<PAGE>
As filed with the Securities and Exchange Commission on January 22, 1999
Registration Nos. 333-69279, 333-69279-01 and 333-69279-02
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
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
Indiana Delaware (State or other
(State or other (State or other jurisdiction of
jurisdiction of jurisdiction of incorporation or
incorporation or incorporation or organization)
organization) organization)
35-1762940 Applied for 35-1719974
(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, (312) 258-5500
and 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: [_]
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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>
PROSPECTUS
$850,000,000
NIPSCO Capital Markets, Inc.
Debentures
Medium-Term Notes
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NIPSCO Capital Trust I
Preferred Securities
Guaranteed as set forth herein by
Nipsco Capital Markets, Inc.
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NIPSCO Industries, Inc.
Common Shares
Stock Purchase Contracts
Stock Purchase Units
Obligations Pursuant to Support Agreement
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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.
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This Prospectus may not be used to sell any of the securities unless it is
accompanied by a Prospectus Supplement.
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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 January 22, 1999.
<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 the Debentures............................................. 11
Description of the 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 the Stock Purchase Contracts and the 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>
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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
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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
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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.
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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,
1998;
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(e) Bay State's Current Reports on Form 8-K dated December 30, 1997 and
November 25, 1998; and
(f) 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
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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 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 THE 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. A Global Debenture will be exchangeable for Debentures
registered in the names of persons other than the depositary or its nominee
only if (i) the depositary notifies Capital Markets that it is unwilling or
unable to continue as a depositary for such Global Debenture and no successor
depositary will have been appointed, (ii) the depositary, at any time, ceases
to be a clearing agency registered under the Exchange Act at which time the
depositary is required to be so registered to act as such depositary and no
successor depositary will have been appointed, (iii) Capital Markets, in its
sole discretion, determines that such Global Debenture will be so exchangeable
or (iv) there will have occurred an event of default with respect to the
Debentures (an "Indenture Event of Default") with respect to such Debentures.
Any Global Debenture that is exchangeable pursuant to the preceding sentence
will be exchangeable for Debentures registered in such names as the depositary
will direct. It is expected that such instructions will be based upon
directions received by the depositary from its Participants with respect to
ownership of beneficial interests in such Global Debenture.
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.
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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
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
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
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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:
(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.
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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);
(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.
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In the event an Indenture Event of Default occurs and is 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 the Preferred Securities in certain circumstances
have the right to direct the Property Trustee to exercise its rights as the
holder of the Debentures. See "Description of the Preferred Securities--Voting
Rights; Amendment of Declaration." 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, to the fullest extent
permitted by law, 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 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
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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.
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 THE 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.
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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 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 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
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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 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 fifteenth Business Day 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
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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 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 stated 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.
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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 preceding the redemption date.
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 the Declaration and 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.
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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 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 Events 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 unless such
Trust Enforcement Event has been cured before the giving of such notice.
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.
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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 or a Delaware Trustee,
however, will not be effective until a successor Trustee possessing the
qualifications to act as a Property Trustee or Delaware Trustee, as the case
may be, has accepted its appointment in accordance with the provisions of the
Declaration. If an Indenture Event of Default has occurred and continues, the
Property Trustee and the Delaware Trustee may be removed by a majority of the
stated liquidation amount of the Preferred Securities.
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:
(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 upon notification of issuance will be listed, 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
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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, 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 with,
convert into, amalgamate or 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 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 stated
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.
If 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
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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 the holders of the Preferred Securities
may be given at a separate meeting of holders of the Preferred Securities
convened for such purpose, at a meeting of all of the holders of the Trust
Securities or pursuant to written consent. The Regular Trustees will cause a
notice of any meeting at which the holders of the 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 the Preferred Securities or distribute the
Debentures in accordance with the Declaration and the terms of the Trust
Securities.
Notwithstanding that holders of the 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.
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.
Generally, the Declaration may be amended without the consent of the holders
of the Trust Securities, if such amendment does not have a material adverse
effect on certain rights, preferences or privileges of the holders of the Trust
Securities. Any amendment, however, that affects the powers, preferences or
special rights of the Trust Securities, or results in the dissolution, winding-
up or termination of the Trust (other than pursuant to the Declaration), will
not be effective unless the holders of at least 66 2/3% of the stated
liquidation amount of the Trust Securities have approved such amendment.
However, if an amendment affects only the powers, preferences or special rights
of Preferred Securities or the Common Securities, then such approval is
required only from the holders of the affected class. Further, any amendment
that changes the amount or timing of any Distribution or otherwise adversely
affects the amount of any Distribution required to be made in respect of the
Trust Securities, or any amendment that restricts the rights of a holder of
Trust Securities to institute a suit for the enforcement of payment of
Distributions, will not be effective unless each holder of Trust Securities has
approved such amendment.
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
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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 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.
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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 or direction of any 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 by it in complying with such request or direction.
Governing Law
The Declaration and the Preferred Securities will be governed by, construed
and interpreted in accordance with the laws of the State of Delaware.
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 upon the redemption of the Debentures if a Tax Event occurs or
upon maturity of the Debentures, to the extent the Trust has funds
available therefor;
(iii) 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 provided
in the Declaration), the lesser of (a) the aggregate of the stated
liquidation amount and all
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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) if a Tax Event occurs or upon maturity of
the Debentures, upon full payment of the redemption price of all of the Trust
Securities, (ii) 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 THE 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.
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
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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 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
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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 THE STOCK PURCHASE CONTRACTS AND THE 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.
The Stock Purchase Contracts and Stock Purchase Units will be governed by and
construed in accordance with the laws of the State of New York.
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
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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.
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
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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.
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
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that may be imposed in connection therewith (other than exchanges pursuant to
the Indenture not involving any transfer).
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."
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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.
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.
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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 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
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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.
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
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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 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
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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 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.
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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 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
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Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Interest Determination Date
with respect to such Interest Reset Date as may then be published by either the
Board of Governors of the Federal Reserve System or the 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
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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 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,
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on the related Calculation Date, then the Federal Funds Rate on such Federal
Funds Rate Interest Determination Date will be calculated by the Calculation
Agent and will be the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading brokers
of federal funds transactions in 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
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currency or composite currency is specified in the applicable Prospectus
Supplement or Pricing Supplement, United States dollars.
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
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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 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
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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.
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.
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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 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
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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 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
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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.
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.
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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 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.
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Unless otherwise specified in the applicable Prospectus Supplement or Pricing
Supplement, the depositary for the Global Securities will be The Depository
Trust Company ("DTC").
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).
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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 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.
57
<PAGE>
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.
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.
58
<PAGE>
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 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 1998 Annual
Report on Form 10-K 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.
59
<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 January 21, 1999.
NIPSCO Capital Markets, Inc.
(Registrant)
/s/ Stephen P. Adik
By __________________________________
Stephen P. Adik
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman and Director January 21, 1999
____________________________________
Gary L. Neale
/s/ Stephen P. Adik President and Director January 21, 1999
____________________________________ (Principal Executive
Stephen P. Adik Officer)
* Treasurer January 21, 1999
____________________________________ (Principal Financial
Francis P. Girot, Jr. Officer)
* Controller January 21, 1999
____________________________________ (Principal Accounting
Arthur A. Paquin Officer)
Executive Vice President and January 21, 1999
____________________________________ Director
Jeffrey W. Yundt
* Executive Vice President and January 21, 1999
____________________________________ Director
Patrick J. Mulchay
</TABLE>
/s/ Stephen P. Adik
*By: _____________________
Stephen P. Adik
Attorney-in-fact
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 January 21, 1999.
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 January 21, 1999.
NIPSCO Industries, Inc.
(Registrant)
/s/ Stephen P. Adik
By __________________________________
Stephen P. Adik
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman, President and January 21, 1999
____________________________________ Director (Principal
Gary L. Neale Executive Officer)
/s/ Stephen P. Adik Executive Vice President January 21, 1999
____________________________________ (Principal Financial
Stephen P. Adik Officer and Principal
Accounting Officer)
* Director January 21, 1999
____________________________________
Steven C. Beering
* Director January 21, 1999
____________________________________
Arthur J. Decio
* Director January 21, 1999
____________________________________
James T. Morris
* Director January 21, 1999
____________________________________
Denis E. Ribordy
* Director January 21, 1999
____________________________________
Ian M. Rolland
* Director January 21, 1999
____________________________________
Edmund A. Schroer
* Director January 21, 1999
____________________________________
John W. Thompson
* Director January 21, 1999
____________________________________
Robert J. Welsh
* Director January 21, 1999
____________________________________
Carolyn Y. Woo
</TABLE>
/s/ Stephen P. Adik
*By: _____________________
Stephen P. Adik
Attorney-in-fact
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>
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
17, 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)
5.1 Opinion of Schiff Hardin & Waite
5.2 Opinion of Richards, Layton & Finger, P.A.
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>
- --------
*Previously filed.
II-6
<PAGE>
Exhibit 4.5
=======================================
GUARANTEE AGREEMENT
NIPSCO CAPITAL TRUST I
Dated as of ______ __, 1999
=======================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION.......................... 1
SECTION 1.1. Definitions and Interpretation................................ 1
ARTICLE II
TRUST INDENTURE ACT............................. 4
SECTION 2.1. Trust Indenture Act: Application.............................. 4
SECTION 2.2. List of Holders of Securities................................. 4
SECTION 2.3. Reports by the Guarantee Trustee.............................. 4
SECTION 2.4. Periodic Reports to Guarantee Trustee......................... 4
SECTION 2.5. Evidence of Compliance Conditions Precedent................... 5
SECTION 2.6. Events of Default; Waiver..................................... 5
SECTION 2.7. Event of Default; Notice...................................... 5
SECTION 2.8. Conflicting Interests......................................... 5
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE............................. 5
SECTION 3.1. Powers and Duties of the Guarantee Trustee.................... 5
SECTION 3.2. Certain Rights of Guarantee Trustee........................... 7
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee......... 8
ARTICLE IV
GUARANTEE TRUSTEE............................. 9
SECTION 4.1. Guarantee Trustee; Eligibility................................ 9
SECTION 4.2. Appointment, Removal and Resignation of Guarantee Trustees.... 9
ARTICLE V
GUARANTEE................................. 10
SECTION 5.1. Guarantee..................................................... 10
SECTION 5.2. Waiver of Notice and Demand................................... 10
SECTION 5.3. Obligations Not Affected...................................... 10
-i-
<PAGE>
SECTION 5.4. Rights of Holders............................................. 11
SECTION 5.5. Guarantee of Payment.......................................... 11
SECTION 5.6. Subrogation................................................... 11
SECTION 5.7. Independent Obligations....................................... 12
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION.................. 12
SECTION 6.1. Limitation of Transactions.................................... 12
SECTION 6.2. Ranking....................................................... 12
ARTICLE VII
TERMINATION................................. 13
SECTION 7.1. Termination................................................... 13
ARTICLE VIII
INDEMNIFICATION............................... 13
SECTION 8.1. Exculpation................................................... 13
SECTION 8.2. Indemnification............................................... 13
ARTICLE IX
MISCELLANEOUS............................... 14
SECTION 9.1. Successors and Assigns........................................ 14
SECTION 9.2. Amendments.................................................... 14
SECTION 9.3. Notices....................................................... 14
SECTION 9.4. Benefit....................................................... 15
SECTION 9.5. Governing Law................................................. 15
-ii-
<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Guarantee"), dated as of _______ ___,
1999, is executed and delivered by NIPSCO Capital Markets, Inc., an Indiana
corporation (the "Guarantor"), and The Chase Manhattan Bank, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Securities (as defined herein) and of NIPSCO Capital Trust
I, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of _______ __, 1999, among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial ownership interests in the assets of the Issuer, the Issuer
is issuing on the date hereof _________ preferred securities, stated liquidation
amount $50 per security, having an aggregate liquidation amount of $___________,
designated the Preferred Securities (the "Preferred Securities") and
____________ common securities, liquidation amount $50 per security, having an
aggregate liquidation amount of $________, designated the Common Securities (the
"Common Securities" and, together with the Preferred Securities, the
"Securities"); and
WHEREAS, as an incentive for the Holders to purchase the Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Guarantee, to pay in full, to the Holders of the Securities,
the Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the purchase by each Holder of
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions and Interpretation. Unless the context
otherwise requires:
(a) capitalized terms used in this Guarantee but not defined in the
preamble above shall have the meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Guarantee shall have the same
meaning throughout;
(c) all references to "the Guarantee" or "this Guarantee" shall be to
this Guarantee as modified, supplemented or amended from time to time;
(d) all references in this Guarantee to Articles, Sections or
recitals shall be to Articles and Sections of, or recitals to, this
Guarantee unless otherwise specified;
(e) a term defined in the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation (the "Trust Indenture Act")
shall have the same meaning when used in this Guarantee unless otherwise
defined in this Guarantee; and
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(f) a reference to the singular shall include the plural and vice
versa, and a reference to any masculine form of a term shall include the
feminine form of a term, as applicable.
(g) the following terms shall have the following meanings:
"Affiliate" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person shall mean
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Authorized Officer" of a Person shall mean any Person that is
authorized to bind such Person.
"Business Day" shall mean 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 trustee under the
Indenture or the principal office of the Property Trustee under the Declaration
is closed for business.
"Corporate Trust Office" shall mean the principal office of the
Guarantee Trustee at which, at any particular time, its corporate trust business
shall be administered, which office at the date hereof is located at 450 West
33rd Street, 15th Floor, New York, New York 10001, Attention: Corporate Trust
Administration.
"Covered Person" shall mean any Holder or beneficial owner of
Securities.
"Debentures" shall mean the series of debentures to be issued by the
Debenture Issuer under the Indenture and to be purchased by the Issuer and held
by the Property Trustee.
"Debenture Issuer" shall mean NIPSCO Capital Markets, Inc., in its
capacity as issuer of the Debentures under the Indenture.
"Direction" by a person shall mean a written direction signed: (a) if
the Person is a natural person, by that Person; or (b) in any other case in the
name of such Person by one or more Authorized Officers of that Person.
"Event of Default" shall mean the failure of the Guarantor to perform
any of its payment or other obligations under this Guarantee.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Securities, to the
extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
the Securities, to the extent the Issuer has funds available therefor, (ii) the
redemption price, including all accumulated and unpaid Distributions to the date
of redemption with respect to the Securities in respect of which the related
Debentures have been redeemed by the Debenture Issuer upon the occurrence of a
Tax Event Redemption or repaid at maturity, to the extent the Issuer has funds
available therefor, and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for the Securities as
provided in the Declaration), the lesser of (a) the aggregate of the stated
liquidation amount and all accumulated and unpaid Distributions on the
Securities to the date of payment, to the extent the Issuer has funds available
therefor, and (b) the amount of assets of the Issuer remaining available for
distribution to Holders of the Securities in liquidation of the Issuer (in
either case, the "Liquidation Distribution").
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"Guarantee Trustee" shall mean The Chase Manhattan Bank, until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee and thereafter shall mean each such
Successor Guarantee Trustee.
"Holder" shall have the meaning given such term in the Declaration.
"Indemnified Person" shall mean the Guarantee Trustee, any Affiliate
of the Guarantee Trustee, or any officers, directors, shareholders, members,
partners, employees, representatives, nominees, custodians or agents of the
Guarantee Trustee.
"Indenture" shall mean the indenture, dated as of February 14, 1997,
among the Guarantor, Industries and The Chase Manhattan Bank, as trustee, as
amended and supplemented (including provisions of the Trust Indenture Act that
are deemed incorporated therein), pursuant to which the Debentures are to be
issued.
"Industries" shall mean NIPSCO Industries, Inc., an Indiana
corporation and an Affiliate of the Issuer.
"Majority in Liquidation Amount" shall mean, except as provided in the
terms of the Securities or the Trust Indenture Act, the Holders of outstanding
Securities, voting together as a single class, or, as the context may require,
the Holders of outstanding Preferred Securities or the Holders of outstanding
Common Securities, voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accumulated and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Officers' Certificate" shall have the meaning given such term in the
Declaration.
"Person" shall mean a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Property Trustee" shall mean The Chase Manhattan Bank, in its
capacity as property trustee under the Declaration.
"Responsible Officer" shall mean, with respect to the Guarantee
Trustee, any officer within the Corporate Trust Office, including any vice-
president, any assistant vice-president, any assistant secretary, the treasurer,
any assistant treasurer or other officer of the Corporate Trust Office
customarily performing functions similar to those performed by any of the above
designated officers and also shall mean, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred due to that
officer's knowledge of and familiarity with the particular subject.
"Successor Guarantee Trustee" shall mean a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Tax Event Redemption" shall have the meaning given such term in the
Declaration.
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"Trust Enforcement Event" shall have the meaning given such term in
the Declaration.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act: Application.
(a) This Guarantee is subject to the provisions of the Trust Indenture
Act that are required to be part of this Guarantee and, to the extent
applicable, shall be governed by such provisions; and
(b) If and to the extent that any provision of this Guarantee
conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust
Indenture Act, such imposed duties of the Trust Indenture Act shall control.
SECTION 2.2. List of Holders of Securities.
(a) The Guarantor shall provide the Guarantee Trustee with a list, in
such form as the Guarantee Trustee may reasonably require, of the names and
addresses of the Holders of the Securities ("List of Holders") (i) within one
Business Day after January 1 and July 1 of each year, and (ii) at any other
time, within 30 days of receipt by the Guarantor of a written request from the
Guarantee Trustee for a List of Holders as of a date no more than 15 days before
such List of Holders is given to the Guarantee Trustee. If at any time the List
of Holders does not differ from the most recent List of Holders given to the
Guarantee Trustee by the Guarantor, the Guarantor shall not be obligated to
provide such List of Holders. The Guarantee Trustee shall preserve, in as
current form as is reasonably practicable, all information contained in Lists of
Holders it receives in its capacity as Guarantee Trustee; provided that the
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under, and
shall be entitled to the benefits of, Sections 311(a), 311(b) and 312(b) of the
Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
Within 60 days after May 15 of each year (commencing with the year of
the first anniversary of the issuance of the Preferred Securities), the
Guarantee Trustee shall provide to the Holders of the Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Guarantee
Trustee also shall comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4. Periodic Reports to Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee such documents,
reports and information as required by Section 314 of the Trust Indenture Act
(if any) and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act.
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SECTION 2.5. Evidence of Compliance Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this Guarantee
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Securities may,
by vote, on behalf of the Holders of all of the Securities, waive any past Event
of Default and its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured, for every purpose of this Guarantee. No such waiver shall
extend to any subsequent Event of Default or other default or impair any right
consequent thereon.
SECTION 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Securities, notices of all Events of Default actually known to a
Responsible Officer of the Guarantee Trustee, unless such defaults have been
cured before the giving of such notice; provided that the Guarantee Trustee
shall be protected in withholding such notice if and so long as a Responsible
Officer of the Guarantee Trustee determines in good faith that the withholding
of such notice is in the interests of the Holders of the Securities.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written notice
or a Responsible Officer of the Guarantee Trustee, charged with the
administration of the Declaration, shall have obtained actual knowledge.
SECTION 2.8. Conflicting Interests.
The Declaration and the Indenture shall be deemed to be specifically
described in this Guarantee for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee shall be held by the Guarantee Trustee for the
benefit of the Holders of the Securities. The Guarantee Trustee shall not
transfer this Guarantee to any Person except a Holder of Securities exercising
his or her rights pursuant to Section 5.4(b) or to a Successor Guarantee Trustee
on acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee
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pursuant to Section 4.2. The right, title and interest of the Guarantee Trustee
shall automatically vest in any Successor Guarantee Trustee, and such vesting
and cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of
the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee
shall enforce this Guarantee for the benefit of the Holders of the Securities.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing or waiver of all Events of Default that may have
occurred, shall undertake to perform only those duties specifically set forth in
this Guarantee, and no implied covenants shall be read into this Guarantee
against the Guarantee Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.6), the Guarantee Trustee
shall exercise the rights and powers vested in it by this Guarantee, and use the
same degree of care and skill in its exercise thereof, as a prudent individual
would exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Guarantee shall be construed to relieve the
Guarantee Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by reference to the express provisions of
this Guarantee, and the Guarantee Trustee shall not be liable except
for the performance of those duties and obligations specifically set
forth in this Guarantee, and no implied covenants or obligations shall
be read into this Guarantee against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Guarantee
Trustee and conforming to the requirements of this Guarantee; but in
the case of any such certificates or opinions that are specifically
required to be furnished to the Guarantee Trustee under this
Guarantee, the Guarantee Trustee shall be under a duty to examine such
certificates or opinions to determine whether or not they conform to
the requirements of this Guarantee;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
Liquidation Amount of the Securities relating to the time, method and place
of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of this
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Guarantee, or the exercise of any trust or power conferred upon the
Guarantee Trustee under this Guarantee; and
(iv) no provision of this Guarantee shall require the Guarantee
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Guarantee
or indemnity, reasonably satisfactory to the Guarantee Trustee, against
such risk or liability is not reasonably assured to it.
SECTION 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee shall be sufficiently evidenced by a Direction or an Officers'
Certificate.
(iii) Whenever, in the administration of this Guarantee, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Guarantee Trustee (unless other evidence is specifically prescribed in this
Guarantee) may request, in the absence of bad faith on its part, and
conclusively rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee shall have no duty to record, file or
register any instrument (or rerecord, refile or reregister such
instrument).
(v) The Guarantee Trustee may consult with counsel of its choice
or other experts. The advice or opinion of such counsel and experts with
respect to legal matters or advice within the scope of such experts' area
of expertise, and the written advice or opinion of such counsel with
respect to such matters, shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by the
Guarantee Trustee under this Guarantee in good faith and in accordance with
such advice or opinion. Such counsel may be counsel to the Guarantor or any
of its Affiliates and may include any of its employees. The Guarantee
Trustee shall have the right at any time to seek instructions concerning
the administration of this Guarantee from any court of competent
jurisdiction.
(vi) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee at the
request or direction of any Holder of the Securities, unless such Holder
has provided to 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
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liabilities that might be incurred thereby, including such reasonable
advances as may be requested by the Guarantee Trustee. The foregoing will
not relieve the Guarantee Trustee, upon the occurrence of an Event of
Default under this Guarantee, of its obligation to exercise the rights and
powers vested in it by this Guarantee.
(vii) The Guarantee Trustee shall not be bound to investigate the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see
fit.
(viii) The Guarantee Trustee may execute any of the trusts or
powers vested in it by this Guarantee or perform any duties imposed upon it
by this Guarantee either directly or by or through agents, nominees,
custodians or attorneys, and the Guarantee Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed by the Guarantee Trustee with due care under this Guarantee.
(ix) Any action taken by the Guarantee Trustee or its agents
under this Guarantee shall bind the Holders of the Securities, and the
signature of the Guarantee Trustee or its agents alone shall be sufficient
and effective to perform any such action. No third party shall be required
to investigate the authority of the Guarantee Trustee so to act or the
Guarantee Trustee's compliance with any of the terms and provisions of this
Guarantee, both of which shall be evidenced conclusively by the Guarantee
Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Guarantee, the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (A) may request instructions from the
Holders of a Majority in Liquidation Amount of the Securities, (B) may
refrain from enforcing such remedy or right or taking such other action
until such instructions are received and (C) shall be protected in
conclusively relying on or acting in accordance with such instructions.
(b) No provision of this Guarantee shall be deemed to impose any duty
or obligation on the Guarantee Trustee to perform any act or acts or exercise
any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent to act in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee.
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ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any state or territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination by
federal, state, territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to
law or the requirements of the applicable supervising or examining
authority, then, for the purposes of this Section 4.1(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to
so act under Section 4.l(a), the Guarantee Trustee shall immediately resign in
the manner and with the effect set forth in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of Guarantee
Trustees.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.2(a) until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by a written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee shall hold office until a Successor
Guarantee Trustee has been appointed or until its removal or resignation. The
Guarantee Trustee may resign from office (without need for prior or subsequent
accounting) by a written instrument executed by the Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
by a written instrument executed by such Successor Guarantee Trustee and
delivered to the Guarantor and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
shall have accepted appointment as provided in this Section 4.2 within 60 days
after delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition any court of competent jurisdiction for
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appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, it may deem proper, appoint a Successor
Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or omissions of
any Successor Guarantee Trustee.
(f) Upon termination of this Guarantee or removal or resignation of
the Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to
the Guarantee Trustee all amounts accrued to the date of such termination,
removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee.
To the extent set forth in this Guarantee, the Guarantor irrevocably
and unconditionally agrees to pay in full to the Holders of the Securities the
Guarantee Payments (without duplication of amounts paid by the Issuer), as and
when due, regardless of any defense, right of set-off or counterclaim that the
Issuer may have or assert. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders of the Securities or by causing the Issuer to pay such
amounts to the Holders of the Securities. If a Trust Enforcement Event has
occurred and is continuing, the rights of the Holders of the Common Securities
to receive Guarantee Payments will be subordinated to the rights of the Holders
of Preferred Securities to receive Guarantee Payments.
SECTION 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Guarantee and
of any liability to which this Guarantee applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Securities to be performed or
observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, redemption price, Liquidation Distribution or any
other sums payable under the terms of the Securities or the extension of time
for the performance of any other obligation under, arising out of, or in
connection with, the Securities;
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(c) any failure, omission, delay or lack of diligence on the part of
the Holders of the Securities to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders of the Securities pursuant
to the terms of the Securities, or any action on the part of the Issuer granting
indulgence or an extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Securities;
(f) the settlement or compromise of any obligation guaranteed or
incurred in this Guarantee; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of the Guarantor, it being the intent
of this Section 5.3 that the obligations of the Guarantor under this Guarantee
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders of the Securities to give
notice to, or obtain consent of, the Guarantor with respect to the happening of
any of the foregoing.
SECTION 5.4. Rights of Holders.
(a) The Holders of a Majority in Liquidation Amount of the 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 this Guarantee
or to direct the exercise of any trust or power conferred upon the Guarantee
Trustee under this Guarantee.
(b) If the Guarantee Trustee fails to enforce this Guarantee, any
Holder of the Securities may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Guarantee, without first instituting
a legal proceeding directly against the Issuer, the Guarantee Trustee or any
other Person. Notwithstanding the foregoing, if the Guarantor has failed to make
a Guarantee Payment, a Holder of Securities may directly institute a proceeding
against the Guarantor for enforcement of this Guarantee for such payment. The
Guarantor waives any right or remedy to require that any action on this
Guarantee be brought first against the Issuer or any other Person before
proceeding directly against the Guarantor.
SECTION 5.5. Guarantee of Payment.
This Guarantee constitutes a guarantee of payment and not of
collection.
SECTION 5.6. Subrogation.
The Guarantor shall be subrogated to all the rights, if any, of the
Holders of the Securities against the Issuer with respect to any amounts paid to
such Holders by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee, if, at the time of any such payment,
any amounts are due and unpaid under this Guarantee. If any amount shall be
paid to
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the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders of the Securities and to pay over such
amount to such Holders.
SECTION 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Securities, and
that the Guarantor shall be liable as principal and as debtor under this
Guarantee to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g) of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1. Limitation of Transactions.
As long as any 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 the Guarantor,
then the Guarantor 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 the Guarantor's 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 the Guarantor 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 the Guarantor or Industries of the
debt securities of any subsidiary of the Guarantor 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 the Guarantor or
Industries in connection with the satisfaction by the Guarantor or Industries of
its obligations under any employee benefit plans or the satisfaction by the
Guarantor or Industries of its obligations pursuant to any contract or security
outstanding on the date of such event requiring the Guarantor or Industries to
purchase capital stock of the Guarantor or Industries, (b) as a result of a
reclassification of the Guarantor's or Industries' capital stock or the exchange
or conversion of one class or series of the Guarantor's or Industries' capital
stock for another class or series of the Guarantor's or Industries' capital
stock, (c) the purchase of fractional interests in shares of the Guarantor's 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 the Guarantor or Industries, (e)
redemptions or repurchases of any rights pursuant to a rights agreement and (f)
payments under this Guarantee).
SECTION 6.2. Ranking.
If a Trust Enforcement Event has occurred and is continuing under the
Declaration, the rights of the Holders of the Common Securities to receive
Guarantee Payments will be subordinated to the rights of the Holders of
Preferred Securities to receive Guarantee Payments.
ARTICLE VII
TERMINATION
12
<PAGE>
SECTION 7.1. Termination.
This Guarantee will terminate upon (i) the Guarantor's full payment of
the redemption price of all the Securities in the event of a Tax Event
Redemption or at the maturity of the Debentures, (ii) distribution of the
Debentures held by the Issuer to the Holders of the Securities or (iii) full
payment of the amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder of the Securities must restore payment of any sums paid under
the Securities or under this Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission by such Indemnified
Person in good faith in accordance with this Guarantee and in a manner that such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to the Holders of the Preferred Securities might properly be
paid.
SECTION 8.2. Indemnification.
(a) To the fullest extent permitted by applicable law, the Guarantor
shall indemnify and hold harmless each Indemnified Person from and against any
loss, damage or claim incurred by such Indemnified Person by reason of any act
or omission by such Indemnified Person in good faith in accordance with this
Guarantee Agreement and in a manner such Indemnified Person reasonably believed
to be within the scope of authority conferred on such Indemnified Person by this
Guarantee Agreement, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such Indemnified
Person by reason of negligence or willful misconduct with respect to such acts
or omissions.
(b) To the fullest extent permitted by applicable law, reasonable out-
of-pocket expenses (including legal fees) incurred by an Indemnified Person in
defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Guarantor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf
13
<PAGE>
of the Indemnified Person to repay such amount if it shall be determined that
the Indemnified Person is not entitled to be indemnified as authorized in
Section 8.2(a).
(c) The provisions set forth in this Section 8.2 shall survive the
termination of the Guarantee or the resignation or removal of the Guarantee
Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee shall bind
the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Securities then
outstanding.
SECTION 9.2. Amendments.
Except with respect to any changes that do not adversely affect the
rights of the Holders of the Securities in any material respect, in which case
no consent of Holders will be required, this Guarantee may be amended only with
the prior approval of the Holders of at least a Majority in Liquidation Amount
of the Securities. The provisions of Section 11.2 of the Declaration with
respect to meetings of Holders of the Securities apply to the giving of such
approval.
SECTION 9.3. Notices.
All notices provided for in this Guarantee shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
(a) If given to the Guarantee Trustee, at the mailing address set
forth below (or such other address as the Guarantee Trustee may give notice of
to the Holders of the Securities):
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trust Administration
Telecopy No.: __________________
(b) If given to the Guarantor, at the mailing address set forth below
(or such other address as the Guarantor may give notice of to the Holders of the
Securities):
NIPSCO Capital Markets, Inc.
801 East 86th Avenue
Merrillville, Indiana 46410
Attention: Francis P. Girot, Jr.
Telecopy No.: (219) 853-5352
14
<PAGE>
(c) If given to any Holder of the Securities, at such Holder's
address as set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 9.4. Benefit.
This Guarantee shall be solely for the benefit of the Holders of the
Securities and, subject to Section 3.1(a), is not separately transferable from
the Securities.
SECTION 9.5. Governing Law.
THIS GUARANTEE SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.6. Governing Law.
This Guarantee may contain more than one counterpart of the signature
page, and this Guarantee may be executed by the affixing of the signature of
each of the parties to one of such counterpart signature pages. All such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
15
<PAGE>
THIS GUARANTEE is executed as of the day and year first above written.
NIPSCO CAPITAL MARKETS, INC., as Guarantor
By:_______________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Guarantee Trustee
By:_______________________________
Name:
Title:
16
<PAGE>
Exhibit 4.8
================================================================================
AMENDED AND RESTATED DECLARATION OF TRUST
NIPSCO Capital Trust I
Dated as of ____________ __, 1999
================================================================================
<PAGE>
CROSS REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of Trust
Indenture Act of Section of
1939, as amended Agreement
- ---------------- ---------
<S> <C>
310(a).....................................................................6.3
310(b)..........................................................6.3(c); 6.3(d)
310(c)............................................................Inapplicable
311(a)..................................................................2.2(b)
311(b)..................................................................2.2(b)
311(c)............................................................Inapplicable
312(a)..................................................................2.2(a)
312(b)..................................................................2.2(b)
312(c)............................................................Inapplicable
313(a).....................................................................2.3
313(b).....................................................................2.3
313(c).....................................................................2.3
313(d).....................................................................2.3
314(a).....................................................................2.4
314(b)............................................................Inapplicable
314(c).....................................................................2.5
314(d)............................................................Inapplicable
314(e).....................................................................2.5
314(f)............................................................Inapplicable
315(a).........................................................3.9(b); 3.10(a)
315(b)..................................................................2.7(a)
315(c)..................................................................3.9(a)
315(d)..................................................................3.9(b)
316(a).....................................................2.6; 7.5(b); 7.6(c)
316(b)............................................................Inapplicable
316(c)............................................................Inapplicable
317(a)....................................................................3.16
317(b)............................................................Inapplicable
318(a)..................................................................2.1(c)
</TABLE>
- -----------------------
* This Cross-Reference Table does not constitute part of the Agreement and
shall not have any bearing upon the interpretation of any of its terms or
provisions.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
ARTICLE 1: INTERPRETATION AND DEFINITIONS................................. 1
SECTION 1.1 Interpretation and Definitions.............................. 1
Affiliate........................................................... 2
Applicable Ownership Interest....................................... 2
Applicable Principal Amount......................................... 2
Authorized Officer.................................................. 2
Beneficial Owner.................................................... 2
Business Day........................................................ 2
Business Trust Act.................................................. 2
Cash Settlement..................................................... 2
Certificate......................................................... 2
Closing Date........................................................ 2
Code................................................................ 3
Collateral Agent.................................................... 3
Commission.......................................................... 3
Common Security..................................................... 3
Common Security Certificate......................................... 3
"Corporate SPUs..................................................... 3
Corporate Trust Office.............................................. 3
Covered Person...................................................... 3
Debentures.......................................................... 3
Debenture Issuer.................................................... 3
Debenture Issuer Indemnified Person................................. 3
Depositary.......................................................... 3
Depositary Participant.............................................. 3
Direct Action....................................................... 3
Distribution........................................................ 4
Exchange Act........................................................ 4
Failed Remarketing.................................................. 4
Fiduciary Indemnified Person........................................ 4
Fiscal Year......................................................... 4
Global Security..................................................... 4
Guarantee........................................................... 4
Holder.............................................................. 4
Indemnified Person.................................................. 4
Indenture........................................................... 4
Indenture Event of Default.......................................... 4
Indenture Trustee................................................... 4
Investment Company.................................................. 4
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Investment Company Act.............................................. 4
Legal Action........................................................ 5
List of Holders..................................................... 5
Majority in Liquidation Amount...................................... 5
New York Stock Exchange............................................. 5
Officers' Certificate............................................... 5
Paying Agent........................................................ 5
Payment Amount...................................................... 5
Person.............................................................. 5
Pledge Agreement.................................................... 5
Primary Treasury Dealer............................................. 6
Preferred Security.................................................. 6
Preferred Security Certificate...................................... 6
Property Account.................................................... 6
Property Trustee.................................................... 6
Pro Rata............................................................ 6
Purchase Contract Agent............................................. 6
Purchase Contract Agreement......................................... 6
Purchase Contract Settlement Date................................... 6
Quorum.............................................................. 6
Quotation Agent..................................................... 6
Redemption Amount................................................... 6
Redemption/Distribution Notice...................................... 6
Redemption Price.................................................... 6
Regular Trustee..................................................... 7
Remarketing......................................................... 7
Remarketing Date.................................................... 7
Reset Rate.......................................................... 7
Responsible Officer................................................. 7
Rule 3a-5........................................................... 7
Securities.......................................................... 7
Securities Act...................................................... 7
Sponsor............................................................. 7
Successor Delaware Trustee.......................................... 7
Successor Entity.................................................... 7
Successor Property Trustee.......................................... 8
Successor Security.................................................. 8
Supermajority....................................................... 8
Tax Event........................................................... 8
Tax Event Redemption................................................ 8
Tax Event Redemption Date........................................... 8
10% in Liquidation Amount........................................... 8
Termination Event................................................... 8
Treasury Portfolio.................................................. 8
Treasury Regulations................................................ 9
Treasury Securities................................................. 9
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Trust................................................................. 9
Trust Enforcement Event............................................... 9
Trust Indenture Act................................................... 9
Trustee............................................................... 9
ARTICLE 2: TRUST INDENTURE ACT.............................................. 9
SECTION 2.1 Trust Indenture Act; Application............................ 9
SECTION 2.2 Lists of Holders of the Securities.......................... 10
SECTION 2.3 Reports by the Property Trustee............................. 10
SECTION 2.4 Periodic Reports to the Property Trustee.................... 10
SECTION 2.5 Evidence of Compliance with Conditions Precedent............ 11
SECTION 2.6 Trust Enforcement Events; Waiver............................ 11
SECTION 2.7 Trust Enforcement Event; Notice............................. 12
ARTICLE 3: ORGANIZATION..................................................... 12
SECTION 3.1 Name and Organization....................................... 12
SECTION 3.2 Office...................................................... 13
SECTION 3.3 Purpose..................................................... 13
SECTION 3.4 Authority................................................... 13
SECTION 3.5 Title to Property of the Trust.............................. 13
SECTION 3.6 Powers and Duties of the Regular Trustees................... 14
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees........ 15
SECTION 3.8 Powers and Duties of the Property Trustee................... 16
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee. 18
SECTION 3.10 Certain Rights of Property Trustee.......................... 19
SECTION 3.11 Delaware Trustee............................................ 21
SECTION 3.12 Execution of Documents...................................... 21
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities...... 22
SECTION 3.14 Duration of Trust........................................... 22
SECTION 3.15 Mergers..................................................... 22
SECTION 3.16 Property Trustee May File Proofs of Claim................... 23
ARTICLE 4: THE SPONSOR...................................................... 24
SECTION 4.1 Responsibilities of the Sponsor............................. 24
SECTION 4.2 Indemnification and Expenses of the Trustees................ 25
ARTICLE 5: THE HOLDERS OF THE COMMON SECURITIES............................. 25
SECTION 5.1 Debenture Issuer's Purchase of the Common Securities........ 25
SECTION 5.2 Covenants of the Debenture Issuer........................... 25
ARTICLE 6: THE TRUSTEES..................................................... 26
SECTION 6.1 Number of Trustees.......................................... 26
SECTION 6.2 Delaware Trustee; Eligibility............................... 26
SECTION 6.3 Property Trustee; Eligibility............................... 26
SECTION 6.4 Qualifications of the Regular Trustees Generally............ 27
SECTION 6.5 Initial Regular Trustees.................................... 27
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
SECTION 6.6 Appointment, Removal and Resignation of the Trustees........ 27
SECTION 6.7 Vacancies among Trustees.................................... 28
SECTION 6.8 Effect of Vacancies......................................... 29
SECTION 6.9 Meetings.................................................... 29
SECTION 6.10 Delegation of Power by the Regular Trustees................. 29
SECTION 6.11 Merger, Consolidation, Conversion or Succession to Business. 29
ARTICLE 7: TERMS OF THE SECURITIES.......................................... 30
SECTION 7.1 General Provisions Regarding the Securities................. 30
SECTION 7.2 Distributions............................................... 32
SECTION 7.3 Redemption of Securities.................................... 34
SECTION 7.4 Redemption Procedures....................................... 34
SECTION 7.5 Voting Rights of the Preferred Securities................... 35
SECTION 7.6 Voting Rights of the Common Securities...................... 37
SECTION 7.7 Paying Agent................................................ 38
SECTION 7.8 Listing..................................................... 38
SECTION 7.9 Transfer of the Preferred Securities........................ 38
SECTION 7.10 Mutilated, Destroyed, Lost or Stolen Certificates........... 39
SECTION 7.11 Deemed Holders.............................................. 40
SECTION 7.12 Global Securities........................................... 40
SECTION 7.13 Remarketing................................................. 42
ARTICLE 8: DISSOLUTION AND TERMINATION OF THE TRUST......................... 44
SECTION 8.1 Dissolution and Termination of the Trust.................... 44
SECTION 8.2 Liquidation Distribution Upon Dissolution of the Trust...... 45
ARTICLE 9: LIMITATION OF LIABILITY OF HOLDERS OF THE SECURITIES,
THE DELAWARE TRUSTEE AND OTHERS........................................... 45
SECTION 9.1 Liability................................................... 45
SECTION 9.2 Exculpation................................................. 46
SECTION 9.3 Fiduciary Duty.............................................. 46
SECTION 9.4 Indemnification............................................. 47
SECTION 9.5 Outside Businesses.......................................... 49
ARTICLE 10: ACCOUNTING...................................................... 50
SECTION 10.1 Fiscal Year................................................. 50
SECTION 10.2 Certain Accounting Matters.................................. 50
SECTION 10.3 Banking..................................................... 50
SECTION 10.4 Withholding................................................. 50
ARTICLE 11: AMENDMENTS AND MEETINGS......................................... 51
SECTION 11.1 Amendments.................................................. 51
SECTION 11.2 Meetings of the Holders of the Securities; Action
by Written Consent.......................................... 53
ARTICLE 12: REPRESENTATIONS OF THE PROPERTY TRUSTEE AND THE DELAWARE
TRUSTEE................................................................... 54
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
SECTION 12.1 Representations and Warranties of the Property Trustee...... 54
SECTION 12.2 Representations and Warranties of the Delaware Trustee...... 55
ARTICLE 13: MISCELLANEOUS................................................... 55
SECTION 13.1 Notices..................................................... 55
SECTION 13.2 Governing Law............................................... 56
SECTION 13.3 Intention of the Parties.................................... 56
SECTION 13.4 Headings.................................................... 56
SECTION 13.5 Successors and Assigns...................................... 57
SECTION 13.6 Partial Enforceability...................................... 57
SECTION 13.7 Counterparts................................................ 57
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
EXHIBITS
Exhibit A Form of Preferred Security Certificate
Exhibit B Form of Common Security Certificate
</TABLE>
ix
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST
This Amended and Restated Declaration of Trust ("Declaration"), dated as of
_______ __, 1999, by and among NIPSCO Capital Markets, Inc., an Indiana
corporation, as Sponsor, Stephen P. Adik, Francis P. Girot, Jr. and Arthur A.
Paquin, as the initial Regular Trustees, The Chase Manhattan Bank, as the
initial Property Trustee, and Chase Manhattan Bank Delaware, as the initial
Delaware Trustee, not in their individual capacities but solely as Trustees, and
the Holders, from time to time, of the Securities representing undivided
beneficial ownership interests in the assets of the Trust to be issued pursuant
to this Declaration.
Whereas, the Trustees and the Sponsor established NIPSCO Capital Trust I
(the "Trust"), a business trust under the Business Trust Act, pursuant to a
Declaration of Trust dated as of December 17, 1998 (the "Original Declaration")
and a Certificate of Trust (the "Certificate of Trust") filed with the Secretary
of State of the State of Delaware on December 17, 1998; and
Whereas, the sole purpose of the Trust shall be to sell and issue certain
securities representing undivided beneficial ownership interests in the assets
of the Trust, to invest the proceeds from such sales in the Debentures issued by
the Debenture Issuer and to engage in only those activities necessary or
incidental thereto; and
Whereas, the parties hereto, by this Declaration, amend and restate each
and every term and provision of the Original Declaration.
Now, Therefore, it being the intention of the parties hereto to continue
the Trust as a business trust under the Business Trust Act and that this
Declaration constitute the governing instrument of such business trust, the
Trustees hereby declare that all assets contributed to the Trust be held in
trust for the benefit of the Holders, from time to time, of the Securities
representing undivided beneficial ownership interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration.
ARTICLE 1: INTERPRETATION AND DEFINITIONS
SECTION 1.1 Interpretation and Definitions. Unless the context otherwise
requires:
(a) capitalized terms used in this Declaration but not defined in the
preamble above shall have the meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration shall have the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" shall be to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles, Sections, Recitals and
Exhibits shall be to Articles and Sections of, or Recitals and Exhibits to, this
Declaration unless otherwise specified;
(e) unless otherwise defined in this Declaration, a term defined in the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), shall have
the same meaning when used in this Declaration; and
<PAGE>
(f) a reference to the singular shall include the plural and vice versa,
and a reference to any masculine form of a term shall include the feminine form
of a term, as applicable.
(g) the following terms shall have the following meanings:
"Affiliate" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person shall mean the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" shall have meanings correlative to
the foregoing.
"Applicable Margin" shall mean the spread determined as set forth
below, based on the prevailing rating of the Remarketed Securities in effect at
the close of business on the Business Day immediately preceding the date of a
Failed Remarketing:
<TABLE>
<CAPTION>
Prevailing Rating Spread
----------------- ------
<S> <C>
AA/"Aa".................................. 3.00%
A/"a".................................... 4.00%
BBB/"Baa"................................ 5.00%
Below BBB/"Baa".......................... 7.00%
</TABLE>
For purposes of this definition, the "prevailing rating" of the Remarketed
Securities shall be:
(i) AA/"Aa" if the Remarketed Securities have a credit rating of
AA-or better by S&P and "Aa3" or better by Moody's or the equivalent
of such ratings by such agencies or a substitute rating agency or
substitute rating agencies selected as provided below;
(ii) if not under clause (i) above, then A/"a" if the Remarketed
Securities have a credit rating of A- or better by S&P and "A3" or
better by Moody's or the equivalent of such ratings by such agencies
or a substitute rating agency or substitute rating agencies selected
as provided below;
(iii) if not under clauses (i) or (ii) above, then BBB/"Baa" if
the Remarketed Securities have a credit rating of BBB- or better by
S&P and "Baa3" or better by Moody's or the equivalent of such ratings
by such agencies or a substitute rating agency or substitute rating
agencies selected as provided below; or
(iv) if not under clauses (i) - (iii) above, then Below
BBB/"Baa".
Notwithstanding the foregoing, (A) if (i) the credit rating of the Remarketed
Securities by S&P shall be on the "Credit Watch" of S&P with a designation of
"negative implications" or "developing," or (ii) the credit rating of the
Remarketed Securities by Moody's shall be on the "Corporate Credit Watch List"
of Moody's with a designation of "downgrade" or "uncertain," or, in each case,
on any successor list of S&P or Moody's with a comparable designation, the
prevailing ratings of the Remarketed Securities shall be deemed to be
2
<PAGE>
within a range one full level lower in the above table than those actually
assigned to the Remarketed Securities by Moody's and S&P and (B) if the
Remarketed Securities are rated by only on rating agency on or before the
Remarketing Date, the prevailing rating shall at all times be determined without
reference to the rating of any other rating agency; provided that if no such
rating agency shall have in effect a rating for the Remarketed Securities, or if
the Lead Remarketing Agent shall not select a substitute rating agency or rating
agencies, as required above, the prevailing rating shall be Below BBB/"baa."
"Applicable Ownership Interest" shall mean, with respect to a
Corporate SPU and the U.S. treasury securities in the Treasury Portfolio, (A) a
1/20, or 5%, undivided beneficial ownership interest in a $1,000 face amount of
a principal or interest strip in a U.S. treasury security included in such
Treasury Portfolio that matures on or prior to ______, 2003 and (B) for each
scheduled interest payment date on the Debentures after the Tax Event Redemption
Date, a 1/20, or 5%, undivided beneficial ownership interest in a $1,000 face
amount of such U.S. treasury security that is a principal or interest strip
maturing on such date.
"Applicable Principal Amount" shall mean either (A) if the Tax Event
Redemption Date occurs prior to the Purchase Contract Settlement Date, the
aggregate principal amount of the Debentures corresponding to the aggregate
stated liquidation amount of the Preferred Securities that are components of the
Corporate PIES on the Tax Event Redemption Date or (B) if the Tax Event
Redemption Date occurs on or after the Purchase Contract Settlement Date, the
aggregate principal amount of the Debentures corresponding to the aggregate
stated liquidation amount of the Preferred Securities outstanding on such Tax
Event Redemption Date.
"Authorized Officer" of a Person shall mean any Person that is
authorized to bind such Person.
"Beneficial Owner" shall mean, with respect to a Global Security, a
Person who is the beneficial owner of such book-entry interest as reflected on
the books of the Depositary or on the books of a Person maintaining an account
with such Depositary (directly as a Depositary Participant or as an indirect
participant, in each case in accordance with the rules of such Depositary).
"Business Day" shall mean 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 principal office
of the Indenture Trustee or the Property Trustee is closed for business.
"Business Trust Act" shall mean Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to time,
or any successor legislation.
"Cash Settlement" shall have the meaning specified in the Purchase
Contract Agreement.
"Certificate" shall mean a Common Security Certificate or a Preferred
Security Certificate.
"Closing Date" shall mean the date on which the Preferred Securities
are issued and sold.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor legislation. A reference to a specific section of
the Code refers not only to such specific section but also to any corresponding
provision of any federal tax statute enacted after the date of this Declaration,
as such specific section or corresponding provision is in effect on the date of
application of the provisions of this Declaration containing such reference.
3
<PAGE>
"Collateral Agent" shall mean The First National Bank of Chicago.
"Commission" shall mean the Securities and Exchange Commission.
"Common Security" shall have the meaning specified in Section 7.1.
"Common Security Certificate" shall mean a definitive certificate in
fully registered form representing a Common Security, substantially in the form
of Exhibit B hereto.
"Corporate SPU" shall mean a stock purchase unit consisting of a unit
comprised of (A) a stock purchase contract under which (i) the holder of the
unit will purchase from Industries, for $50.00 in cash, a certain number of
common shares of Industries and (ii) Industries will pay such holder contract
adjustment payments and (B) beneficial ownership of a Preferred Security or
Debenture, or in certain circumstances following the occurrence of a Tax Event,
the appropriate Applicable Ownership Interest of the Treasury Portfolio.
"Corporate Trust Office" shall mean the principal office of the
Property Trustee at which, at any particular time, its corporate trust business
shall be administered, which office at the date hereof is located at 450 West
33rd Street, 15th Floor, New York, New York 10001.
"Covered Person" shall mean (A) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates and (B) any Holder.
"Debentures" shall mean the series of debentures to be issued by the
Debenture Issuer under the Indenture and to be purchased by the Trust and held
by the Property Trustee.
"Debenture Issuer" shall mean NIPSCO Capital Markets, Inc., an Indiana
corporation, in its capacity as issuer of the Debentures under the Indenture.
"Debenture Issuer Indemnified Person" shall mean (A) any Regular
Trustee, (B) any Affiliate of any Regular Trustee, (C) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee or any Affiliate thereof or (D) any officer, employee or agent
of the Trust or its Affiliates.
"Depositary" shall mean, with respect to Securities issuable in whole
or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as depositary for
such Securities, and initially shall be The Depository Trust Company.
"Depositary Participant" shall mean a member of, or participant in,
the Depositary.
"Direct Action" shall have the meaning specified in Section 3.8(e).
"Distribution" shall mean a distribution payable to the Holders in
accordance with Section 7.2.
"Exchange Act" shall mean the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time, and the
rules and regulations promulgated thereunder.
4
<PAGE>
"Failed Remarketing" shall have the meaning specified in Section
7.13(h).
"Fiduciary Indemnified Person" shall have the meaning set forth in
Section 9.4(b).
"Fiscal Year" shall have the meaning specified in Section 10.1.
"Global Security" shall mean a global Preferred Security Certificate
registered in the name of a Depositary or its nominee.
"Guarantee" shall mean the Guarantee Agreement, dated as of _______
__, 1999, of the Sponsor in respect of the Securities.
"Holder" shall mean any holder of Preferred Securities or Common
Securities, as registered on the books and records of the Trust, such holder
being a beneficial owner within the meaning of the Business Trust Act, provided
that in determining whether the Holders of the requisite liquidation amount of
Preferred Securities have voted on any matter provided for in this Declaration,
then for the purpose of such determination only (and not for any other purpose
hereunder), if the Preferred Securities remain in the form of one or more Global
Securities and if the Depositary that is the holder of such Global Securities
has sent an omnibus proxy to the Depositary Participants to whose accounts the
Preferred Securities are credited on the record date, the term "Holders" shall
mean such Depositary Participants acting at the direction of the Beneficial
Owners.
"Indemnified Person" shall mean a Debenture Issuer Indemnified Person
or a Fiduciary Indemnified Person.
"Indenture" shall mean the Indenture, dated as of February 14, 1997,
among the Debenture Issuer, Industries and the Indenture Trustee, as amended and
supplemented (including the provisions of the Trust Indenture Act that are
deemed incorporated therein), pursuant to which the Debentures are to be issued.
"Indenture Event of Default" shall have the meaning given to the term
"Event of Default" in the Indenture.
"Indenture Trustee" shall mean The Chase Manhattan Bank, in its
capacity as trustee under the Indenture, until a successor is appointed
thereunder, and thereafter shall mean such successor trustee.
"Industries" shall mean NIPSCO Industries, Inc., an Indiana
corporation, the parent of the Debenture Issuer and an Affiliate of the Trust.
"Investment Company" shall mean an investment company as defined in
the Investment Company Act and the regulations promulgated thereunder.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Legal Action" shall have the meaning specified in Section 3.6(f).
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"List of Holders" shall have the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount" shall mean, except as provided in the
terms of the Preferred Securities or by the Trust Indenture Act, Holders of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Preferred Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accumulated and unpaid Distributions to the date
upon which the voting percentages are determined) of all outstanding Securities
or Preferred Securities, as the case may be.
"Moody's" shall mean Moody's Investors Service, Inc.
"New York Stock Exchange" shall mean the New York Stock Exchange, Inc.
or any successor thereto.
"Officers' Certificate" shall mean, when delivered by the Trust, a
certificate signed by a majority of the Regular Trustees of the Trust and, when
delivered by the Sponsor, a certificate signed by (A) the Chairman of the Board,
President or a Vice President of the Sponsor and (B) the Treasurer, Assistant
Treasurer or Secretary of the Sponsor. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Declaration shall include, where applicable:
(i) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(ii) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;
(iii) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Over-allotment Option" shall mean any over-allotment option contained
in an underwriting agreement pursuant to which the Preferred Securities or the
Corporate SPUs are sold.
"Paying Agent" shall have the meaning specified in Section 3.8(h).
"Payment Amount" shall have the meaning specified in Section 7.2(c).
"Person" shall mean a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Pledge Agreement" shall mean the Pledge Agreement dated as of _______
__, 1999 among Industries, the Collateral Agent, The First National Bank of
Chicago, as Securities Intermediary, and the Purchase Contract Agent.
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"Preferred Security" shall have the meaning specified in Section 7.1.
"Preferred Security Certificate" shall mean a definitive certificate
in fully registered form representing a Preferred Security, substantially in the
form of Exhibit A.
"Primary Treasury Dealer" shall mean a primary U.S. government
securities dealer in New York City.
"Property Account" shall have the meaning specified in Section 3.8(c).
"Property Trustee" shall mean the Trustee meeting the eligibility
requirements set forth in Section 6.3.
"Pro Rata" shall mean pro rata to each Holder according to the
aggregate liquidation amount of the Securities held by such Holder in relation
to the aggregate liquidation amount of all Securities outstanding.
"Purchase Contract Agent" shall mean The Chase Manhattan Bank.
"Purchase Contract Agreement" shall mean the Purchase Contract
Agreement dated as of _______, 1999 between Industries and The Chase Manhattan
Bank, as Purchase Contract Agent.
"Purchase Contract Settlement Date" shall mean __________, 2003.
"Quorum" shall mean a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them.
"Quotation Agent" shall mean (A) __________. and any respective
successor, provided that if _____________. or any respective successor ceases to
be a Primary Treasury Dealer, the Sponsor shall substitute another Primary
Treasury Dealer therefor or (B) any other Primary Treasury Dealer selected by
the Sponsor.
"Redemption Amount" shall mean, for each Debenture, the product of the
principal amount of such Debenture and a fraction, the numerator of which shall
be the Treasury Portfolio Purchase Price and the denominator of which shall be
the Applicable Principal Amount.
"Redemption/Distribution Notice" shall have the meaning specified in
Section 7.4(a).
"Redemption Price" shall mean the amount for which the Securities will
be redeemed, which amount will equal the lesser of (i) the redemption price paid
by the Debenture Issuer to repay or redeem, in whole or in part, the Debentures
held by the Trust plus an amount equal to accumulated and unpaid Distributions
on such Securities through the date of their redemption or (ii) the amount
received by the Trust in respect of the Debentures so repaid or redeemed.
"Regular Trustee" shall mean any Trustee other than the Property
Trustee and the Delaware Trustee.
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"Remarketing" shall mean the operation of the procedures for
remarketing specified in Section 7.13.
"Remarketed Securities" shall mean (i) so long as the Trust has not
been liquidated, the Preferred Securities or (ii) if the Trust has been
liquidated, the Debentures.
"Remarketing Agents" shall mean_______________________ or if any of
the Remarketing Agents are removed, any successor remarketing agent selected by
the Sponsor.
"Remarketing Agreement shall mean the Remarketing Agreement dated as
of ______, 1999 among the Industries, the Debenture Issuer, the Trust and the
Remarketing Agents.
"Remarketing Date" shall mean the third Business Day preceding the
Purchase Contract Settlement Date.
"Reset Rate" shall mean the distribution rate per annum that results
from the Remarketing pursuant to Section 7.13.
"Responsible Officer" shall mean, with respect to the Property
Trustee, any officer with direct responsibility for the administration of this
Declaration and also shall mean, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred due to that officer's
knowledge of and familiarity with the particular subject.
"Rule 3a-5" shall mean Rule 3a-5 under the Investment Company Act or
any successor rule thereunder.
"S&P" shall mean Standard & Poor's Corporation.
"Securities" shall mean the Common Securities and the Preferred
Securities.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"66 2/3% in Liquidation Amount" shall mean Holders of outstanding
Securities, voting together as a single class, or, as the context may require,
Holders of outstanding Preferred Securities voting separately as a class, who
are the record owners of 66 2/3% or more of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accumulated and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities or Preferred
Securities, as the case may be.
"Sponsor" shall mean NIPSCO Capital Markets, Inc., an Indiana
corporation, or any successor entity in a merger, consolidation, conversion,
amalgamation or replacement by or conveyance, transfer or lease of its
properties substantially as an entirety, in its capacity as sponsor of the
Trust.
"Successor Delaware Trustee" shall have the meaning specified in
Section 6.6(b).
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"Successor Entity" shall have the meaning specified in Section
3.15(b)(i).
"Successor Property Trustee" shall have the meaning specified in
Section 6.6(b).
"Successor Security" shall have the meaning specified in Section
3.15(b)(i)(B).
"Supermajority" shall have the meaning specified in Section
2.6(a)(ii).
"Tax Event" shall mean the receipt by the Sponsor 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 or change is effective or which proposed change, pronouncement,
action or decision is announced on or after the Closing Date, 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 United States federal income tax with respect
to income received or accumulated on the Debentures, (ii) interest payable by
the Debenture Issuer on the Debentures is not, or within 90 days of the date of
such opinion will not be, deductible by the Debenture Issuer, 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.
"Tax Event Redemption" shall mean that a Tax Event has occurred and is
continuing and the Debentures have been called for redemption pursuant to the
Indenture.
"Tax Event Redemption Date" shall mean the date of the Tax Event
Redemption specified by the Debenture Issuer.
"10% in Liquidation Amount" shall mean, except as provided in the
terms of the Preferred Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, who are the record
owners of 10% or more of the aggregate liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant class.
"Termination Event" shall have the meaning set forth in Section 1.1 of
the Purchase Contract Agreement.
"Treasury SPU" shall mean a Corporate SPU with respect to which
Treasury Securities have been substituted for the Preferred Securities or
Applicable Ownership Interest of the Treasury Portfolio component, as
applicable.
"Treasury Portfolio" shall mean, with respect to the Applicable
Principal Amount of Debentures, (A) if the Tax Event Redemption Date occurs
prior to the Purchase Contract Settlement Date, a portfolio of zero-coupon U.S.
treasury securities consisting of (i) principal or interest strips of U.S.
treasury securities that mature on or prior to the Purchase Contract Settlement
Date in an aggregate amount equal to the Applicable Principal Amount and (ii)
with respect to each scheduled interest payment date on the Debentures
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that occurs after the Tax Event Redemption Date, principal or interest strips of
U.S. treasury securities that mature on or prior to such date in an aggregate
amount equal to the aggregate interest payment that would have been due on the
Applicable Principal Amount of the Debentures on such date and (B) if the Tax
Event Redemption Date occurs on or after the Purchase Contract Settlement Date,
a portfolio of zero-coupon U.S. treasury securities consisting of (i) principal
or interest strips of U.S. treasury securities that mature on or prior to
_______, 2005 in an aggregate amount equal to the Applicable Principal Amount
and (ii) with respect to each scheduled interest payment date on the Debentures
that occurs after the Tax Event Redemption Date, principal or interest strips of
such U.S. treasury securities that mature on or prior to such date in an
aggregate amount equal to the aggregate interest payment that would have been
due on the Applicable Principal Amount of the Debentures on such date.
"Treasury Regulations" shall mean the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Department of the Treasury, as such regulations may be amended
from time to time (including corresponding provisions of succeeding
regulations).
"Treasury Securities" shall mean zero-coupon U.S. Treasury Securities
(CUSIP Number ______) that are the principal strip of the __% U.S. Treasury
Securities that mature on _____, 2003.
"Trust" shall have the meaning specified in the Recitals hereto.
"Trust Enforcement Event" in respect of the Securities shall mean that
an Indenture Event of Default has occurred and is continuing in respect of the
Debentures.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Trustee" or "Trustees" shall mean each Person that has signed this
Declaration as a trustee, so long as such Person continues in office in
accordance with the terms hereof, and all other Persons that from time to time
may be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Two-Year Benchmark Treasury Rate" shall mean direct obligations of
the United States (which may be obligations traded on a when-issued basis only)
having a maturity comparable to the remaining term to maturity of the Remarketed
Securities, as agreed upon by Industries and the Lead Remarketing Agent. The
rate for the Two-Year Benchmark Treasury will be the bid side rate displayed at
10:00 A.M., New York City time, on the third Business Day immediately preceding
the Purchase Contract Settlement Date in the Telerate system (or if the Telerate
system is (a) no longer available on the third Business Day immediately
preceding the Purchase Contract Settlement Date or (b) in the opinion of the
Lead Remarketing Agent (after consultation with Industries) no longer an
appropriate system from which to obtain such rate, such other nationally
recognized quotation system as, in the opinion of the Lead Remarketing Agent
(after consultation with Industries) is appropriate). If such rate is not so
displayed, the rate for the Two-Year Benchmark Treasury shall be, as calculated
by the Lead Remarketing Agent, the yield to maturity for the Two-Year Benchmark
Treasury, expressed as a bond equivalent on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis, and computed by taking the
arithmetic mean of the secondary market bid rates, as of 10:30 A.M., New York
City time, on the third Business Day immediately preceding the Purchase
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Contract Settlement Date of three leading United States government securities
dealers selected by the Lead Remarketing Agent (after consultation with
Industries) (which may include the Lead Remarketing Agent or an affiliate
thereof).
ARTICLE 2: TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and, to the
extent applicable, shall be governed by such provisions.
(b) The Property Trustee shall be the only Trustee that is a trustee
for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
conflicts with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties of the Trust Indenture Act shall
control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the Trust's classification as a grantor trust for United States
federal income tax purposes and shall not affect the nature of the Securities as
equity securities representing undivided beneficial ownership interests in the
assets of the Trust.
SECTION 2.2 Lists of Holders of the Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee a list of the names and addresses of
the Holders of the Securities in such form as the Property Trustee may
reasonably require ("List of Holders") (i) as of the record date relating to the
payment of any Distribution, at least one Business Day prior to the date for
payment of such Distribution, except while the Preferred Securities are
represented by one or more Global Securities, and (ii at any other time, within
30 days of receipt by the Trust of a written request from the Property Trustee
for a List of Holders as of a date no more than 15 days before such List of
Holders is provided to the Property Trustee. If at any time the List of Holders
does not differ from the most recent List of Holders provided to the Property
Trustee by the Sponsor and the Regular Trustees on behalf of the Trust, then
neither the Sponsor nor the Regular Trustees shall be obligated to deliver such
List of Holders. The Property Trustee shall preserve, in as current a form as is
reasonably practicable, all information contained in Lists of Holders provided
to it or that it receives in its capacity as Paying Agent (if acting in such
capacity); provided that the Property Trustee may destroy any List of Holders
previously provided to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under, and
shall be entitled to the benefits of, Sections 311(a), 311(b) and 312(b) of the
Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year (commencing with the year of
the first anniversary of the issuance of the Preferred Securities), the Property
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Property
Trustee also shall comply with
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the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to the Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Trust Enforcement Events; Waiver.
(a) The Holders of a Majority in Liquidation Amount of the Preferred
Securities may waive, by vote or written consent, on behalf of the Holders of
all of the Preferred Securities, any past Trust Enforcement Event in respect of
the Preferred Securities and its consequences, provided that if the underlying
Indenture Event of Default:
(i) is not waivable under the Indenture, then the Trust Enforcement
Event under this Declaration also shall not be waivable; and
(ii) requires the vote or consent of the holders of greater than a
majority in principal amount of the Debentures (a
"Supermajority") to be waived under the Indenture, the related
Trust Enforcement Event under this Declaration only may be waived
by the vote or written consent of the Holders of at least the
same Supermajority in aggregate stated liquidation amount of the
Preferred Securities outstanding.
The foregoing provisions of this Section 2.6 shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act, and Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
Trust Enforcement Event in respect of the Preferred Securities shall be deemed
to have been cured for every purpose of this Declaration and the Preferred
Securities, but no such waiver shall extend to any subsequent or other Trust
Enforcement Event with respect to the Preferred Securities or impair any right
consequent thereon. Any waiver by the Holders of the Preferred Securities of a
Trust Enforcement Event with respect to the Preferred Securities also shall be
deemed to constitute a waiver by the Holders of the Common Securities of any
such Trust Enforcement Event with respect to the Common Securities for all
purposes of this Declaration without any further act, vote or consent of the
Holders of the Common Securities.
(b) The Holders of the Common Securities may waive, by vote or written
consent, any past Trust Enforcement Event in respect of the Common Securities
and its consequences, provided that if the underlying Indenture Event of Default
is not waivable under the Indenture, then, except where the Holders
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of the Common Securities have been deemed to have waived such Trust Enforcement
as provided below in this Section 2.6(b), the related Trust Enforcement Event
under this Declaration also shall not be waivable. The Holders of the Common
Securities shall be deemed to have waived any and all Trust Enforcement Events
in respect of the Common Securities and the consequences thereof until all Trust
Enforcement Events in respect of the Preferred Securities have been cured,
waived or otherwise eliminated. Until all Trust Enforcement Events in respect of
the Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee shall be deemed to be acting solely on behalf of the Holders of
the Preferred Securities, and only the Holders of the Preferred Securities shall
have the right to direct the Property Trustee. The foregoing provisions of this
Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of the
Trust Indenture Act, and Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust
Indenture Act are hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Subject to the foregoing
provisions of this Section 2.6(b), upon such cure, waiver or other elimination,
any Trust Enforcement Event in respect of the Common Securities shall be deemed
to have been cured for every purpose of this Declaration and the Common
Securities, but no such waiver shall extend to any subsequent or other Trust
Enforcement Event with respect to the Common Securities or impair any right
consequent thereon.
(c) A waiver of an Indenture Event of Default under the Indenture by
the Property Trustee at the direction of the Holders of the Preferred Securities
shall constitute a waiver of the corresponding Trust Enforcement Event under
this Declaration. Any such waiver by the Holders of the Preferred Securities
also shall be deemed to constitute a waiver by the Holders of the Common
Securities of any such Trust Enforcement Event with respect to the Common
Securities for all purposes of this Declaration without any further act, vote or
consent of the Holders of the Common Securities. The foregoing provisions of
this Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust
Indenture Act, and Section 316(a)(1)(B) of the Trust Indenture Act is hereby
expressly excluded from this Declaration and the Securities, as permitted by the
Trust Indenture Act.
SECTION 2.7 Trust Enforcement Event; Notice.
(a) Within 90 days after the occurrence of a Trust Enforcement Event
actually known to a Responsible Officer of the Property Trustee, the Property
Trustee shall transmit by mail, first class postage prepaid, to the Holders of
the Securities, notice of such Trust Enforcement Event, unless such Trust
Enforcement Event has been cured before the giving of such notice; provided
that, except for a default in the payment of principal of (or premium, if any)
or interest on any of the Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of any
Trust Enforcement Event except for:
(i) a default under Sections 501(1) and 501(2) of the Indenture; or
(ii) any default as to which the Property Trustee shall have received
written notice or of which a Responsible Officer of the Property
Trustee charged with the administration of this Declaration shall
have actual knowledge.
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ARTICLE 3: ORGANIZATION
SECTION 3.1 Name and Organization.
The Trust hereby continued is named "NIPSCO Capital Trust I," as such
name may be modified from time to time by the Regular Trustees following written
notice to the Holders of the Securities. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the Regular
Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is in care of NIPSCO
Capital Markets, Inc., 801 East 86th Avenue, Merrillville, Indiana 46410. On
ten Business Days' written notice to the Holders of the Securities, the Regular
Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue and
sell the Securities, (b) to use the gross proceeds from such sale to acquire the
Debentures and (c) except as otherwise limited herein, to engage in only those
other activities necessary or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets or otherwise undertake (or permit to be undertaken) any activity that
would cause the Trust not to be classified as a grantor trust for United States
federal income tax purposes.
By the acceptance of this Trust, none of the Trustees, the Sponsor,
the Holders of the Preferred Securities or the Common Securities or the
Beneficial Owners of the Preferred Securities will take any position that is
contrary to the classification of the Trust as a grantor trust for United States
federal income tax purposes.
SECTION 3.4 Authority.
(a) Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive authority to carry out the purposes of the Trust. Any action taken by
the Regular Trustees in accordance with their powers shall constitute the act of
and shall serve to bind the Trust, and any action taken by the Property Trustee
in accordance with its powers shall constitute the act of and shall serve to
bind the Trust. In dealing with the Trustees acting on behalf of the Trust, no
person shall be required to inquire into the authority of the Trustees to bind
the Trust. Persons dealing with the Trust are entitled to rely conclusively on
the power and authority of the Trustees as set forth in this Declaration.
(b) Except as expressly set forth in this Declaration and except if a
meeting of the Regular Trustees is called with respect to any matter over which
the Regular Trustees have power to act, any power of the Regular Trustees may be
exercised by or with the consent of any one such Regular Trustee.
(c) Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act or applicable law, any Regular
Trustee may delegate to any other natural person over the age of 21, by power of
attorney consistent with applicable law, his or her power for the purposes of
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signing any documents that the Regular Trustees have power and authority to
cause the Trust to execute pursuant to Section 3.6.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures and
the Property Account or as otherwise provided in this Declaration, legal title
to all assets of the Trust shall be vested in the Trust. The Holders of the
Securities shall not have legal title to any part of the assets of the Trust but
shall have undivided beneficial ownership interests in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to establish the terms and form of the Securities in the manner
specified in Section 7.1 and to issue and sell the Securities in accordance with
this Declaration; provided that the Trust may issue no more than one series of
Preferred Securities and no more than one series of Common Securities; and
provided further that there shall be no interests in the Trust other than the
Securities, and the issuance of the Securities shall be limited to a one-time,
simultaneous issuance of both Preferred Securities and Common Securities on the
Closing Date, subject to the issuance of additional Securities pursuant to the
exercise of any Over-allotment Option;
(b) to acquire the Debentures with the proceeds of the sale of the
Securities; provided that the Regular Trustees shall cause legal title to the
Debentures to be held of record in the name of the Property Trustee for the
benefit of the Holders of the Securities;
(c) to give the Sponsor and the Property Trustee prompt written notice
of the occurrence of a Tax Event; provided that the Regular Trustees shall
consult with the Sponsor and the Property Trustee before taking or refraining
from taking any action in relation to any such Tax Event;
(d) to establish a record date with respect to all actions to be taken
hereunder that require a record date to be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of the Securities as to such actions and applicable
record dates;
(e) to take all actions and perform such duties as may be required of
the Regular Trustees pursuant to the terms of this Declaration and the
Securities;
(f) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(g) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants to conduct only those services that the Regular Trustees have
authority to conduct directly, and to pay reasonable compensation for such
services;
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(h) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(i) to give to the Property Trustee the certificate required by
Section 314(a)(4) of the Trust Indenture Act, which certificate may be executed
by any Regular Trustee;
(j) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(k) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(l) to take all action that may be necessary or appropriate for the
preservation and continuation of the Trust's valid existence, rights, franchises
and privileges as a statutory business trust under the laws of the State of
Delaware and of each other jurisdiction in which such existence is necessary to
protect the limited liability of the Holders of the Securities or to enable the
Trust to effect the purposes for which it was created;
(m) to take any action not inconsistent with applicable law that the
Regular Trustees determine in their discretion to be necessary or desirable in
carrying out the purposes and functions of the Trust as set forth in Section 3.3
or the activities of the Trust as set forth in this Section 3.6, including:
(i) causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified as a grantor trust for United
States federal income tax purposes; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture
Issuer for United States federal income tax purposes.
(n) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed; and
(o) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Regular Trustees shall exercise the powers set forth in this Section
3.6 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Regular Trustees shall have no power to, and
shall not, take any action that is inconsistent with the purposes and functions
of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of the
powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section 3.6
shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
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(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall cause the Trust not to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall not
and the Trustees (including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust in connection with
its ownership of the Debentures, but shall distribute all such
proceeds to the Holders of the Securities pursuant to the
terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess property for any purpose other than a Trust purpose;
(iv) make any loans or incur any indebtedness;
(v) possess any power or otherwise act in such a way as to vary
the Trust's assets;
(vi) possess any power or otherwise act in such a way as to vary
the terms of the Securities in any way whatsoever (except to
the extent expressly authorized in this Declaration or by the
terms of the Securities);
(vii) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than
the Securities;
(viii) other than as provided in this Declaration or by the terms of
the Securities, (A) direct the time, method and place of
exercising any trust or power conferred upon the Indenture
Trustee with respect to the Debentures, (B) waive any past
default that is waivable under the Indenture, (C) exercise any
right to rescind or annul any declaration that the principal
of all the Debentures shall be due and payable or (D) consent
to any amendment, modification or termination of the Indenture
or the Debentures where such consent is required, unless the
Trust has received an opinion of counsel to the effect that
such modification will not cause more than an insubstantial
risk that the Trust will not be classified as a grantor trust
for United States federal income tax purposes;
(ix) take any action inconsistent with the status of the Trust as a
grantor trust for United States federal income tax purposes;
or
(x) revoke any action previously authorized or approved by vote of
the Holders of the Preferred Securities.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the Trust
and the Holders of the Securities. The right, title and interest of the Property
Trustee to the Debentures shall vest automatically in each Person that hereafter
may be appointed as Property Trustee in accordance with Section 6.6. Such
vesting and cessation of title shall
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be effective whether or not conveyancing documents with regard to the Debentures
have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees nor to the Delaware Trustee
(if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the
Holders of the Securities and, upon the receipt of payments of
funds made in respect of the Debentures, deposit such funds
into the Property Account and make payments to the Holders of
the Securities from the Property Account in accordance with
Section 7.2. Funds in the Property Account shall be held
uninvested until disbursed in accordance with this Declaration.
The Property Account shall be an account that is maintained
with a banking institution, the rating on whose long-term
unsecured indebtedness is at least equal to the rating assigned
to the Preferred Securities by a "nationally recognized
statistical rating organization" within the meaning of Rule
436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Securities to the
extent the Debentures are redeemed or mature; and
(iii) upon written direction by the Sponsor to dissolve the Trust, to
engage in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Debentures to the
Holders of the Securities in exchange for the Securities.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of this Declaration and the Securities.
(e) The Property Trustee shall take any Legal Action that arises out
of or in connection with (i) a Trust Enforcement Event of which a Responsible
Officer of the Property Trustee has actual knowledge or (ii) the Property
Trustee's duties and obligations under this Declaration or the Trust Indenture
Act; provided that if a Trust Enforcement Event has occurred and is continuing
and such event is attributable to the failure of the Debenture Issuer to pay
interest or principal on the Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, on the redemption date),
then a Holder of Preferred Securities may institute a proceeding directly
against the Debenture Issuer to enforce payment to such Holder of the principal
or interest on Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of the Preferred Securities of such Holder (a
"Direct Action").
(f) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation have been distributed to the Holders of the
Securities pursuant to the terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 6.6.
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(g) The Property Trustee shall have the legal power to exercise all of
the rights, powers and privileges of a holder of Debentures under the Indenture
and, if a Trust Enforcement Event actually known to a Responsible Officer of the
Property Trustee occurs and is continuing, the Property Trustee shall enforce,
for the benefit of Holders of the Securities, its rights as holder of the
Debentures subject to the rights of the Holders of the Securities pursuant to
the terms of such Securities.
(h) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities, and any such
Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Property Trustee at any time, and a successor
Paying Agent or additional Paying Agents may be appointed at any time by the
Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Regular Trustees set
forth in Section 3.6.
The Property Trustee shall exercise the powers set forth in this Section
3.8 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Property Trustee shall have no power to, and
shall not, take any action that is inconsistent with the purposes and functions
of the Trust set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Trust
Enforcement Event and after the cure or waiver of all Trust Enforcement Events
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration, and no implied covenants shall be
read into this Declaration against the Property Trustee. If a Trust Enforcement
Event has occurred (that has not been cured or waived pursuant to Section 2.6)
of which a Responsible Officer of the Property Trustee has actual knowledge, the
Property Trustee shall exercise such of the rights and powers vested in it by
this Declaration and shall use the same degree of care and skill in its exercise
as a prudent person would exercise or use under the circumstances in the conduct
of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of a Trust Enforcement Event and
after the cure or waiver of all such Trust Enforcement
Events that may have occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of
this Declaration, and the Property Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this
Declaration, and no implied covenants or obligations
shall be read into this Declaration against the
Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as
to the truth of the statements and the
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correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates
or opinions that by any provision hereof are
specifically required to be furnished to the Property
Trustee, the Property Trustee shall be under a duty to
examine such certificates or opinions to determine
whether or not they conform to the requirements of this
Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it has been proven that the
Property Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it without
negligence, in good faith in accordance with the direction
of the Holders of not less than a Majority in Liquidation
Amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available
to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or
powers, if it has reasonable grounds for believing that the
repayment of such funds or liability is not reasonably
assured to it under the terms of this Declaration or
indemnity reasonably satisfactory to the Property Trustee
against such risk or liability is not reasonably assured to
it;
(v) the Property Trustee's sole duty with respect to the
custody, safe-keeping and physical preservation of the
Debentures and the Property Account shall be to deal with
such property in a similar manner as the Property Trustee
deals with similar property for its own account, subject to
the protections and limitations on liability afforded to the
Property Trustee under this Declaration and the Trust
Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it otherwise may agree
with the Sponsor. Money held by the Property Trustee need
not be segregated from other funds held by it except in
relation to the Property Account maintained by the Property
Trustee pursuant to Section 3.8(c)(i) and except to the
extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall
the Property Trustee be liable for any default or misconduct
of the Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
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(a) Subject to the provisions of Section 3.9:
(i) The Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or
parties.
(ii) Any direction or act of the Sponsor contemplated by this
Declaration shall be sufficiently evidenced by an Officers'
Certificate.
(iii) Whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting
any action hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may request, in
the absence of bad faith on its part, and conclusively rely
upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Sponsor.
(iv) The Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument
(including any financing or continuation statement or any
filing under tax or securities laws) or any rerecording,
refiling or registration thereof.
(v) The Property Trustee may consult with counsel of its choice
or other experts, and the advice or opinion of such counsel
and experts with respect to legal matters or advice within
the scope of such experts' area of expertise shall be full
and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such
counsel may be counsel to the Sponsor or any of its
Affiliates and may include any of its employees. The
Property Trustee shall have the right at any time to seek
instructions concerning the administration of this
Declaration from any court of competent jurisdiction.
(vi) The Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Declaration at the request or direction of any Holder of
Securities, unless such Holder of Securities has provided to
the Property Trustee security and indemnity, reasonably
satisfactory to the Property Trustee, against the costs,
expenses (including attorneys' fees and expenses and the
expenses of the Property Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such
reasonable advances as may be requested by the Property
Trustee; provided that nothing contained in this Section
3.10(A) shall be taken to relieve the Property Trustee, upon
the occurrence of an Indenture Event of Default, of its
obligation to exercise the rights and powers vested in it by
this Declaration.
(vii) The Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report,
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notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or
document, but the Property Trustee, in its discretion, may
make such further inquiry or investigation into such facts
or matters as it sees fit.
(viii) The Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or
by or through agents, custodians, nominees or attorneys, and
the Property Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder.
(ix) Any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Property Trustee or its
agents alone shall be sufficient and effective to perform
any such action, and no third party shall be required to
inquire as to the authority of the Property Trustee to so
act or as to its compliance with any of the terms and
provisions of this Declaration, both of which shall be
evidenced conclusively by the Property Trustee's or its
agent's taking such action.
(x) Whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right
or taking any other action hereunder, the Property Trustee
(A) may request instructions from the Holders of the
Securities, which instructions only may be given by the
Holders of the same proportion in liquidation amount of the
Securities as would be entitled to direct the Property
Trustee under the terms of the Securities in respect of such
remedy, right or action, (B) may refrain from enforcing such
remedy or right or taking such other action until such
instructions are received and (C) shall be protected in
conclusively relying on or acting in accordance with such
instructions.
(xi) Except as otherwise expressly provided by this Declaration,
the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions
of this Declaration.
(xii) The Property Trustee shall 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 this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 6.2, the Delaware
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Trustee shall not be entitled to exercise any powers of, nor shall the Delaware
Trustee have any of the duties and responsibilities of, the Regular Trustees or
the Property Trustee described in this Declaration. Except as set forth in
Section 6.2, the Delaware Trustee shall be a Trustee for the sole and limited
purpose of fulfilling the requirements of Section 3807 of the Business Trust
Act.
SECTION 3.12 Execution of Documents.
Except as otherwise required by the Business Trust Act or applicable
law, any Regular Trustee is authorized to execute on behalf of the Trust any
documents that the Regular Trustees have the power and authority to execute
pursuant to Section 3.6.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration, the Securities, the Debentures or the Indenture.
SECTION 3.14 Duration of Trust.
The Trust shall exist until dissolved pursuant to the provisions of
Article 8 hereof.
SECTION 3.15 Mergers.
(a) 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 in Section 3.15(b) and (c).
(b) At the request of the Sponsor and with the consent of the Regular
Trustees or, if there are more than two, 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; provided that:
(i) if the Trust is not the successor entity, such successor
entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
with respect to the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the
"Successor Securities"), so long as such Successor
Securities rank the same as the Securities with respect
to Distributions and payments upon liquidation,
redemption and otherwise;
(ii) the Debenture Issuer expressly appoints a trustee of such
Successor Entity that
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possesses the same powers and duties as the Property
Trustee as the holder of the Debentures;
(iii) the Preferred Securities or any Successor Securities are or,
upon notification of issuance will be, listed on any
national securities exchange or with any other or
organization on which the Preferred Securities are then
listed or quoted;
(iv) such consolidation, conversion, amalgamation, merger,
replacement, conveyance, transfer or lease does 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 does 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 has a purpose substantially identical
to that of the Trust;
(vii) prior to such consolidation, conversion, amalgamation,
merger, replacement, conveyance, transfer or lease, the
Sponsor has 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 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
or merger, replacement, conveyance, transfer or lease,
the Trust (or such Successor Entity) will continue to
be classified as a grantor trust for United States
federal income tax purposes;
(viii) the Sponsor or any permitted successor or assignee owns all
of the Common Securities and guarantees the obligations of
such Successor Entity under the Successor Securities, at
least to the extent provided by the Guarantee; and
(ix) such Successor Entity expressly assumes all of the
obligations of the Trust.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in aggregate liquidation amount of the
Securities, 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 other entity or permit any other entity to consolidate
with, convert into, amalgamate, merge with or
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into, or replace it, if such consolidation, conversion, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Trust or any
Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes or would cause each Holder of Securities not
to be treated as owning an undivided beneficial ownership interest in the
Debentures.
SECTION 3.16 Property Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon the
Securities or the property of the Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Securities are then due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Property Trustee has made any
demand on the Trust for the payment of any past due Distributions) shall be
entitled and empowered, to the fullest extent permitted by law, by intervention
in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Securities (or, if the
Securities are original issue discount securities, such portion of the
liquidation amount as may be specified in the terms of such securities) and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Property Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel) and of the Holders of the Securities allowed in such
judicial proceeding; and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities to make such payments to the Property Trustee and, in
the event the Property Trustee consents to the making of such payments directly
to the Holders, to pay to the Property Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Property
Trustee, its agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property Trustee
to authorize or consent to or accept or adopt, on behalf of any Holder of
Securities, any plan of reorganization, arrangement, adjustment or compensation
affecting the Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder of Securities in
any such proceeding.
ARTICLE 4: THE SPONSOR
SECTION 4.1 Responsibilities of the Sponsor.
In connection with the sale and issuance of the Preferred Securities,
the Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare, execute and file with the Commission, on behalf of the
Trust, a registration
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statement on Form S-3 in relation to the Preferred Securities, including any
amendments or supplements thereto, and to take any other action relating to the
registration and sale of the Preferred Securities under federal and state
securities laws;
(b) if necessary, to determine the states in which to take appropriate
action to qualify or register for sale all or part of the Corporate SPUs and to
do any and all such acts, other than actions that must be taken by the Trust,
and advise the Trust of actions it must take; to prepare, execute and file, on
behalf of the Trust, any documents it deems necessary or advisable in order to
comply with the applicable laws of any such states; and to prepare, execute and
file, on behalf of the Trust, any such documents or take any acts determined by
it to be necessary in order to qualify or register all or part of the Corporate
SPUs in any state in which it has determined to qualify or register such
Corporate SPUs for sale;
(c) if necessary, to prepare, execute and file on behalf of the Trust,
an application to the New York Stock Exchange or any other national stock
exchange or the Nasdaq National Market for listing upon notice of issuance of
any Preferred Securities;
(d) if necessary, to prepare, execute and file with the Commission, on
behalf of the Trust, a registration statement on Form 8-A relating to the
registration of the Preferred Securities under Section 12(b) of the Exchange
Act, including any amendments thereto; and
(e) to negotiate the terms of, and execute and enter into, an
underwriting agreement providing for the sale of the Corporate SPUs and a
remarketing agreement providing for the Remarketing.
SECTION 4.2 Indemnification and Expenses of the Trustees.
The Sponsor, in its capacity as Debenture Issuer, agrees to indemnify
the Property Trustee and the Delaware Trustee for, and to hold each of them
harmless against, any loss, liability or expense incurred without negligence or
bad faith on the part of the Property Trustee or the Delaware Trustee, as the
case may be, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending either of them against any claim or liability in
connection with the exercise or performance of any of their respective powers or
duties hereunder. The provisions of this Section 4.2 shall survive the
resignation or removal of the Delaware Trustee or the Property Trustee and the
termination of this Declaration.
ARTICLE 5: THE HOLDERS OF THE COMMON SECURITIES
SECTION 5.1 Debenture Issuer's Purchase of the Common Securities.
On the Closing Date, the Debenture Issuer shall purchase all of the
Common Securities issued by the Trust, in an aggregate liquidation amount equal
to at least three percent of the total capital of the Trust, at such time as the
Preferred Securities are sold and issued. If any additional Securities are
issued pursuant to the exercise of any Over-allotment Option, then the Debenture
Issuer shall purchase, on the date of such issuance, an amount of additional
Common Securities such that the aggregate number of Common Securities held by
the Debenture Issuer, upon such purchase, will equal at least percent of the
total capital of the Trust.
The aggregate stated liquidation amount of the Common Securities
outstanding at any time shall
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not be less than three percent of the total capital of the Trust.
SECTION 5.2 Covenants of the Debenture Issuer.
For so long as the Preferred Securities remain outstanding, the
Debenture Issuer shall covenant (i) to maintain, directly or indirectly, 100%
ownership of the Common Securities, (ii) to cause the Trust to remain a
statutory business trust and not to voluntarily dissolve, wind up, liquidate or
be terminated, except as permitted by this Declaration, (iii) to use its
commercially reasonable efforts to ensure that the Trust will not be an
Investment Company required to be registered under the Investment Company Act
and (iv) not to take any action that would be reasonably likely to cause the
Trust to be classified as an association or a publicly traded partnership
taxable as a corporation for United States federal income tax purposes.
ARTICLE 6: THE TRUSTEES
SECTION 6.1 Number of Trustees.
The number of Trustees initially shall be five, and:
(a) at any time before the issuance of any Securities, the Sponsor may
increase or decrease the number of Trustees by written instrument; and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of the Common Securities at a
meeting of the Holders of the Common Securities or by written consent in lieu of
such meeting; provided that the number of Trustees shall be at least three; and
provided further that: (i) the Delaware Trustee, in the case of a natural
person, shall be a person who is a resident of the State of Delaware or that, if
not a natural person, is an entity that has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law;
(ii) at least one Regular Trustee is an employee or officer of, or is affiliated
with, the Sponsor; and (iii) one Trustee shall be the Property Trustee for so
long as this Declaration is required to qualify as an indenture under the Trust
Indenture Act, and such Property Trustee also may serve as Delaware Trustee if
it meets the applicable requirements.
SECTION 6.2 Delaware Trustee; Eligibility.
If required by the Business Trust Act, one Trustee (which may be the
Property Trustee) (the "Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity that has its principal place of
business in the State of Delaware and otherwise meets the requirements of
applicable law,
provided that if the Property Trustee has its principal place of business in the
State of Delaware and otherwise meets the requirements of applicable law, then
the Property Trustee also shall be the Delaware Trustee and Section 3.11 shall
have no application.
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SECTION 6.3 Property Trustee; Eligibility.
(a) There shall be at all times one Trustee (which may be the Delaware
Trustee) that shall act as Property Trustee that shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any state or territory
thereof or of the District of Columbia, or a corporation or
other Person permitted by the Commission to act as an
institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least 50
million U.S. dollars ($50,000,000) and subject to
supervision or examination by federal, state, territorial or
District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes
of this Section 6.3(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report
of condition so published.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 6.3(a), the Property Trustee immediately shall resign in
the manner and with the effect set forth in Section 6.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holders of the Common Securities (as if it were the
obligor referred to in Section 310(b) of the Trust Indenture Act) shall comply
in all respects with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Guarantee shall be deemed to be specifically described in this
Declaration for purposes of clause (i) of the first proviso contained in Section
310(b) of the Trust Indenture Act.
SECTION 6.4 Qualifications of the Regular Trustees Generally.
Each Regular Trustee shall be either a natural person who is at least
21 years of age or a legal entity that shall act through one or more Authorized
Officers.
SECTION 6.5 Initial Regular Trustees.
The initial Regular Trustees shall be Stephen P. Adik, Francis P.
Girot, Jr. and Arthur A. Paquin, the business address of all of whom is in care
of NIPSCO Capital Markets, Inc., 801 East 86th Avenue, Merrillville, Indiana
46410.
SECTION 6.6 Appointment, Removal and Resignation of the Trustees.
(a) Subject to Section 6.6(b), the Trustees may be appointed or
removed without cause at any time:
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(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by a vote of the
Holders of the Common Securities at a meeting of the Holders
of the Common Securities or by written consent in lieu of
such meeting.
(b) The Property Trustee shall not be removed in accordance with
Section 6.6(a) until a successor Trustee possessing the qualifications to act as
Property Trustee under Section 6.3(a) (a "Successor Property Trustee") has been
appointed and has accepted such appointment by written instrument executed by
such Successor Property Trustee and delivered to the Regular Trustees and the
Sponsor. The Delaware Trustee shall not be removed in accordance with Section
6.6(a) until a successor Trustee possessing the qualifications to act as
Delaware Trustee under Sections 6.2 and 6.4 (a "Successor Delaware Trustee") has
been appointed and has accepted such appointment by written instrument executed
by such Successor Delaware Trustee and delivered to the Regular Trustees and the
Sponsor.
(c) A Trustee appointed to office shall hold office until a successor
has been appointed, until death or dissolution or until removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by written instrument executed by such Trustee and delivered to the
Sponsor and the other Trustees, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided that:
(i) no such resignation of the Property Trustee shall be
effective:
(A) until a Successor Property Trustee has been appointed
and has accepted such appointment by written instrument
executed by such Successor Property Trustee and
delivered to the Regular Trustees, the Sponsor and the
resigning Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the
Holders of the Securities; and
(ii) no such resignation of the Delaware Trustee shall be
effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by written
instrument executed by such Successor Delaware Trustee and
delivered to the Regular Trustees, the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 6.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee, as
the case may be, has been appointed and accepted appointment as provided in this
Section 6.6 within 60 days after delivery of an instrument of resignation or
removal, the resigning or removed Property Trustee or Delaware Trustee, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee, as applicable. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Property Trustee or Successor Delaware Trustee, as
the case
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may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
SECTION 6.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 6.1, or if the number of Trustees is
increased pursuant to Section 6.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 6.6.
SECTION 6.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul, dissolve or terminate the Trust nor to terminate this
Declaration. Whenever a vacancy in the number of Regular Trustees shall occur,
until such vacancy is filled by the appointment of a Regular Trustee in
accordance with Section 6.6, the Regular Trustees in office, regardless of their
number, shall have all the powers granted to the Regular Trustees and shall
discharge all the duties imposed upon the Regular Trustees by this Declaration.
SECTION 6.9 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice
of such meeting except where a Regular Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the ground that the
meeting has not been lawfully called or convened. Unless provided otherwise in
this Declaration, any action of the Regular Trustees may be taken at a meeting
by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided a Quorum
is present, or without a meeting by the unanimous written consent of the Regular
Trustees. In the event there is only one Regular Trustee, any and all action of
such Regular Trustee shall be evidenced by a written consent of such Regular
Trustee.
SECTION 6.10 Delegation of Power by the Regular Trustees.
(a) Any Regular Trustee may delegate to any natural person over the
age of 21, by power of attorney consistent with applicable law, his, her or its
power for the purpose of executing any documents contemplated in Section 3.6.
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(b) The Regular Trustees shall have the power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
SECTION 6.11 Merger, Consolidation, Conversion or Succession to Business.
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 such Trustee may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which such Trustee is a party, or any entity
succeeding to all or substantially all the corporate trust business of such
Trustee, shall be the successor of such Trustee hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, provided that such entity otherwise is qualified and eligible under this
Article.
ARTICLE 7: TERMS OF THE SECURITIES
SECTION 7.1 General Provisions Regarding the Securities.
(a) The Regular Trustees shall issue, on behalf of the Trust, one
class of preferred securities representing undivided beneficial ownership
interests in the assets of the Trust and one class of common securities
representing undivided beneficial ownership interests in the assets of the
Trust.
(i) Preferred Securities. The Preferred Securities of the Trust
shall have an aggregate stated liquidation amount with
respect to the assets of the Trust of three hundred million
dollars ($300,000,000) (subject to increase to not more than
three hundred forty-five million dollars ($345,000,000) in
the event of the exercise of any Over-allotment Option) and
a stated liquidation amount with respect to the assets of
the Trust of $50 per Preferred Security. The Preferred
Securities are hereby designated for identification purposes
only as the Preferred Securities. The Preferred Security
Certificates shall be substantially in the form of Exhibit A
hereto, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or
practice.
(ii) Common Securities. The Common Securities of the Trust shall
have an aggregate liquidation amount with respect to the
assets of the Trust of nine million two hundred seventy-
eight thousand four hundred dollars ($9,278,400) (subject to
increase to not more than ten million six hundred seventy
thousand one hundred fifty dollars ($10,670,150) in the
event of the exercise of any Over-allotment Option) and a
liquidation amount with respect to the assets of the Trust
of $50 per Common Security. The Common Securities are hereby
designated for identification purposes only as the Common
Securities (the "Common Securities" and, together with the
Preferred Securities, the "Securities"). The Common Security
Certificates shall be substantially in the form of Exhibit B
hereto, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or
practice.
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(b) Payment of Distributions on, and any payment of the Redemption
Price upon a redemption of, the Preferred Securities and the Common Securities,
as applicable, shall be made Pro Rata based on the liquidation amount of such
Preferred Securities and Common Securities; provided that if on any date on
which amounts payable on distribution or redemption an Indenture Event of
Default has occurred and is continuing, then such amounts payable shall not be
made on any of the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of such Common Securities shall be
made, until all accumulated and unpaid Distributions, or payments of the
Redemption Price, 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. All funds available to the
Property Trustee shall first 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.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be validly issued, fully paid and non-assessable
beneficial ownership interests in the assets of the Trust.
(e) Every Person, by virtue of having become a Holder of Securities or
a Beneficial Owner of Preferred Securities in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration, the Guarantee, the Indenture and
the Debentures.
(f) The Holders of the Securities shall not have any preemptive or
similar rights.
(g) The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustee. If a Regular Trustee of the Trust who
has signed any of the Certificates ceases to be a Regular Trustee before such
signed Certificates have been delivered by the Trust, such Certificates
nevertheless may be delivered as though the Person who signed such Certificates
had not ceased to be a Regular Trustee. Any Certificate may be signed on behalf
of the Trust by such Persons who, at the actual date of execution of such
Certificate, shall be the Regular Trustees of the Trust, although at the date of
the execution and delivery of this Declaration any such Person was not such a
Regular Trustee. Certificates shall be printed, lithographed or engraved or may
be produced in any other manner as is reasonably acceptable to the Regular
Trustees, as evidenced by their execution thereof, and may have such letters,
numbers or other marks of identification or designation and such legends or
endorsements as the Regular Trustees may deem appropriate, or as may be required
to comply with any law or with any rule or regulation of any stock exchange on
which the Securities may be listed, or to conform to usage.
A Preferred Security Certificate shall not be valid until
authenticated by the [manual signature] of an authorized signatory of the
Property Trustee. Such signature shall be conclusive evidence that such
Preferred Security Certificate has been authenticated under this Declaration.
Upon a written order of the Trust signed by one Regular Trustee, the
Property Trustee shall authenticate the Preferred Security Certificates for
original issue. The aggregate number of Preferred Securities outstanding at any
time shall not exceed the liquidation amount set forth in Section 7.1(a)(i).
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The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Certificates. An authenticating agent may authenticate
Certificates whenever the Property Trustee may do so. Each reference in this
Declaration to authentication by the Property Trustee shall include
authentication by such agent. An authenticating agent shall have the same rights
as the Property Trustee to deal with the Sponsor or an Affiliate of the Sponsor.
(h) Unless otherwise specified in the terms of the Preferred
Securities, the Preferred Securities Certificates, upon original issuance
(including Preferred Securities, if any, issued pursuant to the exercise of any
Over-allotment Option), shall be issued as Global Securities in the form of one
or more fully registered global Preferred Security Certificates (each a "Global
Certificate"), to be delivered to The Depository Trust Company, the initial
Depositary, by or on behalf of the Trust. Such Global Certificates initially
shall be registered on the books and records of the Trust in the name of "Cede &
Co.," the nominee of the initial Depositary. No Beneficial Owner of Preferred
Securities shall receive a definitive Preferred Security Certificate
representing such Beneficial Owner's interests in such Global Certificates,
except as provided in Section 7.12. Unless and until definitive, fully
registered Preferred Security Certificates have been issued to the Beneficial
Owners of Preferred Securities pursuant to Section 7.12,
(i) the provisions of this Section 7.1 shall be in full force
and effect;
(ii) the Trust and the Trustees shall be entitled to deal with
the Depositary for all purposes of this Declaration
(including the payment of Distributions on the Global
Certificates and receiving approvals, votes or consents
thereunder) as the Holder of the Preferred Securities and
the sole of holder of the Global Certificates and, except as
set forth herein or in Rule 3a-7 (if the Trust is excluded
from the definition of an Investment Company solely by
reason of Rule 3a-7) with respect to the Property Trustee,
shall have no obligation to the Beneficial Owners of the
Preferred Securities;
(iii) to the extent that the provisions of this Section 7.1
conflict with any other provisions of this Declaration, the
provisions of this Section 7.1 shall control; and
(iv) the rights of the Beneficial Owners of the Preferred
Securities shall be exercised only through the Depositary
and shall be limited to those established by law and
agreements between such Beneficial Owners and the Clearing
Agency and/or the Depositary Participants. The Depositary
shall make book-entry transfers among Depositary
Participants and receive and transmit Distributions on the
Global Certificates to such Depositary Participants;
provided that solely for the purposes of determining whether
the Holders of the requisite amount of Preferred Securities
have voted on any matter provided for in this Declaration,
so long as definitive Preferred Security Certificates have
not been issued, the Trustees may rely conclusively on, and
shall be protected in relying on, any written instrument
(including a proxy) delivered to the Trustees by the
Depositary setting forth the votes of the Beneficial Owners
of the Preferred Securities or assigning the right to vote
on any matter to any other Persons either in whole or in
part.
Whenever a notice or other communication to the Holder of the
Preferred Securities is required to be given under this Declaration, unless and
until definitive Preferred Security Certificates have been issued pursuant to
Section 7.1(g), the Trustees shall deliver all such notices and communications
specified
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herein to be given to the Holders of the Preferred Securities to the Depositary,
and, with respect to any Preferred Security Certificate registered in the name
of a Depositary or the nominee of a Depositary, the Trustees may conclusively
rely on, and shall be protected in relying on, any written instrument (including
a proxy) delivered to the Trustees by the Depositary setting forth the votes of
the Beneficial Owners of the Preferred Securities or assigning the right to vote
on any matter or any other Persons either in whole or in part.
SECTION 7.2 Distributions.
(a) Holders of the Securities shall be entitled to receive
Distributions that shall accumulate and be payable at the rate per annum of
____% of the stated liquidation amount of $50 per Security until _______, 2003,
and at the Reset Rate thereafter. The amount of Distributions payable for any
period shall be computed (i) for any full quarterly distribution period, on the
basis of a 360-day year of twelve 30-day months and (ii) for any period shorter
than a full quarterly distribution period, on the basis of a 30-day month and,
for any period of less than one month, on the basis of the actual number of days
elapsed per 30-day month. Subject to Section 7.1(b), Distributions shall be made
on the Securities on a Pro Rata basis. Distributions on the Securities shall
accumulate from the date of original issue, shall be cumulative and shall be
payable quarterly, in arrears, on _____________, __________, _____________, and
_____________ of each year, commencing _______________ __, 1999, when, as and if
available for payment, by the Property Trustee, except as otherwise described
below. Distributions shall be payable only to the extent that payments are made
to the Trust in respect of the Debentures held by the Property Trustee and to
the extent that the Trust has funds available for the payment of such
Distributions in the Property Account.
(b) Distributions not paid on the scheduled payment date shall
accumulate and compound quarterly at the rate of _____% per annum through and
including ________________, 2003, and at the Reset Rate thereafter ("Compounded
Distributions"). "Distributions" shall mean ordinary cumulative distributions
together with any Compounded Distributions.
(c) If and to the extent that the Debenture Issuer makes a payment of
principal of and any premium or interest on the Debentures held by the Property
Trustee (the amount of any such payment being a "Payment Amount"), the Property
Trustee shall and is directed, to the extent funds are available for that
purpose, to make a Pro Rata distribution of the Payment Amount to Holders,
subject to Section 7.1(b).
(d) Distributions on the Securities shall be payable to the Holders
thereof as they appear on the register of the Trust as of the close of business
on the relevant record dates. If the Preferred Securities are represented by one
or more Global Securities, the relevant record dates shall be the close of
business on the Business Day preceding such Distribution payment date, unless a
different regular record date is established or provided for the corresponding
interest payment date on the Debentures. The relevant record dates for the
Common Securities shall be the same as for the Preferred Securities. If the
Preferred Securities are not represented by one or more Global Securities, the
relevant record dates for the Preferred Securities shall be selected by the
Regular Trustees and shall be [the fifteenth Business Day] prior to the relevant
Distribution payment dates. At all times, the Distribution payment dates shall
correspond to the interest payment dates on the Debentures. Distributions
payable on any Securities that are not punctually paid on any Distribution
payment date, as a result of the Debenture Issuer having failed to make a
payment under the Debentures, shall cease to be payable to the Person in whose
name such Securities are registered on the relevant record date, and such
defaulted Distribution instead shall be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with this
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Declaration. If any date on which Distributions are payable on the Securities is
not a Business Day, then payment of the Distribution payable on such date shall
be made on the next day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that if such Business Day is
in the next calendar year, such payment shall be made on the preceding Business
Day, with the same force and effect as if made on such payment date.
(e) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata among the Holders of the Securities, subject to Section
7.1(b).
SECTION 7.3 Redemption of Securities.
(a) Upon the repayment or redemption, in whole or in part, of the
Debentures held by the Trust, whether at the stated maturity of the Debentures
or upon earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be simultaneously applied Pro Rata (subject to
Section 7.1(b)) to redeem Securities having an aggregate liquidation amount
equal to the aggregate principal amount of the Debentures so repaid or redeemed
at the Redemption Price. Holders of the Securities shall be given not less than
30 nor more than 60 days notice of such redemption in accordance with Section
7.4.
(b) If the Debenture Issuer redeems the Debentures upon the occurrence
and continuance of a Tax Event, the proceeds from such redemption shall be
applied by the Property Trustee to redeem the Securities in whole (but not in
part) at a redemption price per Security equal to the Redemption Amount plus any
accumulated and unpaid Distributions thereon to the Tax Event Redemption Date.
If, following the occurrence of a Tax Event, the Debenture Issuer exercises its
option to redeem the Debentures, the Debenture Issuer shall appoint the
Quotation Agent in consultation with the Sponsor. The Property Trustee shall
distribute to the Holders of the Securities on the Tax Event Redemption Date the
Redemption Price payable in liquidation of such Holders' interests in the assets
of the Trust.
SECTION 7.4 Redemption Procedures.
(a) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution Notice"),
which notice shall be irrevocable, shall be given by the Trust by mail to each
Holder of Securities to be redeemed or exchanged at least 30 but no more than 60
days before the date fixed for redemption or exchange thereof which, in the case
of a redemption, shall be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or exchange and the dates
on which notices are given pursuant to this Section 7.4(a), a
Redemption/Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to the Holders of
the Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of the Securities at the address of each such Holder appearing in the
register of the Trust. No defect in the Redemption/Distribution Notice or in the
mailing of either thereof with respect to any Holder shall affect the validity
of the redemption or exchange proceedings with respect to any other Holder.
(b) Subject to the Trust's fulfillment of the notice requirements set
forth in Section 7.4(a), if Securities are to be redeemed, then (provided that
the Debenture Issuer has paid the Property Trustee a sufficient amount of cash
in connection with the related redemption or maturity of the Debentures) (i)
with respect to the Preferred Securities represented by one or more Global
Securities, by 12:00 noon, New York City time, on the redemption date, the
Property Trustee will deposit irrevocably with the Depositary or its
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nominee funds sufficient to pay the applicable Redemption Price, and the
Property Trustee shall give the Depositary irrevocable instructions and
authority to pay the Redemption Price to the Beneficial Owners of the Preferred
Securities, and (ii) with respect to Securities not represented by one or more
Global Securities, the Property Trustee shall pay the applicable Redemption
Price to the Holders of such Securities by check mailed to the address of each
Holder appearing on the register of the Trust on the redemption date. If any
date fixed for redemption of Securities is not a Business Day, then payment of
the Redemption Price payable on such date shall be made on the next Business Day
(without any interest thereon), except that if such Business Day falls in the
next calendar year, such payment shall be made on the preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. Notwithstanding the foregoing, so long as the Holder of any
Preferred Securities is the Collateral Agent or the Purchase Contract Agent, the
payment of the Redemption Price in respect of the Preferred Securities held by
the Collateral Agent or the Purchase Contract Agent shall be made no later than
12:00 noon, New York City time, on the redemption date by check or wire transfer
in immediately available funds at such place and to such account as may be
designated by the Collateral Agent or the Purchase Contract Agent. If payment of
the Redemption Price in respect of any Securities is improperly withheld or
refused and not paid either by the Trust or by the Sponsor as guarantor pursuant
to the Guarantee, then Distributions on such Securities shall continue to
accumulate at the then applicable rate, from the original redemption date to the
actual date of payment, in which case the actual payment date shall be the date
fixed for redemption for purposes of calculating the Redemption Price. For these
purposes, the applicable Redemption Price shall not include Distributions that
are being paid to Holders of Securities who were Holders of Securities on a
relevant record date. If a Redemption/Distribution Notice has been given and
funds have been deposited or paid as required, then immediately prior to the
close of business on the date of such deposit or payment, Distributions will
cease to accumulate on the Securities called for redemption, and all rights of
Holders of such Securities so called for redemption shall cease, except the
right of the Holders of such Securities to receive the Redemption Price, but
without interest on such Redemption Price, and from and after the date fixed for
redemption, such Securities will cease to be outstanding.
Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that have been
called for redemption, except for the unredeemed portion of any Securities being
redeemed in part.
(c) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Debenture Issuer or its
Affiliates may purchase, at any time and from time to time, outstanding
Preferred Securities by tender, in the open market or by private agreement.
SECTION 7.5 Voting Rights of the Preferred Securities.
(a) Except as provided under this Section 7.5 and Section 11.1 and as
otherwise required by the Business Trust Act, the Trust Indenture Act and other
applicable law, the Holders of the Preferred Securities shall have no voting
rights.
(b) Subject to the requirement of the Property Trustee obtaining a tax
opinion in certain circumstances set forth in Section 7.5(d), the Holders of a
Majority in Liquidation Amount of the Preferred Securities, voting separately as
a class, shall 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 trust or power conferred upon the Property Trustee under
this Declaration, including the right to direct the Property Trustee, as Holder
of the Debentures, to (i) exercise the remedies available to it under the
Indenture,
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(ii) consent to any amendment or modification of the Indenture or the Debentures
where such consent is required or (iii) waive any past default and its
consequences that are waivable under Section 513 of the Indenture; provided that
if an Indenture Event of Default has occurred and is continuing, then the
Holders of 25% of the aggregate stated 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 a Supermajority 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 Supermajority in
aggregate stated liquidation amount of the Preferred Securities.
(c) If the Property Trustee fails to enforce its rights under the
Debentures after a Holder of Preferred Securities has made a written request,
such Holder of Preferred Securities may institute, to the fullest extent
permitted by law, a legal proceeding directly against the Debenture Issuer to
enforce the Property Trustee's rights under the Indenture without first
instituting any legal proceeding against the Property Trustee or any other
Person. In addition, if a Trust Enforcement Event has occurred and is continuing
and such event is attributable to the failure of the Debenture Issuer to make
any interest, principal or other required payments when due under the Indenture,
then a Holder of Preferred Securities may institute a Direct Action against the
Debenture Issuer on or after the respective due date specified in the
Debentures.
(d) The Property Trustee shall notify all Holders of the Preferred
Securities of any notice of any Indenture Event of Default received from the
Debenture Issuer with respect to the Debentures. Such notice shall state that
such Indenture Event of Default also constitutes a Trust Enforcement Event.
Except with respect to directing the time, method, and place of conducting a
proceeding for a remedy, the Property Trustee shall be under no obligation to
take any of the actions described in clauses (i) and (ii) of Section 7.5(b)
above, unless the Property Trustee has obtained an opinion of independent tax
counsel to the effect that the Trust will not fail to be classified as a grantor
trust for United States federal income tax purposes as a result of such action,
and that each Holder of Preferred Securities shall be treated as owning an
undivided beneficial ownership interest in the Debentures.
(e) If 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 shall request the direction
of the Holders of the Securities with respect to such amendment or modification
and shall vote with respect to such amendment or modification as directed by a
Majority in Liquidation Amount of the Securities voting together as a single
class; provided that where a consent under the Indenture would require the
consent of the Holders of a Supermajority 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 Supermajority in aggregate stated
liquidation amount of the Securities. The Property Trustee shall not take any
such action in accordance with the directions of the Holders of the 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 will be treated as owning an undivided beneficial ownership
interest in the Debentures.
(f) A waiver of an Indenture Event of Default with respect to the
Debentures shall constitute a waiver of the corresponding Trust Enforcement
Event.
(g) Any required approval or direction of the Holders of the Preferred
Securities may be given at a separate meeting of the Holders of the Preferred
Securities convened for such purpose, at a meeting of all of the Holders of the
Securities or pursuant to written consent. The Regular Trustees shall cause a
notice
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of any meeting at which Holders of the Preferred Securities are entitled to vote
to be mailed to each Holder of record of Preferred Securities. Each such notice
shall 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.
(h) No vote or consent of the Holders of the Preferred Securities
shall be required for the Trust to redeem and cancel the Preferred Securities or
distribute the Debentures in accordance with this Declaration and the terms of
the Securities.
(i) Notwithstanding that the Holders of the 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 the Debenture Issuer,
the Trustees or any entity directly or indirectly controlled by, or under direct
or indirect common control with, the Debenture Issuer or any Trustee shall not
be entitled to vote or consent and shall be treated, for purposes of such vote
or consent, as if such Preferred Securities were not outstanding.
(j) Except as provided under Section 7.5(k), the Holders of the
Preferred Securities shall have no rights to appoint or remove the Trustees, who
may be appointed, removed or replaced solely by the Holders of the Common
Securities.
(k) If an Indenture Event of Default has occurred and is continuing,
the Property Trustee and the Delaware Trustee may be removed [and replaced] at
such time by a Majority in Liquidation Amount of the Preferred Securities.
SECTION 7.6 Voting Rights of the Common Securities.
(a) Except as provided under Section 6.1(b), this Section 7.6 and
Section 11.1 and as otherwise required by the Business Trust Act, the Trust
Indenture Act or other applicable law or provided by this Declaration, the
Holders of the Common Securities shall have no voting rights.
(b) Subject to Section 7.5(k), the Holders of the Common Securities
shall be entitled to vote to appoint, remove or replace any Trustee or to
increase or decrease the number of Trustees in accordance with Article 6.
(c) Subject to Section 2.6 and only after all Trust Enforcement Events
with respect to the Preferred Securities have been cured, waived, or otherwise
eliminated and subject to the requirement of the Property Trustee obtaining a
tax opinion in certain circumstances set forth in this paragraph (c), the
Holders of the Common Securities shall 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 trust or power conferred upon the
Property Trustee under this Declaration, including 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 is required
or (iii) waive any past default and its consequences that are waivable under
Section 513 of the Indenture; provided that where a consent or action under the
Indenture would require the consent or act of the Holders of a Supermajority of
the aggregate principal amount of Debentures affected thereby, only the Holders
of at least the same Supermajority of the aggregate stated liquidation amount of
the Common Securities may direct the Property Trustee to give such consent or
take such action. Except with respect to directing the
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time, method, and place of conducting a proceeding for a remedy, the Property
Trustee shall be under no obligation to take any of the actions described in
clause 7.6(c)(i) and (ii) above unless the Property Trustee has obtained an
opinion of independent tax counsel to the effect that, as a result of such
action, for United States federal income tax purposes the Trust will not fail to
be classified as a grantor trust and each Holder will be treated as owning an
undivided beneficial ownership interest in the Debentures.
(d) If the Property Trustee fails to enforce its rights under the
Debentures after the Holders of the Common Securities have made a written
request, the Holders of the Common Securities may institute, to the fullest
extent permitted by law, a legal proceeding directly against the Debenture
Issuer to enforce the Property Trustee's rights under the Debentures without
first instituting any legal proceeding against the Property Trustee or any other
Person.
(e) A waiver of an Indenture Event of Default with respect to the
Debentures shall constitute a waiver of the corresponding Trust Enforcement
Event.
(f) Any required approval or direction of the Holders of the Common
Securities may be given at a separate meeting of the Holders of the Common
Securities convened for such purpose, at a meeting of all of the Holders of the
Securities or pursuant to written consent. The Regular Trustees shall cause a
notice of any meeting at which the Holders of the Common Securities are entitled
to vote to be mailed to the Holders of the Common Securities. Such notice shall
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 the
Holders of the Common Securities are entitled to vote; and (iii) instructions
for the delivery of proxies.
(g) No vote or consent of the Holders of the Common Securities shall
be required for the Trust to redeem and cancel the Common Securities or to
distribute Debentures in accordance with this Declaration and the terms of the
Securities.
SECTION 7.7 Paying Agent.
If any Preferred Securities are not represented by one or more Global
Securities, the Trust shall maintain in the Borough of Manhattan, New York City,
State of New York, an office or agency where the Preferred Securities may be
presented for payment ("Paying Agent"). The Regular Trustees shall appoint the
paying agent (which shall be a bank or trust company acceptable to the Debenture
Issuer) and may appoint one or more additional paying agents in such other
locations as they shall determine. The term "Paying Agent" includes any
additional paying agent. The Regular Trustees may change any Paying Agent
without prior notice to the Holders of the Securities. The Regular Trustees
shall notify the Property Trustee of the name and address of any Paying Agent
not a party to this Declaration. If the Trust fails to appoint or maintain
another entity as Paying Agent, the Property Trustee shall act as such. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Property Trustee and the Debenture Issuer.
SECTION 7.8 Listing.
The Sponsor shall use its best efforts to cause the Preferred
Securities to be listed for quotation on the New York Stock Exchange.
SECTION 7.9 Transfer of the Preferred Securities.
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(a) The Preferred Securities initially shall be pledged, pursuant to
the terms of the Pledge Agreement, as collateral to secure the obligations of
the holders of Corporate SPUs to purchase common shares of Industries in
accordance with the terms of the Purchase Contract Agreement.
(b) The Preferred Securities may be transferred, in whole or in part,
only in accordance with the terms and conditions set forth in this Declaration
and the Preferred Securities. To the fullest extent permitted by law, any
transfer or purported transfer of any Preferred Security not made in accordance
with this Declaration shall be null and void.
(c) Subject to this Section 7.9 and Section 7.12, the Preferred
Securities shall be freely transferable.
(d) The Trust shall cause to be kept at the Corporate Trust Office a
register in which, subject to such reasonable regulations as it may prescribe,
the Trust shall provide for the registration of Preferred Securities and of
transfers of Preferred Securities. The Property Trustee is hereby appointed
"Security Registrar" for the purpose of registering Preferred Securities and
transfers of Preferred Securities as herein provided.
(e) Upon surrender for registration of transfer of any Preferred
Securities at an office or agency of the Trust designated for such purpose, a
Regular Trustee shall execute, and the Property Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Preferred Securities of any authorized denominations and of a like aggregate
principal amount.
(f) At the option of the Holder, Securities may be exchanged for other
Preferred Securities of any authorized denominations and of a like aggregate
principal amount, upon surrender of the Preferred Securities to be exchanged at
such office or agency. Whenever any Preferred Securities are so surrendered for
exchange, a Regular Trustee shall execute, and the Property Trustee shall
authenticate and deliver, the Preferred Securities that the Holder making the
exchange is entitled to receive.
(g) If so required by the Trust or the Property Trustee, every
Preferred Security presented or surrendered for registration of transfer or for
exchange shall be duly endorsed, or accompanied by a duly executed written
instrument of transfer in form satisfactory to the Trust and the Security
Registrar, by the Holder thereof or his attorney duly authorized in writing.
(h) No service charge shall be made for any registration of transfer
or exchange of Preferred Securities, but the Trust may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Preferred
Securities.
SECTION 7.10 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates are surrendered to the Regular
Trustees, or if the Regular Trustees receive evidence to their satisfaction of
the destruction, loss or theft of any Certificate; and
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(b) there shall be delivered to the Regular Trustees such security or
indemnity as may be required by them to keep each of the Sponsor and the Trust
harmless,
then, in the absence of notice that such Certificate has been acquired by a bona
fide purchaser, any Regular Trustee shall execute and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like denomination. In connection with the issuance of any new
Certificate under this Section 7.10, the Regular Trustees may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate Certificate issued
pursuant to this Section 7.10 shall constitute conclusive evidence of an
ownership interest in the relevant Securities, as if originally issued, whether
or not the lost, stolen or destroyed Certificate is found at any time.
SECTION 7.11 Deemed Holders.
The Trustees may treat the Person in whose name any Certificate is
registered on the register of the Trust as the sole holder of such Certificate
and of the Securities represented thereby for purposes of receiving
Distributions and for all other purposes whatsoever. Accordingly, the Trustees
shall not be bound to recognize any equitable or other claim to or interest in
such Certificate or in the Securities represented by such Certificate on the
part of any Person, whether or not the Trust has actual or other notice thereof.
SECTION 7.12 Global Securities.
The Preferred Securities initially shall be issued in the form of one or
more Global Securities. A Regular Trustee on behalf of the Trust shall execute,
and the Property Trustee shall authenticate and deliver, one or more Global
Securities that (i) shall represent and be denominated in an amount equal to the
aggregate stated liquidation amount of all of the Preferred Securities to be
issued in the form of Global Securities and not yet canceled, (ii) shall be
registered in the name of the Depositary for the Preferred Securities or the
nominee of such Depositary and (iii) shall be delivered by the Property Trustee
to such Depositary or pursuant to such Depositary's instructions. Global
Securities shall bear a legend substantially to the following effect:
"This Preferred Security is a Global Security within the meaning of
the Declaration and is registered in the name of The Depository Trust
Company, a New York corporation (the "Depositary"), or a nominee of
the Depositary. This Preferred Security is exchangeable for Preferred
Securities registered in the name of a person other than the
Depositary or its nominee only in the limited circumstances described
in the Declaration, and no transfer of this Preferred Security (other
than a transfer of this Preferred Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may
be registered except in limited circumstances.
Unless this certificate is presented by an authorized representative
of the Depositary to NIPSCO Capital Trust I or its agent for
registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depositary (and any
payment hereon is made to Cede & Co. or to such other entity as is
requested by an authorized representative of the Depositary), and
except as otherwise provided in the Amended and Restated Declaration
of NIPSCO Capital Trust I dated ______________, 1999,
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ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein."
Preferred Securities not represented by a Global Security issued in
exchange for all or a part of a Global Security pursuant to this Section 7.12
shall be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Property Trustee. Upon execution and
authentication, the Property Trustee shall deliver any Preferred Securities not
represented by a Global Security to the Persons in whose names such definitive
Preferred Securities are so registered.
At such time as all interests in Global Securities have been redeemed,
repurchased or canceled, such Global Securities shall be canceled, upon receipt
thereof, by the Property Trustee in accordance with standing procedures of the
Depositary. At any time prior to such cancellation, if any interest in a Global
Security is exchanged for Preferred Securities not represented by a Global
Security, redeemed, canceled or transferred to a transferee who receives
Preferred Securities not represented by a Global Security, or if any Preferred
Security not represented by a Global Security is exchanged or transferred for
part of a Global Security, then, in accordance with the standing procedures of
the Depositary, the liquidation amount of such Global Security shall be reduced
or increased, as the case may be, and an endorsement shall be made on such
Global Security by the Property Trustee to reflect such reduction or increase.
The Trust and the Property Trustee, as the authorized representative of the
Holders of the Preferred Securities, may deal with the Depositary for all
purposes of this Declaration, including the making of payments due on the
Preferred Securities and exercising the rights of Holders of the Preferred
Securities hereunder. The rights of any Beneficial Owner shall be limited to
those established by law and agreements between such owners and Depository
Participants; provided that no such agreement shall give to any Person any
rights against the Trust or the Property Trustee without the written consent of
the parties so affected. Multiple requests and directions from and votes of the
Depositary as the Holder of the Preferred Securities represented by Global
Securities with respect to any particular matter shall not be deemed
inconsistent to the extent they do not represent an amount of Preferred
Securities in excess of those held in the name of the Depositary or its nominee.
If at any time the Depositary notifies the Trust that it is unwilling or
unable to continue as Depositary for the Preferred Securities or if at any time
the Depositary no longer is eligible under this Section 7.12, the Regular
Trustees shall 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 shall no longer be effective, and a Regular
Trustee shall 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 aggregate
stated liquidation amount of the Global Securities representing the Preferred
Securities in exchange for such Global Securities.
The Trust at any time and in its sole discretion may determine that the
Preferred Securities issued in the form of one or more Global Securities shall
no longer be represented by Global Securities. In such event a Regular Trustee
on behalf of the Trust shall execute, and the Property Trustee shall
authenticate and deliver, Preferred Securities in definitive registered form, in
any authorized denominations, in an aggregate stated liquidation amount equal to
the aggregate stated liquidation amount of the Global Securities
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representing the Preferred Securities, in exchange for such Global Securities.
Notwithstanding any other provisions of this Declaration (other than the
provisions set forth in Section 7.9), Global Securities may not be transferred
as a whole except by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor Depositary or a nominee
of such successor Depositary.
Interests of Beneficial Owners may be transferred or exchanged for
Preferred Securities not represented by a Global Security, and Preferred
Securities not represented by a Global Security may be transferred or exchanged
for a Global Security or Securities, in accordance with rules of the Depositary
and the provisions of Section 7.9.
SECTION 7.13 Remarketing.
(a) The Debenture Issuer shall request, not later than 15 nor more
than 30 calendar days prior to the Remarketing Date, that the Depositary notify
the Holders of the Preferred Securities and the holders of Corporate SPUs and
Treasury SPUs of the Remarketing and of the procedures that must be followed if
a Holder of Preferred Securities wishes to make a Cash Settlement.
(b) Not later than 5:00 P.M., New York City time, on the seventh
Business Day preceding the Purchase Contract Settlement Date, each Holder of
Preferred Securities may elect to have the Preferred Securities held by such
Holder remarketed in the Remarketing. Under Section 5.4 of the Purchase Contract
Agreement, holders of Corporate SPUs that do not give notice of their intention
to make a Cash Settlement of the Purchase Contract component of their Corporate
SPUs prior to such time in the manner specified in such Section, or have given
such notice but fail to deliver cash prior to 11:00 A.M., New York City time, on
or prior to the fifth Business Day preceding the Purchase Contract Settlement
Date, shall be deemed to have consented to the disposition of the Preferred
Securities comprising a component of their Corporate SPUs in the Remarketing.
Holders of the Preferred Securities that are not a component of Corporate SPUs
wishing to elect to have their Preferred Securities remarketed shall give to the
Debenture Trustee notice of their election prior to 11:00 A.M., New York City
time on such fifth Business Day. Any such notice shall be irrevocable and may
not be conditioned upon the level at which the Reset Rate is established in the
Remarketing. Promptly after 11:00 A.M., New York City time, on such fifth
Business Day, the Debenture Trustee, based on the notices received by it prior
to such time (including notices from the Purchase Contract Agent as to Purchase
Contracts for which Cash Settlement has been elected and cash received), shall
notify the Trust, the Sponsor and the Remarketing Agents of the number of
Preferred Securities to be tendered for purchase in the Remarketing.
(c) If any Holder of Preferred Securities does not give a notice of
its intention to make a Cash Settlement or gives such notice but fails to
deliver cash as described in Section 7.13(b), or gives a notice of election to
have Preferred Securities that are not a component of Corporate SPUs remarketed,
then the Preferred Securities of such Holder shall be deemed tendered for
purchase in the Remarketing, notwithstanding any failure by such Holder to
deliver or properly deliver such Preferred Securities to the Remarketing Agents
for purchase.
(d) The right of each Holder to have Preferred Securities tendered for
purchase shall be limited to the extent that (i) the Remarketing Agents conduct
a remarketing pursuant to the terms of the Remarketing Agreement, (ii) the
Preferred Securities tendered have not been called for redemption, (iii) the
Remarketing
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Agents are able to find a purchaser or purchasers for the tendered Preferred
Securities and (iv) such purchaser or purchasers deliver the purchase price
therefor to the Remarketing Agents.
(e) On the Remarketing Date, the Remarketing Agents shall use
commercially reasonable efforts to remarket, at a price equal to 100% of the
aggregate stated liquidation amount thereof, the Preferred Securities tendered
or deemed tendered for purchase.
(f) If, as a result of the efforts described in 7.13(e), the
Remarketing Agents have determined that they will be able to remarket all of the
Preferred Securities tendered or deemed tendered for purchase at a price of 100%
of the aggregate stated liquidation amount of such Preferred Securities prior to
4:00 P.M., New York City time, on the Remarketing Date, the Remarketing Agents
shall determine the Reset Rate, which shall be the rate per annum (rounded to
the nearest one-thousandth (0.001) of one percent per annum) that the
Remarketing Agents determine, in their sole judgment, to be the lowest rate per
annum that will enable them to remarket all of the Preferred Securities tendered
or deemed tendered for Remarketing.
(g) If none of the Holders of the Preferred Securities or the holders
of the Corporate SPUs elect to have Preferred Securities remarketed in the
Remarketing, the Reset Rate shall be the rate determined by the Remarketing
Agents, in their sole discretion, as the rate that would have been established
had a Remarketing been held on the Remarketing Date.
(h) If, by 4:00 P.M., New York City time, on the Remarketing Date, the
Remarketing Agents are unable to remarket all of the Preferred Securities
tendered or deemed tendered for purchase, a failed Remarketing ("Failed
Remarketing") shall be deemed to have occurred and the Remarketing Agents shall
so advise by telephone the Depositary, the Property Trustee, the Debenture
Trustee, the Trust and the Sponsor. In the event of a Failed Remarketing, the
Reset Rate shall equal the Two-Year Benchmark Treasury plus the Applicable
Margin.
(i) By approximately 4:30 P.M., New York City time, on the Remarketing
Date, provided that there has not been a Failed Remarketing, the Remarketing
Agent shall advise, by telephone (i) the Depositary, the Property Trustee, the
Debenture Trustee, the Trust and the Sponsor of the Reset Rate determined in the
Remarketing and the number of Preferred Securities sold in the Remarketing, (ii)
each purchaser (or the Depositary Participant thereof) of the Reset Rate and the
number of Preferred Securities such purchaser is to purchase and (iii) each
purchaser to give instructions to its Depositary Participant to pay the purchase
price on the Purchase Contract Settlement Date in same day funds against
delivery of the Preferred Securities purchased through the facilities of the
Depositary.
(j) In accordance with the Depositary's normal procedures, on the
Purchase Contract Settlement Date, the transactions described above with respect
to each Preferred Security tendered for purchase and sold in the Remarketing
shall be executed through the Depositary, and the accounts of the respective
Depositary Participants shall be debited and credited and such Preferred
Securities delivered by book-entry as necessary to effect purchases and sales of
such Preferred Securities. The Depositary shall make payment in accordance with
its normal procedures.
(k) If any Holder of the Preferred Securities selling Preferred
Securities in the Remarketing fails to deliver such Preferred Securities, the
Depositary Participant of such selling holder and of any other Person that was
to have purchased Preferred Securities in the Remarketing may deliver to any
such other Person a number of Preferred Securities that is less than the number
of Preferred Securities that otherwise was to be
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purchased by such Person. In such event, the number of Preferred Securities to
be so delivered shall be determined by such Depositary Participant, and delivery
of such lesser number of Preferred Securities shall constitute good delivery.
(l) The Remarketing Agents are not obligated to purchase any Preferred
Securities that otherwise would remain unsold in the Remarketing. Neither the
Trust, any Trustee, the Sponsor nor the Remarketing Agents shall be obligated in
any case to provide funds to make payment upon tender of the Preferred
Securities for Remarketing.
(m) Under the Remarketing Agreement, the Sponsor, in its capacity as
Debenture Issuer, shall be liable for, and shall pay, any and all costs and
expenses incurred in connection with the Remarketing, and the Trust shall not
have any liabilities for such costs and expenses.
(n) The tender and settlement procedures set in this Section 7.13,
including provisions for payment by purchasers of the Preferred Securities in
the Remarketing, shall be subject to modification to the extent required by the
Depositary or if the book-entry system is no longer available for the Preferred
Securities at the time of the Remarketing, to facilitate the tendering and
remarketing of the Preferred Securities in certificated form. In addition, the
Remarketing Agents may modify the settlement procedures set forth herein in
order to facilitate the settlement process.
ARTICLE 8: DISSOLUTION AND TERMINATION OF THE TRUST
SECTION 8.1 Dissolution and Termination of the Trust.
(a) The Trust shall dissolve upon the earliest of:
(i) the bankruptcy of the Debenture Issuer, the Sponsor or
Industries;
(ii) the filing of a certificate of dissolution or its equivalent
with respect to the Sponsor; the receipt by the Trust of the
consent of the Holders of at least a Majority in Liquidation
Amount of the Securities to dissolve the Trust and file a
certificate of cancellation with respect to the Trust; or
the revocation of the Sponsor's charter and the expiration
of 90 days after the date of revocation without a
reinstatement thereof;
(iii) the entry of a decree of judicial dissolution of the Sponsor
or the Trust;
(iv) the time when all of the Securities shall have been called
for redemption and the amounts then due shall have been paid
to the Holders of the Securities;
(v) upon the direction by the Property Trustee, following the
occurrence and continuation of a Tax Event pursuant to which
the Trust has been dissolved and all of the Debentures have
been distributed to the Holders of the Securities in
exchange for all of the Securities;
(vi) at the Sponsor's sole discretion, by notice and direction to
the Property Trustee to distribute the Debentures to the
Holders of the Securities in exchange for all of the
Securities; provided that the Sponsor will be required to
obtain an opinion of counsel
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that the distribution of the Debentures will not be taxable
to the holders of the Preferred Securities for United States
federal income tax purposes; or
(vii) the time when all of the Regular Trustees and the Sponsor
have consented to dissolution of the Trust, provided such
action is taken before the issuance of any Securities.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a) and upon completion of the winding up and
liquidation of the Trust, the Trustees shall terminate the Trust by executing
and filing a certificate of cancellation with the Secretary of State of the
State of Delaware.
(c) The provisions of Section 4.2 and Article 9 shall survive the
termination of the Trust.
SECTION 8.2 Liquidation Distribution Upon Dissolution of the Trust.
(a) In the event of any voluntary or involuntary liquidation,
dissolution, or winding-up of the Trust (each a "Liquidation"), the Holders of
the Securities on the date of the Liquidation shall be entitled to receive, out
of the assets of the Trust available for distribution to the Holders of the
Securities after satisfaction of the Trust's liabilities to creditors, if any,
cash or other immediately available funds in an amount equal to the aggregate of
the stated liquidation amount of $50 per Security plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"); provided if the Liquidation occurs prior to the Purchase
Contract Settlement Date, the Redemption Price payable to the Collateral Agent,
in liquidation of the Holders' interests in the Preferred Securities, will be
distributed to the Collateral Agent, which in turn will apply an amount equal to
the Redemption Amount of such Redemption Price to purchase the Treasury
Portfolio on behalf of the Holders of the Securities and remit the remaining
portion, if any, of such Redemption Price to the Purchase Contract Agent for
payment to the Holders. If, however, Debentures are to be distributed in
connection with such Liquidation, then the Holders of the Securities shall
receive on a Pro Rata basis Debentures in an aggregate principal amount equal to
the aggregate stated liquidation amount of, with an interest rate identical to
the distribution rate of, and accrued and unpaid interest equal to accumulated
and unpaid Distributions on, such Securities in exchange for such Securities;
provided if the Liquidation occurs prior to the Purchase Contract Settlement
Date, the Debentures receivable by the Holders shall be transferred to the
Collateral Account.
(b) If, upon any such Liquidation, 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 Securities shall be paid on a Pro Rata basis. The Holders of
the Common Securities shall be entitled to receive the Liquidation Distribution
Pro Rata with the Holders of the Preferred Securities, except that if an
Indenture Event of Default has occurred and is continuing, then the Preferred
Securities shall have a preference over the Common Securities with regard to the
Liquidation Distribution.
(c) After the date fixed for any distribution of Debentures upon
dissolution of the Trust, (i) the Securities no longer shall be deemed to be
outstanding and (ii) the Certificates shall be deemed to represent the
Debentures in a principal amount equal to the stated liquidation amount of the
Securities, bearing accrued and unpaid interest in an amount equal to the
accumulated and unpaid Distributions on the Securities, until such Certificates
are presented to the Regular Trustees or agent for transfer or reissuance.
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ARTICLE 9: LIMITATION OF LIABILITY OF
HOLDERS OF THE SECURITIES, THE DELAWARE TRUSTEE AND OTHERS
SECTION 9.1 Liability.
(a) Except as expressly set forth in this Declaration, the Guarantee
and the terms of the Securities, the Sponsor:
(i) shall not be personally liable for the return of any portion
of the capital contributions (or any return thereon) of the
Holders of the Securities that will be made solely from
assets of the Trust; and
(ii) shall not be required to pay to the Trust or to any Holder
of the Securities any deficit, upon dissolution of the Trust
or otherwise.
(b) Pursuant to Section 3803(a) of the Business Trust Act, the Holders
of the Common Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware; provided that the
Holders of the Common Securities shall be liable for all of the debts and
obligations of the Trust (other than with respect to the Securities) to the
extent such debts and obligations are not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders
of the Preferred Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 9.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or to any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith on behalf of the Trust and in a manner
that such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence (or, in
the case of the Property Trustee, negligence) or willful misconduct with respect
to such acts or omissions.
(b) Each Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters such
Indemnified Person reasonably believes to be within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses or any other facts pertinent to the existence and amount of assets from
which distributions to Holders of the Securities might properly be paid.
SECTION 9.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary
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duties) and liabilities relating thereto to the Trust or to any other Covered
Person, an Indemnified Person acting under this Declaration shall not be liable
to the Trust or to any other Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity (other than the duties imposed on the
Property Trustee under the Trust Indenture Act), are agreed by the parties
hereto to replace such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between a
Covered Person and an Indemnified Person; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified
Person shall act in a manner that is, or provides terms that
are, fair and reasonable to the Trust or any Holder of
Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the
Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and
shall not be subject to any other or different standard
imposed by this Declaration or by applicable law.
SECTION 9.4 Indemnification.
(a)(i) Pursuant to the Indenture, the Debenture Issuer shall
indemnify, to the full extent permitted by law, any Debenture Issuer Indemnified
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 (other than an action by or in the
right of the Trust), by reason of the fact that he or she is or was a Debenture
Issuer Indemnified Person against expenses (including attorney fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner that he or she reasonably believed to be in or not opposed to
the best interests of the Trust 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
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action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the Debenture Issuer Indemnified Person did not act in good
faith and in a manner that he or she reasonably believed to be in or not opposed
to the best interests of the Trust and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(ii) Pursuant to the Indenture, the Debenture Issuer shall
indemnify, to the full extent permitted by law, any Debenture Issuer Indemnified
Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the Trust
to procure a judgment in its favor by reason of the fact that he or she is or
was a Debenture Issuer Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection with the
defense or settlement of such action or suit 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 Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Debenture Issuer
Indemnified Person was adjudged to be liable to the Trust, unless and only to
the extent that the Court of Chancery of Delaware or the court in which such
action or suit was brought determines 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 that
such Court of Chancery or such other court shall deem proper.
(iii) Any indemnification under paragraphs (i) and (ii) of this
Section 9.4(a) (unless ordered by a court) shall be made by the Debenture Issuer
only as authorized in the specific case upon a determination that
indemnification of the Debenture Issuer Indemnified Person is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth in paragraphs (i) and (ii). Such determination shall be made (1) by a
majority vote of a quorum of the Regular Trustees who were not parties to such
action, suit or proceeding, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion, or (3) by the Holders of the
Common Securities.
(iv) Expenses (including attorneys' fees) incurred by a Debenture
Issuer Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 9.4(a) shall be paid by the Debenture Issuer in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Debenture Issuer Indemnified Person to repay
such amount if it shall ultimately be determined that he or she is not entitled
to be indemnified by the Debenture Issuer as authorized in this Section 9.4(a).
Notwithstanding the foregoing, no advance shall be made by the Debenture Issuer
if a determination is reasonably and promptly made (i) by a majority vote of a
quorum of disinterested Regular Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Regular
Trustees so directs, by independent legal counsel in a written opinion or (iii)
the Holders of the Common Securities, that, based upon the facts known to the
Regular Trustees, counsel or the Holders of the Common Securities at the time
such determination is made, such Debenture Issuer Indemnified Person acted in
bad faith or in a manner that such Person did not believe to be in or not
opposed to the best interests of the Trust, or, with respect to any criminal
proceeding, that such Debenture Issuer Indemnified Person believed or had
reasonable cause to believe his or her conduct was unlawful. In no event shall
any advance be made in instances where the Regular Trustees, independent legal
counsel or the Holders of the Common Securities reasonably determine that such
Person deliberately breached his or her duty to the Trust or to the Holders of
the Securities.
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(v) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Section 9.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Debenture Issuer or the Holders
of the Preferred Securities or otherwise, both as to action in an official
capacity and as to action in another capacity while holding such office. All
rights to indemnification under this Section 9.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Debenture Issuer
Indemnified Person who serves in such capacity at any time while this Section
9.4(a) is in effect. Any repeal or modification of this Section 9.4(a) shall not
affect any rights or obligations then existing.
(vi) The Debenture Issuer or the Trust may purchase and maintain
insurance on behalf of any Person who is or was a Debenture Issuer Indemnified
Person 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 Debenture Issuer would have the power to indemnify him or her against
such liability under the provisions of this Section 9.4(a).
(vii) For purposes of this Section 9.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any Person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 9.4(a) with respect to the resulting or surviving entity as he
or she would have had with respect to such constituent entity if its separate
existence had continued.
(viii) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 9.4(a) shall continue, unless otherwise
provided when authorized or ratified, as to a Person who has ceased to be a
Debenture Issuer Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a Person. The obligation to indemnify as
set forth in this Section 9.4(a) shall survive the resignation or removal of the
Delaware Trustee or the Property Trustee or the termination of this Declaration.
(b) Pursuant to the Indenture, the Debenture Issuer agrees to
indemnify, to the fullest extent permitted by law, the (i) Property Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee or the
Delaware Trustee and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any loss, liability or
expense incurred without gross negligence (or, in the case of the Property
Trustee, negligence) or bad faith on its part, arising out of or in connection
with the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses (including reasonable legal fees and expenses)
of defending itself against or investigating any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 9.4(b) shall
survive the satisfaction and discharge of this Declaration.
SECTION 9.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee (subject to
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Section 6.3(c)) may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the activities of the Trust, and the Trust and the Holders of the
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the activities of the Trust, shall
not be deemed wrongful or improper. Each Covered Person, the Sponsor, the
Delaware Trustee and the Property Trustee shall not be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Covered Person, the Delaware Trustee and the Property
Trustee may engage or be interested in any financial or other transaction with
the Sponsor or any Affiliate of the Sponsor, or may act as depositary for,
trustee or agent for, or act on any committee or body of holders of, securities
or other obligations of the Sponsor or its Affiliates.
ARTICLE 10: ACCOUNTING
SECTION 10.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 10.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or shall cause to be kept, full books of account, records
and supporting documents, which shall reflect in reasonable detail each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The Trust shall use the accrual method of
accounting for United States federal income tax purposes. The books of account
and the records of the Trust shall be examined by and reported upon as of the
end of each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to
each Holder of Securities, within 90 days after the end of each Fiscal Year of
the Trust, annual financial statements of the Trust, including a balance sheet
of the Trust as of the end of such Fiscal Year, and the related statements of
income or loss.
(c) The Regular Trustees shall cause to be duly prepared and delivered
to each Holder of Securities an annual United States federal income tax
information statement, required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver
all such statements within 30 days after the end of each Fiscal Year of the
Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority an annual United States federal income tax
return, on Form 1041 or such other form required by United States federal income
tax law, and any other annual income tax returns required to be filed on behalf
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of the Trust with any state or local taxing authority.
SECTION 10.3 Banking.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided that all payments of funds in respect of
the Debentures held by the Property Trustee shall be made directly to the
Property Account and no other funds of the Trust shall be deposited in the
Property Account. The sole signatories for such accounts shall be designated by
the Regular Trustees; provided that the Property Trustee shall designate the
signatories for the Property Account.
SECTION 10.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Regular
Trustees shall request, and the Holders of the Securities shall provide to the
Trust, such forms or certificates as are necessary to establish an exemption
from withholding with respect to each Holder of Securities and any
representations and forms as shall reasonably be requested by the Regular
Trustees to assist them in determining the extent of, and in fulfilling, the
Trust's withholding obligations. The Regular Trustees shall file required forms
with applicable jurisdictions and, unless an exemption from withholding is
properly established by a Holder of Securities, shall remit amounts withheld
with respect to such Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder of Securities, the amount
withheld shall be deemed to be a distribution in the amount of the withholding
to such Holder. In the event of any claimed over withholding, a Holder shall be
limited to an action against the applicable jurisdiction. If the amount
required to be withheld was not withheld from actual Distributions made, the
Trust may reduce subsequent Distributions by the amount of such withholding.
ARTICLE 11: AMENDMENTS AND MEETINGS
SECTION 11.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may be amended only by a
written instrument approved and executed by the Sponsor and (i) the Regular
Trustees (or, if there are more than two Regular Trustees, a majority of the
Regular Trustees) and (ii) the Property Trustee (if the amendment affects the
rights, powers, duties, obligations or immunities of the Property Trustee) and
(iii) by the Delaware Trustee (if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee).
(b) No amendment shall be made, and any such purported amendment shall
be void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee first has received an Officers' Certificate from
each of the Trust and the Sponsor that such amendment is
permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities);
(ii) unless, in the case of any proposed amendment that affects
the rights, powers,
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duties, obligations or immunities of the Property Trustee,
the Property Trustee first has received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including
the terms of the Securities); and
(B) an opinion of counsel (which may be counsel to the
Sponsor or the Trust) that such amendment is permitted
by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to be classified other than as a
grantor trust for United States federal income tax
purposes;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust
Indenture Act; or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment
Company Act.
(c) At such time after the Trust has issued any Securities that remain
outstanding, (i) any amendment that would (A) adversely affect the powers,
preferences or special rights of the Securities, whether by way of amendment to
this Declaration or otherwise or (B) result in the dissolution, winding-up or
termination of the Trust other than pursuant to the terms of this Declaration
shall not be effective except with the approval of the Holders of at least a
66 2/3% in Liquidation Amount of the Securities; provided that if any amendment
or proposal referred to in clause (A) above would adversely affect only the
Preferred Securities or the Common Securities, then only the affected class will
be entitled to vote on such amendment or proposal, and such amendment or
proposal shall not be effective except with the approval of a 66 2/3% in
Liquidation Amount of the class of Securities affected thereby; and (ii) any
amendment that would (X) change the amount or timing of any distribution of the
Securities or otherwise adversely affect the amount of any distribution required
to be made in respect of the Securities as of a specified date or (Y) restrict
the right of a Holder of Securities to institute suit for the enforcement of any
such payment on or after such date shall not be effective except with the
approval of each Holder of Securities affected thereby.
(d) This Section 11.1 shall not be amended without the consent of all
of the Holders of the Securities.
(e) Article 4 shall not be amended without the consent of the Holders
of the Common Securities.
(f) The rights of the Holders of the Common Securities under Article 5
to increase or decrease the number of, and appoint and remove, Trustees shall
not be amended without the consent of the Holders of the Common Securities.
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(g) Notwithstanding Section 11.1(c), this Declaration may be amended
without the consent of the Holders of the Securities, provided that such
amendment does not have a material adverse effect on the rights, preferences or
privileges of the Holders of the Securities:
(i) to cure any ambiguity;
(ii) to correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other
provision of this Declaration;
(iii) to add to the covenants, restrictions or obligations of the
Sponsor;
(iv) to conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any
legislative body, court, government agency or regulatory
authority;
(v) to modify, eliminate and add to any provision of this
Declaration to ensure that the Trust will be classified as a
grantor trust for United States federal income tax purposes
at all times that any Securities are outstanding or to
ensure that the Trust will not be required to register as an
Investment Company under the Investment Company Act;
provided that such modification, elimination or addition
would not adversely affect in any material respect the
rights, privileges or preferences of any Holder of
Securities; or
(vi) to facilitate the tendering, remarketing and settlement of
the Preferred Securities as contemplated by Section 7.13(n).
SECTION 11.2 Meetings of the Holders of the Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in Liquidation Amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees a writing stating that the
signing Holders of the Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. The Holder or
Holders of the Securities calling a meeting shall specify in writing the
Certificates held by such Holder or Holders, and only those Securities specified
shall be counted for purposes of determining whether the required percentage set
forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of the Holders of
the Securities:
(i) Notice of any such meeting shall be given to all the Holders
of the Securities having a right to vote thereat at least
seven days and not more than 60 days before the date of such
meeting. Whenever a vote, consent or approval of the Holders
of the Securities is permitted or required under this
Declaration or the rules of any stock
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exchange on which the Preferred Securities are listed or
admitted for trading, such vote, consent or approval may be
given at a meeting of the Holders of the Securities. Any
action that may be taken at a meeting of the Holders of the
Securities may be taken without a meeting and without prior
notice if a consent in writing setting forth the action so
taken is signed by the Holders of the Securities owning not
less than the minimum amount of Securities in liquidation
amount that would be necessary to authorize or take such
action at a meeting at which all Holders of the Securities
having a right to vote thereon were present and voting.
Prompt notice of the taking of action without a meeting
shall be given to the Holders of the Securities entitled to
vote who have not consented in writing. The Regular Trustees
may specify that any written ballot submitted to the Holders
of the Securities for the purpose of taking any action
without a meeting shall be returned to the Trust within the
time specified by the Regular Trustees.
(ii) Each Holder of the Securities may authorize any Person to
act for it by proxy on any or all matters in which such
Holder is entitled to participate, including waiving notice
of any meeting, or voting or participating at a meeting. No
proxy shall be valid after the expiration of 11 months from
the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder
of Securities executing such proxy. Except as otherwise
provided herein, all matters relating to the giving, voting
or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to
proxies, and judicial interpretations thereunder, as if the
Trust were a Delaware corporation and the Holders of the
Securities were stockholders of a Delaware corporation.
(iii) Each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person
that the Regular Trustees may designate.
(iv) Unless the Business Trust Act, this Declaration, the terms
of the Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Preferred
Securities are then listed for trading otherwise provides,
the Regular Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of
Holders of the Securities, including notice of the time,
place or purpose of any meeting at which any matter is to be
voted on by any Holders of the Securities, waiver of any
such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to
the exercise of any such right to vote.
ARTICLE 12: REPRESENTATIONS OF THE PROPERTY TRUSTEE
AND THE DELAWARE TRUSTEE
SECTION 12.1 Representations and Warranties of the Property Trustee.
The initial Property Trustee represents and warrants to the Trust and to
the Sponsor at the date of this Declaration, and each Successor Property Trustee
represents and warrants to the Trust and the Sponsor at the time of such
Successor Property Trustee's acceptance of its appointment as Property Trustee,
that:
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(a) the Property Trustee is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, this
Declaration;
(b) the Property Trustee satisfies the requirements set forth in
Section 6.3(a);
(c) the execution, delivery and performance by the Property Trustee of
this Declaration have been duly authorized by all necessary corporate action on
the part of the Property Trustee; this Declaration has been duly executed and
delivered by the Property Trustee, and it constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(d) the execution, delivery and performance of this Declaration by the
Property Trustee do not conflict with, nor constitute a breach of, the articles
of association or incorporation, as the case may be, or the by-laws (or other
similar organizational documents) of the Property Trustee; and
(e) no consent, approval or authorization of, or registration with or
notice to, any state or federal banking authority is required for the execution,
delivery or performance by the Property Trustee of this Declaration.
SECTION 12.2 Representations and Warranties of the Delaware Trustee.
The initial Delaware Trustee represents and warrants to the Trust and to
the Sponsor at the date of this Declaration, and each Successor Delaware Trustee
represents and warrants to the Trust and the Sponsor at the time of such
Successor Delaware Trustee's acceptance of its appointment as Delaware Trustee,
that:
(a) the Delaware Trustee satisfies the requirements set forth in
Section 6.2 and has the power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration and, if it
is not a natural person, is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization;
(b) the Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and this Declaration; and this
Declaration constitutes a legal, valid and binding obligation of the Delaware
Trustee under Delaware law, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency and
other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law);
and
(c) no consent, approval or authorization of, or registration with or
notice to, any state or federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee of this Declaration.
56
<PAGE>
ARTICLE 13: MISCELLANEOUS
SECTION 13.1 Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Property Trustee, the Delaware Trustee and the Holders of
the Securities):
c/o NIPSCO Capital Markets, Inc.
801 East 86th Avenue
Merrillville, Indiana 46410
Attention: Francis P. Girot, Jr.
Telecopy No: (219) 853-5352
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Regular Trustees, the Property Trustee and the Holders of the Securities):
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration
Telecopy No: _________________
(c) if given to the Property Trustee, at its Corporate Trust Office
(or such other address as the Property Trustee may give notice of to the Regular
Trustees, the Delaware Trustee and the Holders of the Securities);
(d) if given to the Holders of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holders of
the Common Securities may give notice of to the Property Trustee, the Delaware
Trustee and the Trust):
c/o NIPSCO Capital Markets, Inc.
801 East 86th Avenue
Merrillville, Indiana 46410
Attention: Francis P. Girot, Jr.
Telecopy No: (219) 853-5352
(e) if given to any Holder of Preferred Securities, at such Holder's
address as set forth in the register of the Trust.
All such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed or mailed by first class mail, postage
prepaid, except that if a notice or other document is refused delivery or cannot
be delivered because of a changed address of which no notice was given, such
notice or other document shall be deemed to have been delivered on the date of
such refusal or inability to deliver.
57
<PAGE>
SECTION 13.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be governed
by and interpreted in accordance with the laws of the State of Delaware, without
regard to principles of conflicts of laws.
SECTION 13.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be classified for
United States federal income tax purposes as a grantor trust. The provisions of
this Declaration shall be interpreted in a manner consistent with such
classification.
SECTION 13.4 Headings.
The headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 13.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or referred
to, the successors and assigns of such party shall be deemed to be included, and
all covenants and agreements in this Declaration by the Sponsor and the Trustees
shall bind and inure to the benefit of their respective successors and assigns,
whether so expressed.
SECTION 13.6 Partial Enforceability.
If any provision of this Declaration or the application of such provision
to any Person or circumstance is held invalid, the remainder of this
Declaration, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
SECTION 13.7 Counterparts.
This Declaration may contain more than one counterpart of the signature
page, and this Declaration may be executed by the affixing of the signature of
each of the Trustees to one of such counterpart signature pages. All such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
58
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
NIPSCO Capital Markets, Inc.,
as Sponsor, Debenture Issuer and Common Securities
Holder
By:
-----------------------------------------------
Stephen P. Adik
President
The Chase Manhattan Bank,
as Property Trustee
By:
-----------------------------------------------
Chase Manhattan Bank Delaware,
as Delaware Trustee
By:
-----------------------------------------------
Name:
Title:
--------------------------------------------------
Stephen P. Adik, as Regular Trustee
--------------------------------------------------
Francis P. Girot, Jr., as Regular Trustee
--------------------------------------------------
Arthur A. Paquin, as Regular Trustee
59
<PAGE>
EXHIBIT A
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL SECURITY, INSERT THE
FOLLOWING: This Preferred Security is a Global Security within the meaning of
the Amended and Restated Declaration of NIPSCO Capital Trust I hereinafter
referred to and is registered in the name of The Depository Trust Company, a New
York corporation (the "Depositary"), or a nominee of the Depositary. This
Preferred Security is exchangeable for Preferred Securities registered in the
name of a person other than the Depositary or its nominee only in the limited
circumstances described in the Declaration, and no transfer of this Preferred
Security (other than a transfer of this Preferred Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered, except
in limited circumstances.
Unless this Preferred Security Certificate is presented by an authorized
representative of the Depositary to the issuer or its agent for registration of
transfer, exchange or payment, and any Preferred Security Certificate issued is
registered in the name of Cede & Co. or such other name as registered by an
authorized representative of the Depositary (and any payment hereon is made to
CEDE & CO. or to such other entity as is requested by an authorized
representative of the Depositary), and except as otherwise provided in the
Amended and Restated Declaration of NIPSCO Capital Trust I dated ________, 1999,
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL, since the registered owner hereof, CEDE & CO., has an
interest herein.]
Certificate No. ______ Number of Preferred Securities: _____
CUSIP No. ________
Certificate Evidencing Preferred Securities
of
NIPSCO Capital Trust I
Preferred Securities
(liquidation amount $50 per Preferred Security)
NIPSCO Capital Trust I, a statutory business trust created under the laws
of the State of Delaware (the "Trust"), hereby certifies that CEDE & CO. (the
"Holder") is the registered owner of ___ preferred securities of the Trust
representing undivided beneficial ownership interests in the assets of the Trust
designated the Preferred Securities (liquidation amount $50 per Preferred
Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the register of the Trust, in person or by a duly authorized
attorney, upon surrender of this certificate duly endorsed and in proper form
for transfer as provided in the Declaration (as defined below). The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Preferred Securities represented hereby are issued and shall in all respects
be subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust, dated as of _______ __, 1999 (as the same may be amended from time to
time (the "Declaration"), among NIPSCO Capital Markets, Inc., as Sponsor,
Stephen P. Adik, Francis P. Girot, Jr. and Arthur A. Paquin, as Regular
Trustees, The Chase Manhattan Bank, as Property Trustee, Chase Manhattan Bank
Delaware, as Delaware Trustee, and the holders from time to time, of undivided
beneficial ownership interests in the assets of the Trust. Capitalized terms
used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Guarantee Agreement,
dated as of ___________, 1999, of
<PAGE>
NIPSCO Capital Markets, Inc., in respect of the Preferred Securities. The
Sponsor will provide a copy of the Declaration, the Guarantee and the Indenture
to a Holder without charge upon written request to the Sponsor at its principal
place of business.
Upon receipt of this certificate, the Holder is bound by the terms of the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Debentures as indebtedness and the Preferred Securities as
evidence of undivided indirect beneficial ownership interests in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this _____ day
of ___________, 1999.
NIPSCO Capital Trust I
-----------------------------------------
By:
-------------------------------------
Regular Trustee
This is one of the Securities referred to in the within-mentioned
Declaration.
The Chase Manhattan Bank
-----------------------------------------
By:
-------------------------------------
Senior Trust Officer
2
<PAGE>
EXHIBIT B
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT AS PROVIDED IN
THE DECLARATION (AS DEFINED BELOW)
Certificate No. ____ Number of Common Securities: ____
Certificate Evidencing Common Securities
of
NIPSCO Capital Trust I
Common Securities
(liquidation amount $50 per Common Security)
NIPSCO Capital Trust I, a statutory business trust created under the laws
of the State of Delaware (the "Trust"), hereby certifies that _________________
(the "Holder") is the registered owner of ______ common securities of the Trust
representing an undivided beneficial ownership interest in the assets of the
Trust designated the Common Securities (liquidation amount $50 per Common
Security) (the "Common Securities"). Except as provided in the Declaration (as
defined below), the Common Securities are not transferable, and any attempted
transfer thereof shall be void. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust,
dated as of ________ __, 1999 (as the same may be amended from time to time, the
"Declaration"), among NIPSCO Capital Markets, Inc., as Sponsor, Stephen P. Adik,
Francis P. Girot and Arthur A. Paquin, as Regular Trustees, The Chase Manhattan
Bank, as Property Trustee, Chase Manhattan Bank Delaware, as Delaware Trustee,
and the holders, from time to time, of undivided beneficial ownership interests
in the assets of the Trust. The Holder is entitled to the benefits of the
Guarantee Agreement, dated as of _____________, 1999, of NIPSCO Capital Markets,
Inc., in respect of the Common Securities. The Sponsor will provide a copy of
the Declaration, the Guarantee and the Indenture to the Holder without charge
upon written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the terms of the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of an undivided indirect beneficial ownership interest in the
Debentures.
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this _____ day
of ___________, 1999.
NIPSCO Capital Trust I
-----------------------------------------
By:
-------------------------------------
Regular Trustee
This is one of the Securities referred to in the within-mentioned
Declaration.
The Chase Manhattan Bank
-----------------------------------------
By:
-------------------------------------
Senior Trust Officer
2
<PAGE>
Robert J. Minkus
(312) 258-5584
[email protected]
Exhibit 5.1
January 22, 1999
NIPSCO Industries, Inc.
801 East 86th Avenue
Merrillville, Indiana 46410
NIPSCO Capital Markets, Inc.
801 East 86th Avenue
Merrillville, Indiana 46410
Re: Registration Statement on Form S-3 (registration nos. 333-69279,
----------------------------------------------------------------
- -01 and -02)
- ------------
Ladies and Gentlemen:
We have acted as counsel to NIPSCO Industries, Inc., an Indiana corporation
("Industries"), NIPSCO Capital Markets, Inc., an Indiana corporation ("Capital
Markets"), and NIPSCO Capital Trust I, a Delaware statutory business (the
"Trust"), in connection with their filing of a Registration Statement on Form S-
3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the registration of the following
securities, to be issued from time to time pursuant to Rule 415 under the
Securities Act at an aggregate initial offering price not to exceed
$850,000,000: (i) Stock Purchase Contracts of Industries (the "Stock Purchase
Contracts"); (ii) Stock Purchase Units, consisting of Stock Purchase Contracts
and Preferred Securities, as defined below; (iii) Common Shares (including
related Share Purchase Rights), without par value, of Industries (the "Common
Shares"); (iv) Preferred Securities of the Trust (the "Preferred Securities");
(v) Debentures of Capital Markets (the "Debentures"); (vi) the guarantee of and
back-up undertakings of Capital Markets in connection with the Preferred
Securities of the Trust (the "Guarantee"); (vii) Medium-Term Notes of Capital
Markets (the "Medium-Term Notes"); and (viii) Industries' obligations pursuant
to the Support Agreement between Capital Markets and Industries (the "Support
Agreement").
In connection with our opinion, we have examined the Registration
Statement, including the exhibits thereto, and such other documents, corporate
records and instruments, and have examined such laws and regulations, as we have
deemed necessary for the purposes of this opinion. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to the original documents of all
documents submitted
<PAGE>
Exhibit 5.1
NIPSCO Industries, Inc.
January 22, 1999
Page 2
submitted to us as originals, the conformity to the original documents of all
documents submitted to us as copies and the authenticity of the originals of
such latter documents.
On the basis of such examination, we are of the opinion that, when the
Registration Statement, as it may be amended, has become effective under the
Securities Act and any applicable state securities or Blue Sky laws have been
complied with:
1. The Stock Purchase Contracts will be valid and legally binding
obligations of Industries, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles at
such time as: (i) the Purchase Contract Agreement between Industries and The
Chase Manhattan Bank, as purchase contract agent, has been duly executed and
delivered so as not to violate any applicable law or result in a default under
or breach of any agreement or instrument binding upon Industries and so as to
comply with any requirement or restriction imposed by any court or governmental
or regulatory body having jurisdiction over Industries; (ii) the terms of the
Stock Purchase Contracts have been duly established in conformity with
resolutions of the Board of Directors of Industries; and (iii) the Stock
Purchase Contracts have been duly executed and delivered as contemplated by the
Registration Statement and any prospectus supplement relating thereto.
2. The Common Shares, which have been duly authorized, will be validly
issued, fully paid, and nonassessable at such time as: (i) the terms of the
issuance and sale of the Common Shares have been duly established in conformity
with resolutions of the Board of Directors of Industries; and (ii) the Common
Shares have been duly issued and sold as contemplated by the Registration
Statement and any prospectus supplement relating thereto.
3. The Debentures will be valid and legally binding obligations of
Capital Markets, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles at such time as:
(i) the terms of the Debentures and of their issuance and sale have been duly
established in conformity with resolutions of the Board of Directors of Capital
Markets and the indenture dated as of February 14, 1997 among Capital Markets,
Industries and The Chase Manhattan Bank, as trustee (the "Indenture"); (ii) the
Debentures have been duly executed and authenticated in accordance with the
Indenture; and (iii) the Debentures have been duly issued and sold as
contemplated by the Registration Statement and any prospectus supplement
relating thereto and the Indenture.
4. The Guarantee will be a valid and legally binding obligation of
Capital Markets, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles at such time as:
(i) the Registration Statement has become effective under the Securities Act;
(ii) the Guarantee Agreement by Capital Markets and The Chase Manhattan Bank, as
guarantee trustee, for the benefit of the holders of securities of the Trust has
been duly executed and delivered so as not to violate any applicable law or
result in a default under or breach of any agreement or instrument binding upon
Capital Markets and so as to comply with any requirement or restriction imposed
by any court or governmental or regulatory body having jurisdiction over Capital
Markets; and (iii) the Preferred Securities have been duly issued and delivered
by the Trust as contemplated by the Registration Statement and any prospectus
supplement relating thereto.
<PAGE>
NIPSCO Industries, Inc.
January 22, 1999
Page 3
5. The Medium-Term Notes will be valid and legally binding obligations of
Capital Markets, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles at such time as:
(i) the terms of the Medium-Term Notes and of their issuance and sale have been
duly established in conformity with resolutions of the Board of Directors of the
Capital Markets and the Indenture; (ii) the Medium-Term Notes have been duly
executed and authenticated in accordance with the Indenture; and (iii) the
Medium-Term Notes have been duly issued and sold as contemplated by the
Registration Statement and any prospectus supplement relating thereto and the
Indenture.
6. The obligations under the Support Agreement will be valid and legally
binding obligations of Industries, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
We express opinions herein with respect to the applicability of the laws of
the State of Indiana and the United States Federal laws, and we express no
opinion as to the laws of any other jurisdiction.
We hereby consent to the use of this opinion for filing with the
Registration Statement as Exhibit 5(a) thereto and the reference to us under the
caption "Experts and Legal Opinions" in the Prospectus contained in the
Registration Statement.
Very truly yours,
SCHIFF HARDIN & WAITE
By:
-------------------------
Robert J. Minkus
<PAGE>
EXHIBIT 5.2
[Letterhead of Richards, Layton & Finger, P.A.]
January 22, 1999
NIPSCO Capital Trust I
c/o NIPSCO Capital Markets, Inc.
801 East 86th Avenue
Merrillville, Indiana 46410
Re: NIPSCO Capital Trust I
----------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for NIPSCO Capital Markets,
Inc., an Indiana corporation (the "Company"), and NIPSCO Capital Trust I, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated December 17, 1998
(the "Certificate"), as filed in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on December 17, 1998;
(b) The Declaration of Trust of the Trust, dated as of December 17,
1998, among the Company and the trustees of the Trust named therein;
(c) A form of Amended and Restated Declaration of Trust of the Trust
(including Exhibits A and B thereto) (the "Declaration"), to be entered into
among the Company, as sponsor, the trustees of the Trust named therein, and the
holders, from time to time, of undivided beneficial interests in the assets of
the Trust, attached as an exhibit to the Registration Statement (as defined
below);
(d) Amendment No. 1 to the Registration Statement on Form S-3 (the
"Registration Statement"), including a prospectus ("Prospectus"), relating to
the Preferred
<PAGE>
NIPSCO Capital Trust I
January 22, 1999
Page 2
Securities of the Trust representing undivided beneficial interests in the
assets of the Trust (each, a "Preferred Security" and collectively, the
"Preferred Securities"), as proposed to be filed by the Company, the Trust and
NIPSCO Industries, Inc. with the Securities and Exchange Commission on or about
January 22, 1999; and
(e) A Certificate of Good Standing for the Trust, dated January 22,
1999, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular,
we have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our
own but rather have relied solely upon the foregoing documents, the statements
and information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration
and the Certificate are in full force and effect and have not been amended, (ii)
except to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Securities Certificate for such Preferred
Security and the payment for the Preferred Security acquired by it, in
accordance with the Declaration and the Registration Statement, and (vii) that
the Preferred Securities are issued and sold to the Preferred Security Holders
in accordance with the Declaration and the Registration
<PAGE>
NIPSCO Capital Trust I
January 22, 1999
Page 3
Statement. We have not participated in the preparation of the Registration
Statement and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Declaration.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition,
we hereby consent to the use of our name under the heading "Legal Matters" in
the Prospectus. In giving the foregoing consents, we do not thereby admit that
we come within the category of Persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other Person for any purpose.
Very truly yours,
Richards, Layton & Finger, P.A.
<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
January 21, 1999
<PAGE>
EXHIBIT 23.2
ACCOUNTANTS' CONSENT
The Board of Directors
Bay State Gas Company:
We consent to the use of our audit report dated October 27, 1998 on the
consolidated financial statements of Bay State Gas Company and subsidiaries as
of September 30, 1998 and for each of the years in the three-year period then
ended incorporated herein by reference and to the reference to our firm under
the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Boston, Massachusetts
January 21, 1999
