chairman, as evidenced by a written instrument of delegation.
Any such authorization by the Board of Directors or the Chairman shall remain in
effect until rescinded by action of the Board of Directors or (in the case of a
delegation by the Chairman) by the Chairman and, where it identifies the
authorized signatory by office rather than by name, shall not be rescinded
solely by virtue of a change in the person holding that office or a temporary
vacancy in that office.
A certified copy of these By-Laws and/or any authorization given hereunder
may be furnished as evidence of the authorities herein granted, and all persons
shall be entitled to rely on such authorities in the case of a specific
contract, conveyance or other transaction without the need of a resolution of
the Board of Directors specifically authorizing the transaction involved.
SECTION 6.2. Checks. Checks and other negotiable instruments for the
disbursement of Corporation funds may be signed by any one of the Chairman, the
President, any Vice President, the Treasurer, the Controller and the Secretary
in such manner as shall from time to time be determined by resolution of the
Board of Directors. Electronic or wire transfers to funds may be authorized by
any officer of the Corporation who is authorized pursuant to this Section 6.2 to
disburse Corporation funds by check or other negotiable instrument.
SECTION 6.3. Deposits. Securities, notes and other evidences of
indebtedness shall be kept in such places, and deposits of checks, drafts and
funds shall be made in such banks, trust companies or depositories, as shall be
recommended and approved by any two of the Chairman, the President, any Vice
President and the Treasurer.
19
<PAGE>
SECTION 6.4. Voting of Stock. Unless otherwise ordered by the Board of
Directors, the Chairman, the President or any Vice President shall have the
power to execute and deliver on behalf of the Corporation proxies on stock owned
by the Corporation appointing a person or persons to represent and vote such
stock at any meeting of stockholders, with full power of substitution, and shall
have power to alter or rescind such appointment. Unless otherwise ordered by
the Board of Directors, the Chairman, the President or any Vice President shall
have the power on behalf of the Corporation to attend and to act and vote at any
meeting of stockholders of any corporation in which the Corporation holds stock
and shall possess and may exercise any and all rights and powers incident to the
ownership of such stock, which, as the owner thereof, the Corporation might have
possessed and exercised if present. The Board may confer like powers upon any
other person or persons.
SECTION 6.5. Transfer of Stock. Such form of transfer or assignment
customary or necessary to effect a transfer of stocks or other securities
standing in the name of the Corporation shall be signed by the Chairman, the
President, any Vice President or the Treasurer, and the Secretary or an
Assistant Secretary shall sign as witness if required on the form. A
corporation or person transferring any such stocks or other securities pursuant
to a form of transfer or assignment so executed shall be fully protected and
shall be under no duty to inquire whether the Board of Directors has taken
action in respect thereof.
ARTICLE VII.
SHARE CERTIFICATES AND THEIR TRANSFER.
SECTION 7.1. Share Certificates. Certificates for shares of the
Corporation shall be signed by the Chairman, the President or any Vice
President, and by the Secretary or any Assistant Secretary, and shall not be
valid unless so signed. Such certificates shall be appropriately numbered and
contain the name
20
<PAGE>
of the registered holder, the number of shares and the date of issue. If such
certificate is countersigned (a) by a transfer agent other than the Corporation
or its employee, or (b) by a registrar other than the Corporation or its
employee, any other signature on the certificate may be a facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent, or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he, she or it were
such officer, transfer agent, or registrar at the date of issue.
SECTION 7.2. Transfer of Shares. Upon surrender to the Corporation or a
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation and such transfer agent to
issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction. No certificate shall be issued in
exchange for any certificate until the former certificate for the same number of
shares of the same class and series shall have been surrendered and cancelled,
except as provided in Section 7.4.
SECTION 7.3. Regulations. The Board of Directors shall have authority to
make rules and regulations concerning the issue, transfer and registration of
certificates for shares of the Corporation.
SECTION 7.4. Lost, Stolen and Destroyed Certificates. The Corporation may
issue a new certificate or certificates for shares in place of any issued
certificate alleged to have been lost, stolen or destroyed upon such terms and
conditions as the Board of Directors may prescribe.
21
<PAGE>
SECTION 7.5. Registered Shareholders. The Corporation shall be entitled
to treat the holder of record (according to the books of the Corporation) of any
share or shares as the holder in fact thereof and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other party whether or not the Corporation shall have express or
other notice thereof, except as expressly provided by law.
SECTION 7.6. Transfer Agents and Registrars. The Board of Directors may
from time to time appoint a transfer agent and a registrar in one or more
cities, may require all certificates evidencing shares of the Corporation to
bear the signatures of a transfer agent and a registrar, may provide that such
certificates shall be transferable in more than one city, and may provide for
the functions of transfer agent and registrar to be combined in one agency.
ARTICLE VIII.
INDEMNIFICATION.
SECTION 8.1. Litigation Brought by Third Parties. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, formal or informal (other than
an action by or in the right of the Corporation) (an "Action") by reasons of the
fact that he or she is or was a director, officer, employee or agent of the
Corporation (a "Corporate Person"), or is or was serving at the request of the
Corporation as a director, officer, employee, agent, partner, trustee or member
or in another authorized capacity (collectively, an "Authorized Capacity") of or
for another corporation, unincorporated association, business trust,
partnership, joint venture, trust, individual or other legal entity, whether or
not organized or formed for profit (collectively, "Another Entity"), against
expenses (including
22
<PAGE>
attorneys' fees), judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such Action
("Expenses") if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any Action by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the Corporation, or,
with respect to any criminal action or proceeding, that the person had
reasonable cause to believe his or her conduct was unlawful.
SECTION 8.2. Litigation by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any action by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a Corporate
Person, or is or was serving at the request of the Corporation in an Authorized
Capacity of or for Another Entity against Expenses actually and reasonably
incurred by him or her in connection with that defense or settlement of such
action if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Corporation,
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for willful
negligence or misconduct in the performance of his duty to the Corporation
unless and only to the extent that a court of equity or the court in which such
action was pending shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court of equity or other court shall deem proper.
23
<PAGE>
SECTION 8.3. Successful Defense. To the extent that a person who is or
was a Corporate Person or is or was serving in an Authorized Capacity of
Another Entity at the request of the Corporation and has been successful on the
merits or otherwise in defense of any action, referred to in Section 8.1 or 8.2
of this Article, or in defense of any claim, issue or matter therein, he or she
shall be indemnified against Expenses actually and reasonably incurred by him or
her in connection therewith.
SECTION 8.4 Determination of Conduct. Any indemnification under Section
8.1 or 8.2 of this Article (unless ordered by a court) shall be made by the
Corporation only upon a determination that indemnification of the person is
proper in the circumstances because he or she has met the applicable standard of
conduct set forth in said Section 8.1 or 8.2. Such determination shall be made
(a) by the Board of Directors by a majority vote of a quorum consisting of
directors not at the time parties to such action, suit or proceeding, or (b) if
a quorum cannot be obtained, by a majority vote of a committee duly designated
by the Board of Directors (in which designation directors who are parties may
participate) consisting of two or more directors not at the time parties to such
action, suit or proceeding, or (c) by special legal counsel, or (d) by the
shareholders; provided, however, that shares owned by or voted under the control
of persons who are at the time parties to such action, suit or proceeding may
not be voted on the determination.
SECTION 8.5. Advance Payment. The Corporation shall advance Expenses
reasonably incurred by any Corporate Person in any Action in advance of the
final disposition thereof upon the undertaking of such party to repay the
advance unless it is ultimately determined that such party is entitled to
indemnification hereunder, if (a) the indemnitee furnishes the Corporation a
written affirmation of his or her good faith belief that he or she has satisfied
the standard of conduct in Section 8.1 or 8.2 and (b) a
24
<PAGE>
determination is made by those making the decision pursuant to Section 8.4 that
the facts then known would not preclude indemnification under these By-Laws.
SECTION 8.6. By-Law Not Exclusive. The indemnification provided by this
Article 8 shall not be deemed exclusive of any other rights to which any person
may be entitled under any by-law, agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
SECTION 8.7. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Corporate Person or is or was
serving at the request of the Corporation in an Authorized Capacity of or for
Another Entity against any liability asserted against him or her and incurred by
him or her in any such capacity, or arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify him or her
against such liability under the provisions of this Article 8 or the Indiana
Business Corporation Law.
SECTION 8.8. Effect of Invalidity. The invalidity or unenforceability of
any provision of this Article 8 shall not affect the validity or enforceability
of the remaining provisions of this Article 8.
SECTION 8.9. Definition of Corporation. For purposes of this Article 8,
references to "the Corporation" shall include, in addition to the surviving or
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger.
25
<PAGE>
SECTION 8.10. Change in Law. Notwithstanding the foregoing provisions of
Article 8, the Corporation shall indemnify any person who is or was a Corporate
Person or is or was serving at the request of the Corporation in an Authorized
Capacity of or for Another Entity to the full extent permitted by the Indiana
Business Corporation Law or by any other applicable law, as may from time to
time be in effect.
ARTICLE IX.
GENERAL.
SECTION 9.1. Fiscal Year. The fiscal year of the Corporation shall begin
on the 1st day of January and end on the 31st day of December in each year.
SECTION 9.2. Corporate Seal. The corporate seal shall be circular in form
and shall have inscribed thereon the words "NIPSCO Industries, Inc. - Corporate
Seal - Indiana."
SECTION 9.3. Amendments. These By-Laws may be altered, amended or
repealed in whole or in part, and new By-Laws may be adopted, at any annual,
regular or special meeting of the Board of Directors by the affirmative vote of
a majority of a quorum of the Board of Directors.
SECTION 9.4. Dividends. Subject to any provisions of any applicable
statute or of the Articles of Incorporation, dividends may be declared upon the
capital stock of the Corporation by the Board of Directors at any regular or
special meeting thereof; and such dividends may be paid in cash, property or
shares of the Corporation.
26
<PAGE>
SECTION 9.5. Control Shares. The Terms "control shares" and "control
share acquisition" used in this Section 9.5 shall have the meanings set forth
in Indiana Business Corporation Law Section 23-1-42-1, et seq. (the "Act").
Control shares of the Corporation acquired in a control share acquisition shall
have only such voting rights as are conferred by the Act.
Control shares of the Corporation acquired in a control share acquisition
with respect to which the acquiring person has not filed with the Corporation
the Statement required by the Act may, at any time during the period ending
sixty days after the last acquisition of control shares by the acquiring person,
be redeemed by the Corporation at the fair value thereof pursuant to procedures
authorized by a resolution of the Board of Directors. Such authority may be
exercised generally or confined to specific instances.
Control shares of the Corporation acquired in a control share acquisition
with respect to which the acquiring person was not granted full voting rights by
the shareholders as provided in the Act may, at any time after the shareholder
vote required by the Act, be redeemed by the Corporation at the fair value
thereof pursuant to procedures authorized by a resolution of the Board of
Directors. Such authority may be exercised generally or confined to specific
instances.
27
<PAGE>
EXHIBIT 4.6
CERTIFICATE OF TRUST
OF
NIPSCO CAPITAL TRUST I
This Certificate of Trust of Nipsco Capital Trust I (the "Trust"),
dated December 17, 1998, is being duly executed and filed by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act
(12 Del. C. (S) 3801, et seq.)
1. Name. The name of the business trust formed by this Certificate of
Trust is NIPSCO Capital Trust I.
2. Delaware Trustee. The name and business address of the trustee of
the Trust in the State of Delaware are Chase Manhattan Bank Delaware, 1201
Market Street, Wilmington, Delaware 19801, Attention: Corporate Trust
Administration.
3. Effective Date. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust,
have executed this Certificate of Trust as of the date first-above written.
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely
as trustee
By: /s/ Denis Kelly
-------------------------------------
Name: Denis Kelly
Title: Trust Officer
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as trustee
By: /s/ R. Lorenzen
-------------------------------------
Name: R. Lorenzen
Title: Senior Trust Officer
STEPHEN P. ADIK, not in his individual
capacity but solely as trustee of the
Trust
/s/ Stephen P. Adik
-----------------------------------------
FRANCIS P. GIROT, JR., not in his
individual capacity but solely as trustee
of the Trust
/s/ Francis P. Girot, Jr.
-----------------------------------------
ARTHUR A. PAQUIN, not in his individual
capacity but solely as trustee of the
Trust
/s/ Arthur A. Paquin
-----------------------------------------
<PAGE>
EXHIBIT 4.7
DECLARATION OF TRUST
OF
NIPSCO CAPITAL TRUST I
THIS DECLARATION OF TRUST is made as of December 17, 1998 (this
"Declaration"), among NIPSCO Capital Markets, Inc., an Indiana corporation, as
sponsor (the "Sponsor"), The Chase Manhattan Bank, a New York banking
corporation, as trustee, Chase Manhattan Bank Delaware, a Delaware banking
corporation, as trustee, and Stephen P. Adik, Francis P. Girot, Jr. and Arthur
A. Paquin, individuals, as trustees (collectively, the "Trustees"). The Sponsor
and the Trustees hereby agree as follows:
1. The trust created hereby shall be known as "NIPSCO Capital Trust I"
(the "Trust"), in which name the Trustees or the Sponsor, to the extent
provided herein, may conduct the business of the Trust, make and execute
contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to the
Trust the sum of $10. Such amount shall constitute the initial trust estate. It
is the intention of the parties hereto that the Trust created hereby constitute
a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C.
(S) 3801, et seq. (the "Business Trust Act"), and that this document constitute
the governing instrument of the Trust. The Trustees are hereby authorized and
directed to execute and file a certificate of trust with the Delaware Secretary
of State in accordance with provisions of the Business Trust Act.
3. The Sponsor and the Trustees will enter into an amended and restated
Declaration of Trust satisfactory to each such party to provide for the
contemplated operation of the Trust created hereby and the issuance of the
Preferred Securities and Common Securities referred to therein. Prior to the
execution and delivery of such amended and restated Declaration of Trust, the
Trustees shall not have any duty or obligation hereunder or with respect of the
trust estate, except as otherwise required by applicable law or as may be
necessary to obtain prior to such execution and delivery any licenses, consents
or approvals required by applicable law or otherwise.
4. The Sponsor, as the Sponsor of the Trust, is hereby authorized, in its
discretion, (i) to prepare and file with the Securities and Exchange Commission
(the "Commission") and to execute, in each case on behalf of the Trust, (a) a
Registration Statement (the "1933 Act Registration Statement"), including all
pre-effective and post-effective amendments thereto, relating to the
registration under the Securities Act of 1933, as amended (the "1933 Act"), of
the Preferred Securities of the Trust and (b) a Registration Statement on Form
8-A (the "1934 Act Registration Statement"), including all pre-effective and
post-effective amendments thereto, relating to the registration of the Preferred
Securities of the Trust under the Securities Exchange Act of 1934, as amended;
(ii) if and at such time as determined by the Sponsor, to file with the New York
Stock Exchange or any other exchange or the National Association of Securities
Dealers (each, an "Exchange"), and execute on behalf of the Trust one or more
listing applications and all other applications, statements, certificates,
agreements and other instruments as shall be necessary or desirable to cause the
Preferred Securities of the Trust to be listed on any of the Exchanges; (iii) to
negotiate, execute, deliver and perform on behalf of the Trust an underwriting
agreement with one or more underwriters relating to the offering of the
Preferred Securities of the Trust; (iv) to execute and deliver letters or
documents to, or instruments for filing with, any Sponsor related to the
Preferred Securities of the Trust; and (v) to file and execute on behalf of the
Trust, such applications, reports, surety bonds, irrevocable consents,
appointments of attorney for service of process and other papers and documents
that shall be necessary or desirable to register the Preferred Securities of the
Trust
<PAGE>
under the securities or "Blue Sky" laws of such jurisdictions as the Sponsor, on
behalf of the Trust, may deem necessary or desirable.
In the event that any filing referred to in this Section 4 is required by
the rules and regulations of the Commission, any Exchange or state securities or
"Blue Sky" laws to be executed on behalf of the Trust by the Trustees, the
Trustees, in their capacities as trustees of the Trust, are hereby authorized to
join in any such filing and to execute on behalf of the Trust any and all of the
foregoing, it being understood that the Trustees, in their capacities as
trustees of the Trust, shall not be required to join in any such filing or
execute on behalf of the Trust any such document unless required by the rules
and regulations of the Commission, an Exchange or state securities or "Blue Sky"
laws.
5. This Declaration may be executed in one or more counterparts.
6. The number of trustees shall initially shall be five (5), and
thereafter the number of trustees shall be such number as shall be set forth in
the amended and restated Declaration of Trust or shall be fixed from time to
time by a written instrument signed by the Sponsor which may increase or
decrease the number of trustees; provided, however, that to the extent required
by the Business Trust Act, one trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware. Subject to the
foregoing, the Sponsor is entitled to appoint or remove without cause any
trustee at any time. Any trustee may resign upon thirty days' prior notice to
the Sponsor.
7. The Sponsor hereby agrees to (i) reimburse the Trustees for all
reasonable expenses (including reasonable fees and expenses of counsel and other
experts) and (ii) indemnify, defend and hold harmless the Trustees and any of
the officers, directors, employees and agents of the Trustees (the "Indemnified
Persons") from and against and all losses, damages, liabilities, claims,
actions, suits, costs, expenses, disbursements (including the reasonable fees
and expenses of counsel), taxes and penalties of any kind and nature whatsoever
(collectively, "Expenses"), to the extent that such Expenses arise out of or are
imposed upon or asserted at any time against such Indemnified Persons with
respect to the performance of this Declaration, the creation, operation or
termination of the Trust or the transactions contemplated hereby; provided,
however, that the Sponsor shall not be required to indemnify any Indemnified
Person for any Expenses which are a result of the willful misconduct, bad faith
or gross negligence of such Indemnified Person.
8. This Declaration shall be governed by, and construed in accordance
with, the laws of the State of Delaware (without regard to conflict of laws
principles).
IN WITNESS WHEREOF, the parties hereto have caused this Declaration to be
duly executed as of the day and year first above written.
NIPSCO CAPITAL MARKETS, INC.,
as Sponsor
By: /s/ Stephen P. Adik
---------------------
Name: Stephen P. Adik
Title: President and Chief Executive Officer
-2-
<PAGE>
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely as trustee
By: /s/ Denis Kelly
-------------------------------------------------
Name: DENIS KELLY
Title: TRUST OFFICER
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as trustee
By: /s/ R. Lorenzen
-------------------------------------------------
Name: R. LORENZEN
Title: SENIOR TRUST OFFICER
STEPHEN P. ADIK, not in his individual
capacity but solely as trustee
/s/ Stephen P. Adik
----------------------------------------------------
FRANCIS P. GIROT, JR., not in his individual
capacity but solely as trustee
/s/ Francis P. Girot, Jr.
----------------------------------------------------
ARTHUR A. PAQUIN, not in his individual
capacity but solely as trustee
/s/ Arthur A. Paquin
----------------------------------------------------
-3-
<PAGE>
EXHIBIT 12
NIPSCO INDUSTRIES, INC.
Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Twelve
Months
Year Ended December 31, Ended
---------------------------------------------------------------------------- September 30,
1993 1994 1995 1996 1997 1998
------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Earnings as defined in item
503(d) of Regulation S-K:
Income before interest
charges..................... $261,843,340 $272,678,294 $284,665,276 $287,877,630 $319,514,639 $329,007,136
Adjustments-
Federal income taxes........ 89,021,967 100,320,953 95,676,572 80,626,310 97,010,863 109,958,328
State income tax............ 13,132,078 15,398,420 15,214,803 12,781,207 16,856,952 18,696,906
Deferred investment tax
credit, net............... (7,446,643) (6,499,242) (7,515,362) (7,407,813) (7,375,636) (7,372,012)
Deferred income taxes, net.. 2,122,294 (11,488,355) (1,479,358) 21,125,012 (1,466,940) (17,597,506)
Federal and state income
taxes included in other
income.................... (5,537,170) (16,332,753) (2,698,478) (206,820) 987,240 (3,967,131)
Amortization of
capitalized interest...... 0 103,130 247,516 247,512 0 0
------------ ------------ ------------ ------------ ------------ ------------
$353,135,866 $354,180,447 $384,110,969 $395,043,038 $425,527,118 $428,725,721
============ ============ ============ ============ ============ ============
Fixed charges as defined in
item 503(d) of Regulation
S-K:
Interest on long-term debt.... $82,121,209 $78,292,155 $82,655,251 $84,254,716 $102,842,096 $110,946,258
Other interest................ 9,238,106 11,650,228 13,561,297 17,759,136 13,453,006 12,780,789
Amortization of premium,
reacquisition premium,
discount and expense
on debt, net................ 3,582,624 3,897,151 4,401,658 4,605,471 4,718,120 4,612,157
Interest portion of rent
expense..................... 2,038,992 2,220,575 2,415,111 2,656,116 2,939,650 6,627,825
Capitalized interest during
period...................... 4,654,887 2,145,182 234,613 0 0 0
------------ ------------ ------------ ------------ ------------ ------------
$101,635,818 $98,205,291 $103,267,930 $109,275,439 $123,952,872 $134,967,029
============ =========== ============ ============ ============ ============
Plus preferred stock dividends:
Preferred dividend
requirements of subsidiary.. $10,341,006 $9,912,759 $9,046,207 $8,711,985 $8,691,457 $8,589,195
Preferred dividend
requirements factor......... 1.56 1.47 1.54 1.59 1.54 1.49
------------ ------------ ------------ ------------ ------------ ------------
Preferred dividend
requirements of subsidiary.. 16,131,969 14,571,756 13,931,159 13,852,056 13,384,844 12,797,901
Fixed charges................. 101,635,818 98,205,291 103,267,930 109,275,439 123,952,872 134,967,029
------------ ------------ ------------ ------------ ------------ ------------
$117,767,787 $112,777,047 $117,199,089 $123,127,495 $137,337,716 $147,764,930
============ =========== ============ ============ ============ ============
Ratio of earnings to fixed
charges ...................... 3.00 3.14 3.28 3.21 3.10 2.90
</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 report dated January 30, 1998,
included in the Annual Report on Form 10-K for NIPSCO Industries, Inc. for the
year ended December 31, 1997; our report dated April 28, 1998, included in the
Quarterly Report on Form 10-Q for NIPSCO Industries, Inc. for the period ended
March 31, 1998; our report dated July 29, 1998, included in the Quarterly Report
on Form 10-Q for NIPSCO Industries, Inc. for the period ended June 30, 1998 and
our report dated October 28, 1998, included in the Quarterly Report on Form 10-Q
for NIPSCO Industries, Inc. for the period ended September 30, 1998 and to all
references made to our Firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
December 18, 1998
<PAGE>
EXHIBIT 25.1
___________________________________________
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.)
801 East 86th Avenue
Merrillvillle, Indiana 46410
(Address of principal executive offices) (Zip Code)
NIPSCO Industries, 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.)
801 East 86th Avenue 46410
Merrillvillle, Indiana (Zip Code)
(Address of principal executive offices)
_____________________________________
Debentures
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.
-2-
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a 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 17th day of December, 1998.
THE CHASE MANHATTAN BANK
By /s/ R. Lorenzen
------------------------
R. Lorenzen
Senior Trust Officer
-3-
<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, 1998, 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....................................... $ 11,951
Interest-bearing balances................................. 4,551
Securities:
Held to maturity securities................................. 1,740
Available for sale securities............................... 48,537
Federal funds sold and securities purchased under
agreements to resell...................................... 29,730
Loans and lease financing receivables:
Loans and leases, net of unearned income $127,379
Less: Allowance for loan and lease losses 2,719
Less: Allocated transfer risk reserve......... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve.................................. 124,660
Trading Assets.............................................. 51,549
Premises and fixed assets (including capitalized
leases)................................................... 3,009
Other real estate owned..................................... 272
Investments in unconsolidated subsidiaries and
associated companies...................................... 300
Customers' liability to this bank on acceptances
outstanding............................................... 1,329
Intangible assets........................................... 1,429
Other assets................................................ 13,563
--------
TOTAL ASSETS................................................ $292,620
========
</TABLE>
-4-
<PAGE>
LIABILITIES
<TABLE>
Deposits
<S> <C>
In domestic offices....................................... $ 98,760
Noninterest-bearing........................... $ 39,071
Interest-bearing.............................. 59,689
--------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's.................................. 75,403
Noninterest-bearing .......................... $ 3,877
Interest-bearing.............................. 71,526
Federal funds purchased and securities sold under agree-
ments to repurchase....................................... 34,471
Demand notes issued to the U.S. Treasury.................... 1,000
Trading liabilities......................................... 41,589
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less............. 3,781
With a remaining maturity of more than one year
through three years..................................... 213
With a remaining maturity of more than three years... 104
Bank's liability on acceptances executed and outstanding.. 1,329
Subordinated notes and debentures........................... 5,408
Other liabilities........................................... 12,041
TOTAL LIABILITIES........................................... 274,099
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock................................................ 1,211
Surplus (exclude all surplus related to preferred stock)... 10,441
Undivided profits and capital reserves...................... 6,287
Net unrealized holding gains (losses)
on available-for-sale securities.......................... 566
Cumulative foreign currency translation adjustments......... 16
TOTAL EQUITY CAPITAL........................................ 18,521
--------
TOTAL LIABILITIES AND EQUITY CAPITAL........................ $292,620
========
</TABLE>
I, Joseph L. Sclafani, E.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 in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
<PAGE>
EXHIBIT 25.2
________________________________________
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.)
801 East 86th Avenue
Merrillvillle, Indiana 46410
(Address of principal executive offices) (Zip Code)
NIPSCO Industries, 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.)
801 East 86th Avenue 46410
Merrillvillle, Indiana (Zip Code)
(Address of principal executive offices)
_____________________________________
Guarantees of Preferred 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.
-2-
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a 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 17th day of December, 1998.
THE CHASE MANHATTAN BANK
By /s/ R. Lorenzen
---------------------------
R. Lorenzen
Senior Trust Officer
-3-
<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, 1998, 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.................................. $ 11,951
Interest-bearing balances.......................... 4,551
Securities:
Held to maturity securities.......................... 1,740
Available for sale securities........................ 48,537
Federal funds sold and securities purchased under
agreements to resell............................... 29,730
Loans and lease financing receivables:
Loans and leases, net of unearned income $127,379
Less: Allowance for loan and lease losses 2,719
Less: Allocated transfer risk reserve.... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve............................. 124,660
Trading Assets....................................... 51,549
Premises and fixed assets (including capitalized
leases)............................................ 3,009
Other real estate owned.............................. 272
Investments in unconsolidated subsidiaries and
associated companies............................... 300
Customers' liability to this bank on acceptances
outstanding........................................ 1,329
Intangible assets.................................... 1,429
Other assets......................................... 13,563
--------
TOTAL ASSETS......................................... $292,620
========
</TABLE>
- 4 -
<PAGE>
LIABILITIES
<TABLE>
<CAPTION>
Deposits
<S> <C> <C>
In domestic offices............................................. $ 98,760
Noninterest-bearing..................................... $39,071
Interest-bearing........................................ 59,689
-------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's.......................................... 75,403
Noninterest-bearing .................................... $ 3,877
Interest-bearing........................................ 71,526
Federal funds purchased and securities sold under agreements
to repurchase..................................................... 34,471
Demand notes issued to the U.S. Treasury.......................... 1,000
Trading liabilities............................................... 41,589
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less................... 3,781
With a remaining maturity of more than one year
through three years........................................ 213
With a remaining maturity of more than three
years...................................................... 104
Bank's liability on acceptances executed and outstanding.......... 1,329
Subordinated notes and debentures................................. 5,408
Other liabilities................................................. 12,041
TOTAL LIABILITIES................................................. 274,099
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock...................................................... 1,211
Surplus (exclude all surplus related to preferred stock).......... 10,441
Undivided profits and capital reserves............................ 6,287
Net unrealized holding gains (losses)
on available-for-sale securities.................................. 566
Cumulative foreign currency translation adjustments............... 16
TOTAL EQUITY CAPITAL.............................................. 18,521
--------
TOTAL LIABILITIES AND EQUITY CAPITAL.............................. $292,620
========
</TABLE>
I, Joseph L. Sclafani, E.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
instructions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
<PAGE>
EXHIBIT 25.3
___________________________________________
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 Trust I
(Exact name of obligor as specified in its charter)
Indiana Applied For
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
801 East 86th Avenue
Merrillville, Indiana 46410
(Address of principal executive offices) (Zip Code)
________________________________________
Preferred 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.
-2-
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a 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 17th day of December, 1998.
THE CHASE MANHATTAN BANK
By /s/ R. Lorenzen
---------------------------------
/s/ R. Lorenzen
Senior Trust Officer
-3-
<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, 1998, 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........ $ 11,951
Interest-bearing balances................................. 4,551
Securities:
Held to maturity securities................................. 1,740
Available for sale securities............................... 48,537
Federal funds sold and securities purchased under
agreements to resell...................................... 29,730
Loans and lease financing receivables:
Loans and leases, net of unearned income........ $127,379
Less: Allowance for loan and lease losses....... 2,719
Less: Allocated transfer risk reserve........... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve.................................... 124,660
Trading Assets.............................................. 51,549
Premises and fixed assets (including capitalized
leases)................................................... 3,009
Other real estate owned..................................... 272
Investments in unconsolidated subsidiaries and
associated companies...................................... 300
Customers' liability to this bank on acceptances
outstanding............................................... 1,329
Intangible assets........................................... 1,429
Other assets................................................ 13,563
--------
TOTAL ASSETS................................................ $292,620
========
</TABLE>
-4-
<PAGE>
LIABILITIES
<TABLE>
<CAPTION>
Deposits
<S> <C>
In domestic offices.......................................... $ 98,760
Noninterest-bearing...................................$39,071
Interest-bearing...................................... 59,689
In foreign offices, Edge and Agreement,
subsidiaries and IBF's....................................... 75,403
Noninterest-bearing...................................$ 3,877
Interest-bearing.......................................71,526
Federal funds purchased and securities sold under agree-
ments to repurchase............................................ 34,471
Demand notes issued to the U.S. Treasury....................... 1,000
Trading liabilities............................................ 41,589
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less................ 3,781
With a remaining maturity of more than one year
through three years........................................ 213
With a remaining maturity of more than three years........... 104
Bank's liability on acceptances executed and outstanding....... 1,329
Subordinated notes and debentures.............................. 5,408
Other liabilities.............................................. 12,041
TOTAL LIABILITIES.............................................. 274,099
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock................................................... 1,211
Surplus (exclude all surplus related to preferred stock)...... 10,441
Undivided profits and capital reserves......................... 6,287
Net unrealized holding gains (losses)
on available-for-sale securities............................... 566
Cumulative foreign currency translation adjustments............ 16
TOTAL EQUITY CAPITAL........................................... 18,521
--------
TOTAL LIABILITIES AND EQUITY CAPITAL........................... $292,620
========
</TABLE>
I, Joseph L. Sclafani, E.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 instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
