<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 12, 1999
NIPSCO INDUSTRIES, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Indiana 1-9779 35-1719974
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
801 E. 86th Avenue, Merrillville, Indiana 46410
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (219) 853-5200
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(Former Name or Former Address, if Changed Since Last Report)
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The following exhibits are filed herewith:
1.1 Underwriting Agreement, dated February 9, 1999 among NIPSCO Industries,
Inc., NIPSCO Capital Markets, Inc., NIPSCO Capital Trust I, and
Lehman Brothers Inc., Goldman Sachs & Co. and Morgan Stanley & Co.
Incorporated, as Underwriters
3.1 Amended and Restated By-Laws of NIPSCO Industries, Inc. Effective
January 30, 1999
4.1 Form of First Supplemental Indenture among NIPSCO Capital Markets, Inc.,
NIPSCO Industries, Inc., and The Chase Manhattan Bank, as Trustee
4.2 Form of Purchase Contract Agreement by and between NIPSCO Industries,
Inc., and The Chase Manhattan Bank, as Purchase Contract Agent
4.3 Form of Pledge Agreement among NIPSCO Industries, Inc., The First
National Bank of Chicago, as Collateral Agent and Securities
Intermediary, and The Chase Manhattan Bank, as Purchase Contract Agent
4.4 Form of Remarketing Agreement among NIPSCO Industries, Inc., NIPSCO
Capital Markets, Inc., NIPSCO Capital Trust I, and Lehman Brothers
Inc., as Remarketing Agent
4.5 Form of Certificate Evidencing Corporate PIES (included as Exhibit A
to Exhibit 4.2 filed herewith)
4.6 Form of Certificate Evidencing Treasury PIES (included as Exhibit B
to Exhibit 4.2 filed herewith)
4.7 Form of Certificate Evidencing 5.90% Senior Debenture due 2005
8.1 Tax Opinion of Schiff Hardin & Waite
12.1 Statement regarding Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Arthur Andersen LLP (incorporated by reference to Exhibit
23.1 to the Current Report on Form 8-K of NIPSCO Industries, Inc.
dated February 8, 1999)
23.2 Consent of Schiff Hardin & Waite (included in the tax opinion filed as
Exhibit 8.1)
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SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NIPSCO INDUSTRIES, INC.
(Registrant)
Dated: February 12, 1999 By: /s/ Nina M. Rausch
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Name: Nina M. Rausch
Title: Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
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<C> <S>
1.1 Underwriting Agreement dated February 9, 1999 among NIPSCO
Industries, Inc., NIPSCO Capital Markets, Inc., NIPSCO
Capital Trust I, and Lehman Brothers Inc., Goldman Sachs &
Co. and Morgan Stanley & Co. Incorporated, as Underwriters
3.1 Amended and Restated By-Laws of NIPSCO Industries, Inc.
Effective January 30, 1999
4.1 Form of First Supplemental Indenture among NIPSCO Capital
Markets, Inc., NIPSCO Industries, Inc., and The Chase
Manhattan Bank, as Trustee
4.2 Form of Purchase Contract Agreement by and between NIPSCO
Industries, Inc. and The Chase Manhattan Bank, as Purchase
Contract Agent
4.3 Form of Pledge Agreement among NIPSCO Industries, Inc.,
The First National Bank of Chicago, as Collateral Agent
and Securities Intermediary, and The Chase Manhattan Bank,
as Purchase Contract Agent
4.4 Form of Remarketing Agreement among NIPSCO Industries, Inc.,
NIPSCO Capital Markets, Inc., NIPSCO Capital Trust I, and
Lehman Brothers Inc., as Remarketing Agent
4.5 Form of Certificate Evidencing Corporate PIES (included as
Exhibit A to Exhibit 4.2 filed herewith)
4.6 Form of Certificate Evidencing Treasury PIES (included as
Exhibit B to Exhibit 4.2 filed herewith)
4.7 Form of Certificate Evidencing 5.90% Senior Debenture
due 2005
8.1 Tax Opinion of Schiff Hardin & Waite
12.1 Statement regarding Computation of Ratio of Earnings to
Fixed Charges
23.1 Consent of Arthur Andersen LLP (incorporated by reference to
Exhibit 23.1 to the Current Report on Form 8-K of NIPSCO
Industries, Inc. dated February 8, 1999)
23.2 Consent of Schiff Hardin & Waite (included in the tax
opinion filed as Exhibit 8.1)
</TABLE>
<PAGE>
Exhibit 1.1
ST&B
Draft 2/3/99
NIPSCO INDUSTRIES, INC.
NIPSCO CAPITAL MARKETS, INC.
NIPSCO CAPITAL TRUST I
Trust Preferred Securities
REMARKETING AGREEMENT
February __, 1999
LEHMAN BROTHERS INC.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
NIPSCO Capital Trust I, a Delaware statutory business trust (the
"Trust"), is issuing today Trust Preferred Securities (stated liquidation amount
$50 per Trust Preferred Security) (the "Preferred Securities") pursuant to the
Amended and Restated Declaration of Trust, dated as of February __, 1999 (the
"Declaration"), and guaranteed (the "Guarantee"; together with the Preferred
Securities, the "Securities") by NIPSCO Capital Markets, Inc., an Indiana
corporation ("Capital Markets"), to the extent set forth in the Guarantee
Agreement, dated as of February __, 1999 (the "Guarantee Agreement"), between
Capital Markets and The Chase Manhattan Bank, as Guarantee Trustee (the
"Guarantee Trustee"). Capital Markets will be the owner of all of the beneficial
ownership interests represented by Common Securities (the "Common Securities";
together with the Preferred Securities, the "Trust Securities") of the Trust.
Concurrently with the issuance of the Securities and Capital Market's purchase
of all of the beneficial ownership interests represented by Common Securities of
the Trust, the Trust will invest the proceeds of each thereof in Capital
Market's Debentures (the "Debentures"). The Debentures are to be issued pursuant
to the Indenture, dated as of February 14, 1997 (the "Indenture"), among NIPSCO
Industries, Inc., an Indiana corporation and the parent of Capital Markets (the
"Company"), Capital Markets and The Chase Manhattan Bank, as Indenture Trustee
(the "Indenture Trustee"). Capitalized terms used and not defined in this
Agreement shall have the meanings set forth in the Declaration or the Indenture,
as the case may be.
The Remarketing (as defined below) of the Securities is provided for
in the Declaration and, if the Debentures have been distributed to holders of
the Preferred Securities in liquidation of the Trust, the Indenture. As used in
this Agreement, the term "Remarketed Securities" means the Securities or
Debentures subject to the Remarketing as notified by the Indenture Trustee on
the fifth Business Day prior to the Purchase Contract Settlement Date; the term
"Remarketing Procedures" means the procedures in connection with the Remarketing
of the Securities described
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2
in Section 7.13 of the Declaration and [Article Twelve] of the Indenture(1), as
the case may be; and the term "Remarketing" means the remarketing of the
Remarketed Securities pursuant to the Remarketing Procedures.
Section 1. Appointment and Obligations of the Remarketing Agent. (a)
The Company, Capital Markets and the Trust (collectively, the "Issuers") hereby
appoint Lehman Brothers Inc. as exclusive remarketing agent (the "Remarketing
Agent"), and Lehman Brothers Inc. hereby accepts appointment as Remarketing
Agent for the purpose of (i) Remarketing Remarketed Securities on behalf of the
holders thereof and (ii) performing such other duties as are assigned to the
Remarketing Agent in the Remarketing Procedures, all in accordance with and
pursuant to the Remarketing Procedures.
(b) The Remarketing Agent agrees (i) to use commercially reasonable
efforts to remarket the Remarketed Securities tendered or deemed tendered to the
Remarketing Agent in the Remarketing, (ii) to notify the Issuers promptly of the
Reset Rate and (iii) to carry out such other duties as are assigned to the
Remarketing Agent in the Remarketing Procedures, all in accordance with the
provisions of the Remarketing Procedures.
(c) On the third Business Day immediately preceding the Purchase
Contract Settlement Date (the "Remarketing Date"), the Remarketing Agent shall
use commercially reasonable efforts to remarket, at a price equal to 100% of the
aggregate liquidation or principal amount thereof, Remarketed Securities
tendered or deemed tendered for purchase.
(d) If none of the holders of Remarketed Securities elect to have
Remarketed Securities held by them remarketed in the Remarketing, the
Remarketing Agent shall determine the Reset Rate which shall be the rate that
would have been established had a Remarketing been held on the Remarketing Date.
(e) If, as a result of the efforts described in Section 1(b), the
Remarketing Agent has determined that it will be able to remarket all Remarketed
Securities tendered or deemed tendered for purchase at a price of 100% of the
aggregate stated liquidation or principal amount of such Remarketed Securities
prior to 4:00 P.M., New York City time, on the Remarketing Date, the Remarketing
Agent 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) which the
Remarketing Agent determines, in its sole judgment, to be the lowest rate per
annum that will enable it to remarket all Remarketed Securities tendered or
deemed tendered for Remarketing.
(f) If, by 4:00 P.M., New York City time, on the Remarketing Date,
the Remarketing Agent is unable to remarket all Remarketed Securities tendered
or deemed tendered for purchase, a failed Remarketing ("Failed Remarketing")
shall be deemed to have occurred and the Remarketing
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1 Current version of Indenture does not provide for remarketing and will
need to be so amended in the Supplement.
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3
Agent shall so advise by telephone the Depositary, the Property Trustee, the
Debenture Trustee, the Company, the Trust and Capital Markets.
(g) 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 Company, the Trust and Capital Markets of
the Reset Rate determined in the Remarketing and the number of Remarketed
Securities sold in the Remarketing, (ii) each purchaser (or the Depositary
Participant thereof) of the Reset Rate and the number of Remarketed 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 Remarketed Securities
purchased through the facilities of the Depositary.
(h) The Remarketing Agent shall remit to the Collateral Agent all
proceeds of the Remarketed Securities subject to the Pledge Agreement.
2. Representations, Warranties and Agreements of the Company and
Capital Markets. The Company and Capital Markets jointly represent, warrant and
agree (i) on and as of the date hereof, (ii) on and as of the date the
Prospectus or other Remarketing Materials (each as defined in Section 2(a)
below) are first distributed in connection with the Remarketing (the
"Commencement Date"), (iii) on and as of the Remarketing Date, and (iv) on and
as of the Purchase Contract Settlement Date that:
(a) A registration statement or registration statements on Form S-3
(file No. 333-69279) and an amendment or amendments thereto with respect
to the Securities and the Debentures have (i) been prepared by the Issuers
in conformity with the requirements of the Securities Act of 1933 as
amended (the "Securities Act") and the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, (ii) been filed with the Commission under the
Securities Act and (iii) become effective under the Securities Act; a
registration statement on Form S-3, if required to be filed in connection
with the Remarketing, may also be prepared by the Issuers in conformity
with the requirements of the Securities Act and the Rules and Regulations
and filed with the Commission under the Securities Act; and the Indenture,
the Guarantee Agreement and the Declaration have each been qualified under
the Trust Indenture Act of 1939, as amended, (the "Trust Indenture Act").
Copies of such registration statement or registration statements that have
become effective and the amendment or amendments to such registration
statements have been delivered by the Issuers to you. As used in this
Agreement, "Effective Time" means the date and time as of which the last
of such registration statements that have become effective or may be
filed, or the most recent post-effective amendment thereto, if any, was
declared effective by the Commission; Effective Date means the date of the
Effective Time of such last registration statement; Preliminary Prospectus
means each prospectus included in such last registration statement, or
amendment thereto, before it became effective under the Securities Act and
any prospectus filed by the Issuers with your consent pursuant to Rule
424(a) of the Rules and Regulations; "Registration Statement"
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4
means such last registration statement, as amended at its Effective Time,
including documents incorporated by reference therein at such time and, if
applicable, all information contained in the final prospectus filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations,
including any information deemed to be part of such Registration Statement
as of the Effective Time pursuant to paragraph (b) of Rule 430A of the
Rules and Regulations; and "Prospectus" means such final prospectus, as
first filed pursuant to Rule 424(b) of the Rules and Regulations.
Reference made herein to any Preliminary Prospectus, the Prospectus or any
other information furnished by the Issuers to the Remarketing Agent for
distribution to investors in connection with the Remarketing (the
"Remarketing Materials") shall be deemed to refer to and include any
documents incorporated by reference therein pursuant to Item 12 of Form
S-3 under the Securities Act as of the date of such Preliminary Prospectus
or the Prospectus, as the case may be, or, in the case of Remarketing
Materials, referred to as incorporated by reference therein, and any
reference to any amendment or supplement to any Preliminary Prospectus,
the Prospectus or the Remarketing Materials shall be deemed to refer to
and include any document filed under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), after the date of such Preliminary
Prospectus or the Prospectus or, if so incorporated, the Remarketing
Materials, as the case may be; and any reference to any amendment to the
Registration Statement shall be deemed to include any annual report of the
Company or Capital Markets filed with the Commission pursuant to Section
13(a) or 15(d) of the Exchange Act after the Effective Time that is
incorporated by reference in the Registration Statement.
(b) Giving effect to the interpretations of the requirements of the
Securities Act reflected in the Company's letter requesting "no-action"
submitted to the staff of the commission (the "Staff"), dated April 27,
1992, as supplemented by letters dated July 9, 1992 and September 21, 1992
(the "No-Action Request") and the Staff's response thereto dated September
25, 1992 (the "Staff Response"), the Registration Statement conforms (and
the Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus, when they become effective or
are filed with the Commission, as the case may be, will conform) in all
respects to the requirements of the Securities Act and the Rules and
Regulations and the Registration Statement, the Prospectus and the
Remarketing Materials do not and will not, as of the Effective Date (as to
the Registration Statement and any amendment thereto), as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) and as of the Commencement Date, Remarketing Date and
Remarketing Settlement Date (as to any Remarketing Materials) contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided that no representation and warranty is made as to
the statement of eligibility and qualification on Form T-1 of the
Indenture Trustee, the Property Trustee or the Guarantee Trustee under the
Trust Indenture Act, or as to information contained in or omitted from the
Registration Statement, the Prospectus or the Remarketing Materials in
reliance upon and in conformity with written information furnished to the
Issuers by the Remarketing Agent specifically for inclusion therein; the
Indenture, the Declaration and the Guarantee Agreement each conform in all
material respects to the requirements of the Trust Indenture Act and the
applicable rules and
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5
regulations thereunder; and the Commission has not issued an order
preventing or suspending the use of the Registration Statement, any
Preliminary Prospectus, the Prospectus or the Remarketing Materials.
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed and
incorporated by reference in the Prospectus, when such documents become
effective or are filed with Commission, as the case may be, will conform
in all material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(d) Each of the Company, Capital Markets, Northern Indiana Public
Service Company ("Northern Indiana"), Bay State Gas Company ("Bay State")
and IWC Resources Corporation ("IWCR" and, together with Northern Indiana
and Bay State, the "Significant Subsidiaries") has been duly incorporated
and is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus or in any Remarketing Materials, and has been
duly qualified as a foreign corporation for the transaction of business
and is in good standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business, so as to require
such qualification, or is subject to no material liability or disability
by reason of the failure to be so qualified in any such jurisdiction; and
each other subsidiary (as defined in Section 15 hereof) of the Company has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation.
(e) The Company has an authorized capitalization as set forth in the
Prospectus and in any Remarketing Materials; and all of the issued capital
shares of the Company and each wholly-owned subsidiary of the Company have
been duly and validly authorized and issued and are fully paid and
non-assessable; and except as set forth in Exhibit 21 to the most recent
Form 10-K of the Company, all of the issued common shares of Northern
Indiana and Indianapolis Water Company ("IWC") and all of the issued
capital shares of each other subsidiary of the Company (except for
directors' qualifying shares and except as set forth in the Prospectus)
are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims.
(f) Northern Indiana[, Bay State] and IWCR constitute the only
"significant subsidiaries" (as such term is defined in Rule 1-02 of
Regulation S-X) of the Company.
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6
(g) The Indenture has been duly authorized, executed and delivered
by the Company and Capital Markets, and (assuming due execution and
delivery by the Indenture Trustee) constitutes a valid and binding
agreement of each of the Company and Capital Markets enforceable against
the Company and Capital Markets in accordance with its terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing; and the Debentures have been duly authorized,
executed, issued and delivered by Capital Markets and (assuming due
authentication by the Indenture Trustee) constitute valid and binding
obligations of Capital Markets, entitled to the benefits of the Indenture
and the Support Agreement, dated April 4, 1989, as amended as of May 15,
1989, December 10, 1990 and February 14, 1991 (the "Support Agreement"),
between the Company and Capital Markets, and enforceable in accordance
with their terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(h) The Declaration has been duly authorized, executed and delivered
by Capital Markets and the Regular Trustees, and (assuming due execution
and delivery by the Property Trustee and the Delaware Trustee) constitutes
a valid and binding agreement of Capital Markets, enforceable against
Capital Markets in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
(i) The Guarantee Agreement has been duly authorized, executed and
delivered by Capital Markets and, (assuming due execution and delivery by
the Guarantee Trustee) constitutes a valid and binding agreement of
Capital Markets enforceable against Capital Markets in accordance with its
terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
(j) This Agreement has been duly authorized, executed and delivered
by the Company, Capital Markets and the Trust.
(k) The Remarketed Securities, the Indenture, the Declaration, the
Guarantee Agreement and the Remarketing Agreement, when the Remarketed
Securities are delivered pursuant to this Agreement, will conform to the
descriptions thereof contained in the Prospectus and in any Remarketing
Materials.
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7
(l) The execution, delivery and performance of this Agreement, the
Indenture, the Declaration, the Guarantee Agreement and the Remarketing
Agreement by the Company and Capital Markets, as applicable, and the
consummation by the Issuers of the transactions contemplated hereby and
thereby and the issuance and delivery of the Debentures (the
"Transactions") did not and will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is bound or to
which any of the properties or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any violation of
the provisions of the charter or by-laws of the Company or any of its
subsidiaries or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their respective properties or assets; and
except for such consents, approvals, authorizations, registrations or
qualifications as may be required under the Securities Act, Trust
Indenture Act, Exchange Act and applicable state securities laws in
connection with the initial distribution of the Preferred Securities or
the Remarketing, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or body
is required for the Transactions.
(m) There are no contracts, agreements or understandings between (i)
the Company or Capital Markets and (ii) any person granting such person
the right to require the Company or Capital Markets to file a registration
statement under the Securities Act with respect to any securities of the
Company or Capital Markets owned or to be owned by such person or to
require the Company or Capital Markets to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company or Capital Markets under the Securities Act.
(n) Neither the Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus or in any Remarketing
Materials, any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or
decree, which could, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the general affairs,
management, financial position, shareholders' equity or results of
operations of the Company and its subsidiaries taken as a whole or upon
the ability of the Issuers to perform their obligations under this
Agreement (a "Material Adverse Effect"), otherwise than as set forth or
contemplated in the Prospectus and in any Remarketing Materials; and,
since such date, there has not been any material change in the
consolidated share capital or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development involving
a prospective material adverse change, in or affecting the general
affairs, management, financial position, shareholders' equity or results
of operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus and in any Remarketing Materials.
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8
(o) The financial statements filed as part of the Registration
Statement or incorporated by reference in the Prospectus or as presented
in any Remarketing Materials present fairly the financial condition and
results of operations of the entities purported to be shown thereby, at
the dates and for the periods indicated, and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved and, with respect to
financial statements included in periodic reports filed by the Company
pursuant to Section 13 or 15(d) of the Exchange Act with the Commission on
and after September 25, 1992, contain the information requested by the
Staff in the Staff Response to be so included; and the supporting
schedules included or incorporated by reference in the Prospectus or in
any Remarketing Materials present fairly the information required to be
stated therein.
(p) Arthur Andersen LLP, who have certified certain financial
statements of the Company, whose report appears in the Prospectus or is
incorporated by reference therein or in any Remarketing Materials and who
have delivered the letter referred to in Section 6(h) hereof, are
independent public accountants as required by the Securities Act and the
Rules and Regulations.
(q) The Company and each Significant Subsidiary has good and
marketable title in fee simple to such of its fixed assets as are real
property and good and marketable title to its other assets reflected in
the most recent consolidated balance sheet incorporated by reference in
the Prospectus or in any Remarketing Materials, except properties and
assets that are leased or that are sold or otherwise disposed of in the
ordinary course of business after the date of said balance sheet, subject
to no mortgages, liens, charges or encumbrances of any kind whatsoever
("Liens") other than Liens permitted under the Indenture.
(r) Other than as set forth or incorporated by reference in the
Prospectus, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or to which any
property or asset of the Company or any of its subsidiaries is the subject
which could reasonably be expected individually or in the aggregate to
have a Material Adverse Effect; and to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(s) The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
(t) There are no contracts or other documents which are required to
be described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which have
not been described in the Prospectus or filed as exhibits to the
Registration Statement or incorporated therein by reference as permitted
by the Rules and Regulations.
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9
(u) None of the Company nor any Significant Subsidiary has any
material contingent liability which is not disclosed in the Prospectus.
(v) None of the Company nor any Significant Subsidiary (i) is in
violation of its charter or by-laws or similar constitutive documents,
(ii) is in default in any respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition contained
in any material indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is
bound or to which any of its properties or assets is subject, except where
such defaults, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, or (iii) is in violation in
any material respect of any law, ordinance, governmental rule, regulation
or court decree to which it or its properties or assets may be subject or
has failed to obtain any material license, permit, certificate, franchise
or other governmental authorization or permit necessary to the ownership
of its properties or assets or to the conduct of its business, except
where such violations or failures, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
(w) Neither the Company nor any subsidiary of the Company is an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations of the Commission thereunder; the Commission has issued an
order (the "Order") exempting Capital Markets from all of the provisions
of the 1940 Act; the Order is in full force and effect; and Capital
Markets will continue to comply with the terms and conditions of the
Order, or otherwise remain exempt from all of the provisions of the 1940
Act, so long as any Remarketed Securities are outstanding.
(x) The Support Agreement has been duly authorized by Capital
Markets and the Company and constitutes a valid and binding agreement of
each of Capital Markets and the Company enforceable against Capital
Markets and the Company in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing; the Company's obligations under the Support Agreement will
rank prior to the equity securities of the Company and equal with all
other unsecured and unsubordinated indebtedness of the Company, whether
now or hereafter outstanding; and the Debentures and the Guarantee will be
entitled to the benefits of the Support Agreement, the obligations of
Capital Markets under the Debentures and the Guarantees will be deemed to
be "Debt" (as defined in the Support Agreement) for purposes of the
Support Agreement and the holders of the Debentures and the Guarantee will
be entitled to the rights of "Lenders" (as defined in the Support
Agreement) under the Support Agreement.
<PAGE>
10
(y) Each of the Company and each Significant Subsidiary has
statutory authority, franchises and consents free from burdensome
restrictions and adequate for the conduct of the business in which it is
engaged.
(z) Except for the Company's ownership of the voting securities of
the Significant Subsidiaries, as and to the extent described in the
Prospectus, no person or corporation which is a "holding company" or a
"subsidiary company" of a "holding company" (as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended (the "1935
Act")), directly or indirectly owns, controls or holds with power to vote
10% or more of the outstanding voting securities of the Company or any
Significant Subsidiary; the Company is a "holding company" (as such term
is defined in the 1935 Act) but is exempt from all provisions of the 1935
Act pursuant to Section 3(a)(1) thereof except Section 9(a)(2) thereof;
and none of the Significant Subsidiaries is a "holding company" as defined
in the 1935 Act.
(aa) The Prospectus accurately describes the most restrictive of the
existing limitations on the payment of dividends by Northern Indiana on
its common shares held by the Company.
3. Representations, Warranties and Agreements of the Company,
Capital Markets and the Trust. The Company, Capital Markets and the Trust,
jointly and severally, represent, warrant and agree, (i) on and as of the date
hereof, (ii) on and as of the Commencement Date, (iii) on and as of the
Remarketing Date and (iv) on and as of the Remarketing Settlement Date that:
(a) The Trust has been duly created and is validly existing as a
statutory business trust in good standing under the Business Trust Act of
the State of Delaware (the "Delaware Trust Act") with the trust power and
authority to own property and conduct its business as described in the
Prospectus, and has conducted and will conduct no business other than the
transactions contemplated by this Agreement as described in the Prospectus
or in any Remarketing Materials; the Trust is not a party to or bound by
any agreement or instrument other than this Agreement, the Declaration and
the other agreements entered into in connection with the transaction
contemplated hereby; the Trust has no liabilities or obligations other
than those arising out of the transactions contemplated by this Agreement
and the Declaration and described in the Prospectus or in any Remarketing
Materials; and the Trust is not a party to or subject to any action, suit
or proceeding of any nature.
(b) The Declaration has been duly authorized, executed and delivered
by Capital Markets, as Sponsor, and the Regular Trustees and (assuming due
authorization, execution and delivery by the Property Trustee and the
Delaware Trustee), constitutes a valid and binding obligation of the
Trust, enforceable against the Trust in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing, and will conform to the description thereof
contained in the Prospectus or in any Remarketing Materials.
<PAGE>
11
(c) The Trust Securities are duly authorized, validly issued, fully
paid and, in the case of the Preferred Securities, non-assessable and
conform to the descriptions contained in the Prospectus or in any
Remarketing Materials.
(d) This Agreement has been duly authorized, executed and delivered
by the Trust.
(e) The execution, delivery and performance of this Agreement, the
Declaration and the Trust Securities by the Trust, the purchase of the
Debentures by the Trust from Capital Markets, the distribution of the
Debentures upon the liquidation of the Trust in the circumstances
contemplated by the Declaration, and the consummation by the Trust of the
transactions contemplated herein and in the Declaration (the "Trust
Transactions"), did not and will not result in a violation of any statute
or order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Trust or any of its assets; and except for
such consents, approvals, authorizations, registrations or qualifications
as may be required under the Securities Act, Trust Indenture Act, Exchange
Act or under applicable state securities laws in connection with the
initial distribution of the Preferred Securities and the Remarketing, no
consent, approval, authorization or order of or filing or registration
with, any such court or governmental agency or body is required for the
Trust Transactions.
(f) The Trust is not an "investment company" within the meaning of
such term under the Investment Company Act and the rules and regulations
of the Commission thereunder.
4. Fees and Expenses. (a) For the performance of its services as
Remarketing Agent hereunder, Capital Markets shall pay to the Remarketing Agent
on the Purchase Contract Settlement Date, by wire transfer to an account
designated by the Remarketing Agent, an amount to be agreed upon by Capital
Markets and the Remarketing Agent.
(b) The Company and Capital Markets, jointly and severally, agree to
pay (i) the costs incident to the preparation and printing of the Registration
Statement, Prospectus and any Remarketing Materials and any amendments or
supplements thereto; (ii) the costs of distributing the Registration Statement,
Prospectus and any Remarketing Materials and any amendments or supplements
thereto; (iii) the fees and expenses of qualifying the Remarketed Securities
under the securities laws of the several jurisdictions as provided in Section
5(h) and of preparing, printing and distributing a Blue Sky Memorandum
(including related fees and expenses of counsel to the Remarketing Agent); (iv)
all other costs and expenses incident to the performance of the obligations of
the Company, Capital Markets and the Trust hereunder; and (v) the reasonable
fees and expenses of counsel to the Remarketing Agent in connection with their
duties hereunder. The Trust shall not be liable for any fees and expenses in
this Section.
5. Further Agreements of the Company and Capital Markets. The
Company and Capital Markets, jointly and severally, agree:
(a) To prepare any registration statement or prospectus, if
required, in connection with the Remarketing, in a form approved by the
Remarketing Agent and to file any such
<PAGE>
12
prospectus pursuant to the Securities Act within the period required by
the Rules and Regulations; to advise the Remarketing Agent, promptly after
it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and
to furnish the Remarketing Agent with copies thereof; to file promptly all
reports and any definitive proxy or information statements required to be
filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus
and for so long as the delivery of a prospectus is required in connection
with the offering or sale of the Remarketed Securities; to advise the
Remarketing Agent, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of the Prospectus, of the suspension of the
qualification of any of the Remarketed Securities for offering or sale in
any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any Prospectus
or suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal.
(b) To furnish promptly to the Remarketing Agent and to counsel for
the Remarketing Agent a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed therewith.
(c) To deliver promptly to the Remarketing Agent in New York City
such number of the following documents as the Remarketing Agent shall
request: (i) conformed copies of the Registration Statement as originally
filed with the Commission and each amendment thereto (in each case
excluding exhibits other than this Agreement, the Indenture, the
Declaration and the Guarantee Agreement), (ii) the Prospectus and any
amended or supplemented Prospectus, (iii) any document incorporated by
reference in the Prospectus (excluding exhibits thereto) and (iv) any
Remarketing Materials; and, if the delivery of a prospectus is required at
any time in connection with the Remarketing and if at such time any event
shall have occurred as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when
such Prospectus is delivered, not misleading, or, if for any other reason
it shall be necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated by
reference in the Prospectus in order to comply with the Securities Act or
the Exchange Act, to notify the Remarketing Agent and, upon its request,
to file such document and to prepare and furnish without charge to the
Remarketing Agent and to any dealer in securities as many copies as the
Remarketing Agent may from time to time request of an amended or
supplemented Prospectus which will correct such statement or omission or
effect such compliance.
<PAGE>
13
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the Remarketing
Agent, be required by the Securities Act or requested by the Commission.
(e) Prior to filing with the Commission (i) any amendment to the
Registration Statement or supplement to the Prospectus or any document
incorporated by reference in the Prospectus or (ii) any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy
thereof to the Remarketing Agent and counsel for the Remarketing Agent;
and not to file any such amendment or supplement which shall be
disapproved by the Remarketing Agent promptly after reasonable notice.
(f) As soon as practicable after the Effective Date of the
Registration Statement to make generally available to the Company's
security holders and to deliver to the Remarketing Agent an earnings
statement of the Company and its subsidiaries (which need not be audited)
complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company, Rule 158).
(g) During a period of five years following the effective date of
the Registration Statement, to deliver to the Remarketing Agent copies of
all reports or other communications (financial or other) furnished to
shareholders of the Company, and deliver to the Remarketing Agent, (i) as
soon as they are available, copies of any reports and financial statements
furnished to or filed by the Company or Capital Markets with the
Commission or any national securities exchange on which any of the
Remarketed Securities or any class of securities of the Company or Capital
Markets may be listed; and (ii) such additional information concerning the
business and financial condition of the Company or Capital Markets as the
Remarketing Agent may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to the
Company's shareholders generally or to the Commission).
(h) Promptly from time to time to take such action as the
Remarketing Agent may reasonably request to qualify any of the Remarketed
Securities and the obligations of the Company under the Support Agreement
for offering and sale under the securities laws of such jurisdictions as
the Remarketing Agent may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of the
Securities and the obligations of the Company pursuant to the Support
Agreement; provided that in connection therewith, neither the Company nor
Capital Markets shall be required to qualify as a foreign corporation or
to file a general consent to service of process in any jurisdiction.
6. Conditions to the Remarketing Agent's Obligations. The
obligations of the Remarketing Agent hereunder are subject to the accuracy, on
and as of the date when made, of the representations and warranties of the
Company, Capital Markets and the Trust contained herein, to
<PAGE>
14
the performance by the Company, Capital Markets and the Trust of their
respective obligations hereunder, and to each of the following additional terms
and conditions:
(a) The Prospectus shall have been timely filed with the Commission;
no stop order suspending the effectiveness of the Registration Statement
or any part thereof or suspending the qualification of the Indenture, the
Guarantee Agreement or the Declaration shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise
shall have been complied with.
(b) The Remarketing Agent shall not have discovered and disclosed to
the Company on or prior to the Remarketing Date that the Prospectus, the
Registration Statement, or the Remarketing Materials or any amendment or
supplement thereto contains any untrue statement of a fact which, in the
opinion of counsel for the Remarketing Agent, is material or omits to
state any fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Declaration,
the Indenture, the Remarketed Securities, the Guarantee Agreement, the
Preferred Securities, the Common Securities, the Prospectus, the
Registration Statement, the Remarketing Materials and all other legal
matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all material respects to
counsel for the Remarketing Agent, and the Issuers shall have furnished to
such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
(d) Counsel to the Company and Capital Markets shall have furnished
to the Remarketing Agent its written opinion, as counsel to the Company
and Capital Markets, addressed to the Remarketing Agent and dated the
Remarketing Date, in form and substance satisfactory to the Remarketing
Agent, to the effect that:
(i) The Company and each of its Significant Subsidiaries have
been duly incorporated and are validly existing as corporations in
good standing under the laws of their respective jurisdictions of
incorporation, with respective power and authority (corporate and
other) to own their respective properties and conduct their
businesses as described in the Prospectus.
(ii) The Company has an authorized capitalization as set forth
in the Prospectus and in any Remarketing Materials, all of the
issued capital shares of the Company and each Significant Subsidiary
of the Company have been duly and validly authorized and issued and
are fully paid and non-assessable; and all of the issued common
shares of Northern Indiana and all of the issued capital shares of
each other Significant Subsidiary (except for directors' qualifying
shares and as set forth or incorporated by reference in the
Registration Statement) are owned directly or
<PAGE>
15
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(iii) The Company and each Significant Subsidiary has been
duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction.
(iv) There are no preemptive or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of
the Debentures pursuant to the Company's or Capital Markets' charter
or by-laws or any agreement or other instrument known to such
counsel.
(v) To the best of such counsel's knowledge and other than as
set forth in the Prospectus or in any Remarketing Materials, there
are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or to which any
property or asset of the Company or any of its subsidiaries is
subject which could reasonably be expected individually or in the
aggregate to have a material adverse effect on the consolidated
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries; and, to the best of such counsel's
knowledge and other than as set forth in the Prospectus, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(vi) The Registration Statement was declared effective under
the Securities Act, and the Indenture, the Declaration and the
Guarantee Agreement were qualified under the Trust Indenture Act, as
of the date and time specified in such opinion, the Prospectus was
filed with the Commission pursuant to the subparagraph of Rule
424(b) of the Rules and Regulations specified in such opinion on the
date specified therein and, to the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose is
pending or threatened by the Commission.
(vii) Giving effect to the interpretations of the requirements
of the Securities Act reflected in the No-Action Request and the
Staff Response, the Registration Statement, as of its Effective
Date, and the Prospectus, as of its date, and any further amendments
or supplements thereto, as of their respective dates, made by the
Company prior to the Purchase Contract Settlement Date (other than
the financial statements, related schedules and other financial data
contained therein, as to which such counsel need express no opinion)
complied as to form in all material respects with the requirements
of the Securities Act, the Rules and Regulations and the Trust
Indenture Act; and the documents incorporated by reference in the
Prospectus and any further amendment or supplement to any such
incorporated
<PAGE>
16
document made by any of the Issuers prior to the Purchase Contract
Settlement Date (other than the financial statements, related
schedules and other financial data contained therein, as to which
such counsel need express no opinion), when they became effective or
were filed with the Commission, as the case may be, complied as to
form in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder; and the Indenture, the
Declaration and the Guarantee Agreement conform in all material
respects to the requirements of the Trust Indenture Act and the
applicable rules and regulations thereunder.
(viii) The statements contained in the Prospectus under the
captions "Description of the Debentures," "Description of the
Preferred Securities," "Description of the Guarantee," "Relationship
Among the Preferred Securities, the Debentures and the Guarantee"
and "Description of the Support Agreement" insofar as they purport
to constitute summaries of certain terms of documents referred to
therein, constitute accurate summaries of the terms of such
documents in all material respects.
(ix) The Indenture has been duly authorized, executed and
delivered by the Company and Capital Markets and (assuming due
authentication, execution and delivery by the Indenture Trustee)
constitutes a valid and binding agreement of each of the Company and
Capital Markets enforceable against them in accordance with its
terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity
or at law) and an implied covenant of good faith and fair dealing.
(x) The Debentures have been duly authorized, executed and
delivered by Capital Markets and (assuming due authentication by the
Indenture Trustee) constitute valid and binding obligations of
Capital Markets entitled to the benefits of the Indenture and
enforceable in accordance with their terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
(xi) The Declaration has been duly authorized, executed and
delivered by Capital Markets.
(xii) The Guarantee Agreement has been duly authorized,
executed and delivered by Capital Markets and (assuming due
execution and delivery by the Guarantee Trustee) constitutes a valid
and binding agreement of Capital Markets enforceable against Capital
Markets in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
<PAGE>
17
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
(xiii) This Agreement has been duly authorized, executed and
delivered by the Company and Capital Markets.
(xiv) The Support Agreement has been duly authorized, executed
and delivered by the Company and Capital Markets and constitutes a
valid and binding agreement of the Company and Capital Markets
enforceable in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) or an implied
covenant of good faith and fair dealing; the Debentures and the
Guarantee will be entitled to the benefits of the Support Agreement,
the obligations of Capital Markets under the Debentures and the
Guarantees will be deemed to be "Debt" for purposes of the Support
Agreement and the holders of the Debentures and the Guarantee will
be entitled to the rights of "Lenders" under the Support Agreement.
(xv) The Transactions will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such
counsel to which the Trust, the Company or any of the Significant
Subsidiaries is a party or by which the Trust, the Company or any of
the Significant Subsidiaries is bound or to which any of the
properties or assets of the Trust, the Company or any of the
Significant Subsidiaries is subject, nor will such actions result in
any violation of the provisions of the charter or by-laws of the
Company or any of the Significant Subsidiaries or the Declaration or
Certificate of Trust of the Trust or any statute, rule or regulation
or any order known to such counsel of any court or governmental
agency or body having jurisdiction over the Trust, the Company or
any of the Significant Subsidiaries or any of their properties or
assets; and, except for the registration of the Debentures, the
Preferred Securities, the Guarantees, the Company's obligations
under the Support Agreement under the Securities Act, the
qualification of the Indenture, the Declaration and the Guarantee
Agreement under the Trust Indenture Act, and such consents,
approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state securities
laws, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is
required for the Transactions.
(xvi) None of the Trust nor the Company or any of its
subsidiaries is an "investment company" or an entity "controlled" by
an "investment company" as such terms are defined in the Investment
Company Act.
<PAGE>
18
(xvii) Based upon current law and the assumptions stated or
referred to therein: (i) the Trust will be classified as a grantor
trust for United States federal income tax purposes and not as an
association taxable as a corporation; (ii) the Debentures will be
classified as indebtedness of Capital Markets and (iii) the
statements set forth in the Prospectus or in the Remarketing
Materials under the caption "Certain United States Federal Income
Tax Consequences" insofar as they purport to constitute summaries of
matters of United States federal tax laws and regulations or legal
conclusions with respect thereto, constitute accurate summaries of
the matters described therein in all material respects.
In rendering such opinion, such counsel may (i) state that its opinion is
limited to matters governed by the Federal laws of the United States of
America and the laws of the State of Indiana and New York (with respect to
clause (x)) and (ii) rely (to the extent such counsel deems proper and
specifies in its opinion), as to matters involving the application of the
laws of the State of Massachusetts upon the opinion of ______________.
Such counsel shall also advise the Remarketing Agent that although such
counsel is not passing upon and assumes no responsibility or liability for
the accuracy, completeness or fairness of the statements contained in the
documents incorporated by reference in the Prospectus or any further
amendment or supplement thereto made by the Issuers prior to such
Remarketing Date, they have no reason to believe that any of such
documents (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion), when such
documents became effective or were filed with the Commission, as the case
may be, contained, in the case of a registration statement which became
effective under the Securities Act, an untrue statement of a material fact
or omitted to state a material fact required to be stated therein
necessary to make the statements therein not misleading, or, in the case
of other documents which were filed under the Securities Act or the
Exchange Act with the Commission, an untrue statement of a material fact
or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made when such documents were so filed, not misleading. Such counsel shall
also advise the Remarketing Agent that although such counsel is not
passing upon and, except as set forth in clauses (viii) and (xvii) above,
assumes no responsibility or liability for the accuracy, completeness or
fairness of the statements contained in the Registration Statement, the
Prospectus and the Remarketing Materials and any further amendments and
supplements thereto made by the Issuers prior to such date, they have no
reason to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Issuers prior to
such date (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that, as of its date, the Prospectus and the Remarketing
Materials or any further amendment or supplement thereto made by the
Issuers prior to such Remarketing Date (other than the financial
statements and related schedules therein, as to which such counsel need
express no opinion) contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
or that, as of such
<PAGE>
19
Remarketing Date, either the Registration Statement, the Prospectus or the
Remarketing Materials or any further amendment or supplement thereto made
by the Issuers prior to such Remarketing Date (other than the financial
statements and related schedules therein, as to which such counsel need
express no opinion) contains an untrue statement of a material fact or
omits to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
and they do not know of any amendment to the Registration Statement
required to be filed or of any contracts or other documents of a character
required to be filed as an exhibit to the Registration Statement or
required to be incorporated by reference into the Prospectus or the
Remarketing Materials or required to be described in the Registration
Statement, the Prospectus or the Remarketing Materials which were not
filed or incorporated by reference or described as required.
(e) Special Delaware counsel to the Issuers shall have furnished to
the Remarketing Agent its written opinion, as special Delaware counsel to
the Issuers, addressed to the Remarketing Agent and dated the Remarketing
Date, in form and substance satisfactory to the Remarketing Agent, to the
effect that:
(i) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Trust Act.
Under the Delaware Trust Act and the Declaration, the Trust has the
business trust power and authority to own property and to conduct
its business as described in the Prospectus and the Remarketing
Materials and to enter into and perform its obligations under this
Agreement and the Trust Securities.
(ii) The Common Securities have been duly authorized by the
Declaration and are validly issued and (subject to the terms in this
paragraph) fully paid undivided beneficial interests in the assets
of the Trust (such counsel may note that the holders of Common
Securities will be subject to the withholding provisions of Section
10.4 of the Declaration, will be required to make payment or provide
indemnity or security as set forth in the Declaration and will be
liable for the debts and obligations of the Trust to the extent
provided in Section 9.1(b) of the Declaration); under the Delaware
Trust Act and the Declaration, the issuance of the Common Securities
is not subject to preemptive rights.
(iii) The Preferred Securities have been duly authorized by
the Declaration and are validly issued and (subject to the terms in
this paragraph) fully paid and non-assessable undivided beneficial
ownership interests in the assets of the Trust, the holders of the
Preferred Securities will be entitled to the benefits of the
Declaration (subject to the limitations set forth in clause (v)
below) and will be entitled to the same limitation of personal
liability as extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of
Delaware (such counsel may note that the holders of Preferred
Securities will be subject to the withholding provisions of Section
10.4 of the Declaration and will be required to make payment or
provide indemnity or security as set forth in the
<PAGE>
20
Declaration); under the Delaware Trust Act and the Declaration, the
issuance of the Preferred Securities is not subject to preemptive
rights.
(iv) Under the Delaware Trust Act and the Declaration all
necessary trust action has been taken to duly authorize the
execution, delivery and performance by the Trust of this Agreement.
(v) Assuming the Declaration has been duly authorized by
Capital Markets and has been duly executed and delivered by Capital
Markets and the Regular Trustees, and assuming due authorization,
execution and delivery of the Declaration by the Property Trustee
and the Delaware Trustee, the Declaration constitutes a valid and
binding obligation of Capital Markets and the Regular Trustees,
enforceable against Capital Markets and the Regular Trustees in
accordance with its terms, except to the extent that enforcement
thereof may be limited by (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance or
transfer and other similar laws relating to or affecting the rights
and remedies of creditors generally, (ii) principles of equity,
including applicable law relating to fiduciary duties (regardless of
whether considered and applied in a proceeding in equity or at law),
and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or
contribution.
(vi) The issuance and sale by the Trust of the Preferred
Securities, the purchase by the Trust of the Debentures, the
execution, delivery and performance by the Trust of this Agreement,
the consummation by the Trust of the transactions contemplated by
this Agreement and compliance by the Trust with its obligations
thereunder do not violate any of the provisions of the Certificate
of Trust or the Declaration or any applicable Delaware law or
administrative regulation.
(vii) Assuming that the Trust derives no income from or
connected with sources within the State of Delaware and has no
assets, activities (other than having a Delaware Trustee as required
by the Delaware Trust Act and the filing of documents with the
Secretary of State of Delaware) or employees in the State of
Delaware, no filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any
Delaware court or Delaware governmental authority or agency (other
that as may be required under the securities or blue sky laws of the
state of Delaware, as to which such counsel need express no opinion)
is necessary or required to be obtained by the Trust solely in
connection with the due authorization, execution and delivery by the
Trust of this Agreement or the offering, issuance, sale or delivery
of the Preferred Securities.
(f) Counsel to the Property Trustee and the Guarantee Trustee shall
have furnished to the Remarketing Agent its written opinion, as counsel to
The Chase Manhattan Bank, as Property Trustee and Guarantee Trustee,
addressed to the Remarketing Agent and dated the
<PAGE>
21
Remarketing Date, in form and substance satisfactory to the Remarketing
Agent, to the effect that:
(i) Each of the Property Trustee and the Guarantee Trustee is
duly incorporated as a New York banking corporation with all
necessary power and authority to execute and deliver and perform
their respective obligations under the terms of the Declaration and
the Guarantee Agreement.
(ii) The execution, delivery and performance by the Property
Trustee of the Declaration and the execution, delivery and
performance by the Guarantee Trustee of the Guarantee Agreement have
been duly authorized by all necessary corporate action on the part
of the Property Trustee and the Guarantee Trustee, respectively. The
Declaration has been duly executed and delivered by the Property
Trustee and the Guarantee Agreement has been duly executed and
delivered by the Guarantee Trustee and each constitutes the valid
and binding agreement of the Property Trustee and the Guarantee
Trustee, respectively, enforceable against the Property Trustee and
the Guarantee Trustee, respectively, in accordance with their terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity
or at law) and an implied covenant of good faith and fair dealing.
(iii) The execution, delivery and performance of the
Declaration and the Guarantee Agreement by the Property Trustee and
the Guarantee Trustee, respectively, do not conflict with or
constitute a breach of the charter or by-laws of the Property
Trustee and the Guarantee Trustee, respectively.
(iv) No consent, approval or authorization of, or registration
with or notice to, any New York or federal banking authority is
required for the execution, delivery or performance by the Property
Trustee and the Guarantee Trustee of the Declaration and the
Guarantee Agreement, respectively.
(g) Counsel to the Delaware Trustee shall have furnished to the
Remarketing Agent its written opinion, as counsel to Chase Manhattan Bank
Delaware, as Delaware Trustee, addressed to the Remarketing Agent and
dated the Remarketing Date, in form and substance satisfactory to the
Remarketing Agent, to the effect that:
(i) The Delaware Trustee has been duly incorporated and is
validly existing as a banking corporation in good standing under the
laws of the State of Delaware with all necessary power and authority
to execute and deliver, and to carry out and perform its obligations
under the terms of the Declaration.
(ii) The execution, delivery and performance by the Delaware
Trustee of the Declaration has been duly authorized by all necessary
corporate action on the part
<PAGE>
22
of the Delaware Trustee. The Declaration has been duly executed and
delivered by the Delaware Trustee and constitutes the valid and
binding agreement of the Delaware Trustee enforceable against the
Delaware Trustee in accordance with its terms, subject to (i)
bankruptcy, insolvency, moratorium, receivership, reorganization,
liquidation, fraudulent conveyance or transfer and other similar
laws relating to or affecting the rights and remedies of creditors
generally, (ii) principles of equity, including applicable law
relating to fiduciary duties (regardless of whether considered and
applied in a proceeding in equity or at law), and (iii) the effect
of applicable public policy on the enforceability of provisions
relating to indemnification or contribution.
(iii) The execution, delivery and performance of the
Declaration by the Delaware Trustee do not conflict with or
constitute a breach of the charter or by-laws of the Delaware
Trustee.
(iv) No consent, approval or authorization of, or registration
with or notice to, any Delaware or federal banking authority is
required for the execution, delivery or performance by the Delaware
Trustee of the Declaration.
(h) On the Remarketing Date, the Company shall have furnished to the
Remarketing Agent a letter addressed to the Remarketing Agent and dated
such date, in form and substance satisfactory to the Remarketing Agent, of
Arthur Andersen LLP, or such other firm of nationally recognized
independent public accountants satisfactory to the Remarketing Agent,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" with respect to certain financial
information contained in the Prospectus and in the Remarketing Materials.
(i) Each of the Company and Capital Markets shall have furnished to
the Remarketing Agent a certificate, dated the Remarketing Date, of, (i)
with respect to the Company, (A) its Chairman of the Board and President,
or its Executive Vice President, and (B) its chief financial officer, and
(ii) with respect to Capital Markets, its President, and its chief
financial officer, stating that:
(i) The representations, warranties and agreements of the
Company and Capital Markets in Sections 2 and 3 are true and correct
as of the Remarketing Date; the Company and Capital Markets have
complied with all its agreements contained herein; and the
conditions contained in Section 6(a) have been fulfilled;
(ii) (A) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus or in the
Remarketing Materials any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, which could, individually or
in the aggregate, reasonably be expected to have
<PAGE>
23
a Material Adverse Effect, otherwise than as set forth or
contemplated in the Prospectus or in the Remarketing Materials and
(B) since the respective dates as of which information is given in
the Prospectus or in the Remarketing Materials, there has not been
any material change in the consolidated share capital or long-term
debt of the Company and its subsidiaries or the consolidated share
capital or long-term debt of any Significant Subsidiary or any
change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries (taken as a whole), otherwise than as set forth or
contemplated in the Prospectus or the Remarketing Materials; and
(iii) They have carefully examined the Registration Statement,
the Prospectus and the Remarketing Materials and, in their opinion
(A) the Registration Statement, as of its effective date, and the
Prospectus and the Remarketing Materials, as of their respective
dates, did not include any untrue statement of a material fact and
did not omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
and (B) since such dates, no event has occurred which should have
been set forth in a supplement or amendment to the Registration
Statement, the Prospectus or the Remarketing Materials.
(j) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus and in the
Remarketing Materials any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus or in the Remarketing Materials or (ii) since such date there
shall not have been any change in the capital stock or long-term debt of
the Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus or in the Remarketing Materials,
the effect of which, in any such case described in clause (i) or (ii), is,
in the judgment of the Remarketing Agent, so material and adverse as to
make it impracticable or inadvisable to proceed with the Remarketing on
the terms and in the manner contemplated in the Prospectus and in the
Remarketing Materials.
(k) Without the prior written consent of the Remarketing Agent, the
Declaration or the Indenture shall not have been amended in any manner, or
otherwise contain any provision contained therein as of the date hereof
that, in the opinion of the Remarketing Agent, materially changes the
nature of the Remarketed Securities or the Remarketing Procedures.
(l) Subsequent to the execution and delivery of this Agreement, (i)
no downgrading shall have occurred in the rating accorded the Preferred
Securities or any of the Company's, any Significant Subsidiary's or
Capital Markets' debt securities by any "nationally
<PAGE>
24
recognized statistical rating organization", as that term is defined by
the Commission for purposes of Rule 436(g)(2) under the Securities Act and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
any of the Preferred Securities or any of the Company's, any Significant
Subsidiary's or Capital Markets' debt securities.
(m) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange or in the over-the-counter market, or trading in any securities
of the Company or Capital Markets on any exchange or in the
over-the-counter market, shall have been suspended or minimum prices shall
have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium
shall have been declared by Federal or state authorities, (iii) the United
States shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the United States or
(iv) there shall have occurred such a material adverse change in general
economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) as to make it, in the judgment of the Remarketing Agent,
impracticable or inadvisable to proceed with the Remarketing on the terms
and in the manner contemplated in the Prospectus or in the Remarketing
Materials.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Remarketing Agent.
7. Indemnification and Contribution. (a) The Issuers shall indemnify
and hold harmless the Remarketing Agent, its officers and employees and each
person, if any, who controls the Remarketing Agent within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of the
Remarketed Securities), to which the Remarketing Agent or that officer, employee
or controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in any Preliminary Prospectus, the Registration Statement,
the Prospectus or the Remarketing Materials or in any amendment or supplement
thereto, or (B) in any blue sky application or other document prepared or
executed by the Issuers (or based upon any written information furnished by the
Issuers) specifically for the purpose of qualifying any or all of the Remarketed
Securities under the securities laws of any state or other jurisdiction (any
such application, document or information being hereinafter called a "Blue Sky
Application"), or (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement, the Prospectus or the
Remarketing Materials or in any amendment or supplement thereto, or in any Blue
Sky Application, any material fact required to be stated therein or necessary to
make the statements therein not misleading and shall reimburse the Remarketing
Agent and each such officer, employee
<PAGE>
25
and controlling person promptly upon demand for any legal or other expenses
reasonably incurred by the Remarketing Agent or that officer, employee or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Issuers shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement, the Prospectus or the Remarketing Materials or in
any such amendment or supplement, or in any Blue Sky Application in reliance
upon and in conformity with the written information furnished to the Issuers by
or on behalf of the Remarketing Agent specifically for inclusion therein and
described in a letter from the Remarketing Agent to the Company and provided
further, that as to any Preliminary Prospectus this indemnity agreement shall
not inure to the benefit of the Remarketing Agent, its officers or employees or
any person controlling the Remarketing Agent on account of any loss, claim,
damage, liability or action arising from the sale of the Remarketed Securities
to any person by the Remarketing Agent if the Remarketing Agent failed to send
or give a copy of the Prospectus, as the same may be amended or supplemented, to
that person within the time required by the Securities Act, and the untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact in such Preliminary Prospectus was corrected
in the Prospectus, unless such failure resulted from non-compliance by the
Company with Section 5(c). For purposes of the last proviso to the immediately
preceding sentence, the term "Prospectus" shall not be deemed to include the
documents incorporated therein by reference, and the Remarketing Agent shall not
be obligated to send or give any supplement or amendment to any document
incorporated by reference in any Preliminary Prospectus or the Prospectus to any
person other than a person to whom the Remarketing Agent had delivered such
incorporated document or documents in response to a written request therefor.
The foregoing indemnity agreement is in addition to any liability which the
Issuers may otherwise have to the Remarketing Agent or to any officer, employee
or controlling person of the Remarketing Agent.
(b) The Remarketing Agent shall indemnify and hold harmless the
Company and Capital Markets, their officers and employees, each of their
directors, the Trust and each Trustee, and each person, if any, who controls any
of the Issuers within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Company or Capital Markets, any such director, officer or
employee, the Trust or any such Trustee or any such controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any Preliminary Prospectus, the Registration Statement, the Prospectus or the
Remarketing Materials or in any amendment or supplement thereto, or (B) in any
Blue Sky Application or (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement, the Prospectus or the
Remarketing Materials or in any amendment or supplement thereto, or in any Blue
Sky Application, any material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with the written
information furnished to the Company or the Trustee by or on behalf of the
Remarketing
<PAGE>
26
Agent specifically for inclusion therein and described in a letter from the
Remarketing Agent to the Company and Capital Markets, and shall reimburse the
Company and Capital Markets and any such director, officer or employee, the
Trust or any such Trustee or such controlling person for any legal or other
expenses reasonably incurred by the Company or Capital Markets or any such
director or officer, the Trust or any Trustee or any such controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any liability which the
Remarketing Agent may otherwise have to the Company or Capital Markets or any
such director or officer, the Trust or any such Trustee or any such controlling
person.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 7.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Remarketing Agent shall have the right to employ counsel to represent
jointly the Remarketing Agent and its officers, employees and controlling
persons who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Remarketing Agent against the Issuers under
this Section 7 if, in the reasonable judgment of the Remarketing Agent, it is
advisable for the Remarketing Agent and those officers, employees and
controlling persons to be jointly represented by separate counsel, and in that
event the fees and expenses of such separate counsel shall be paid by the
Issuers. No indemnifying party shall (i) without the prior written consent of
the indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
<PAGE>
27
(d) If the indemnification provided for in this Section 7 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 7(a) or 7(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Issuers on the one hand and the Remarketing Agent on the other
hand from the Remarketing or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Issuers on the one hand and the Remarketing Agent on
the other with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Issuers on the one hand and the Remarketing Agent on the other with respect to
such offering shall be deemed to be in the same proportion as the total
liquidation or principal amount of the Remarketed Securities less the fee paid
to the Remarketing Agent pursuant to Section 4(a) of this Agreement, on the one
hand, and the total fees received by the Remarketing Agent pursuant to such
Section 4(a), on the other hand, bear to the total liquidation or principal
amount of the Remarketed Securities. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Issuers on the one hand or the Remarketing Agent on the other
hand, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Remarketing Agent agree that it would not be just and
equitable if contributions pursuant to this Section 7(d) were to be determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 7(d)
shall be deemed to include, for purposes of this Section 7(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(d), the Remarketing Agent shall not be required to
contribute any amount in excess of the amount by which the fees received by it
under Section 4 exceed the amount of any damages which the Remarketing Agent has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
8. Resignation and Removal of the Remarketing Agent. The Remarketing
Agent may resign and be discharged from its duties and obligations hereunder,
and Capital Markets may remove the Remarketing Agent, by giving 60 days' prior
written notice, in the case of a resignation, to Capital Markets, the
Depositary, the Property Trustee and the Indenture Trustee and, in the case of a
removal, the removed Remarketing Agent, the Depositary, the Property Trustee and
the Indenture Trustee; provided, however, that (i) Capital Markets may not
remove the Remarketing Agent unless (A) the Remarketing Agent becomes involved
as a debtor in a bankruptcy, insolvency or similar proceeding, (B) the
Remarketing Agent shall not be among the 15 underwriters with the
<PAGE>
28
largest volume underwritten in dollars, on a lead or co-managed basis, of U.S.
domestic debt securities during the twelve-month period ended as of the last
calendar quarter preceding the Remarketing Date or (C) the Remarketing Agent
shall be subject to one or more legal restrictions preventing the performance of
its obligations hereunder and (ii) no such resignation nor any such removal
shall become effective until Capital Markets shall have appointed at least one
nationally recognized broker-dealer as successor Remarketing Agent and such
successor Remarketing Agent shall have entered into a remarketing agreement with
the Company, Capital Markets and the Trust in which it shall have agreed to
conduct the Remarketing in accordance with the Remarketing Procedures. In any
such case, Capital Markets will use its reasonable efforts to appoint a
successor Remarketing Agent and enter into such a remarketing agreement with
such person as soon as reasonably practicable. The provisions of Sections 4 and
7 shall survive the resignation or removal of any Remarketing Agent pursuant to
this Agreement.
9. Dealing in the Remarketed Securities. The Remarketing Agent, when
acting as a Remarketing Agent or in its individual or any other capacity, may,
to the extent permitted by law, buy, sell, hold and deal in any of the
Remarketed Securities. The Remarketing Agent may exercise any vote or join in
any action which any beneficial owner of Remarketed Securities may be entitled
to exercise or take pursuant to the Declaration or the Indenture with like
effect as if it did not act in any capacity hereunder. The Remarketing Agent, in
its individual capacity, either as principal or agent, may also engage in or
have an interest in any financial or other transaction with the Issuers as
freely as if it did not act in any capacity hereunder.
10. Remarketing Agent's Performance; Duty of Care. The duties and
obligations of the Remarketing Agent shall be determined solely by the express
provisions of this Agreement and the Declaration and the Indenture. No implied
covenants or obligations of or against the Remarketing Agent shall be read into
this Agreement, the Declaration or the Indenture. In the absence of bad faith on
the part of the Remarketing Agent, the Remarketing Agent may conclusively rely
upon any document furnished to it, which purports to conform to the requirements
of this Agreement, the Declaration or the Indenture as to the truth of the
statements expressed in any of such documents. The Remarketing Agent shall be
protected in acting upon any document or communication reasonably believed by it
to have been signed, presented or made by the proper party or parties. The
Remarketing Agent, acting under this Agreement, shall incur no liability to the
Company or to any holder of Remarketed Securities in its individual capacity or
as Remarketing Agent for any action or failure to act, on its part in connection
with a Remarketing or otherwise, except if such liability is judicially
determined to have resulted from the gross negligence or willful misconduct on
its part.
11. Termination. This Agreement shall terminate as to the
Remarketing Agent on the effective date of the resignation or removal of the
Remarketing Agent pursuant to Section 8. In addition, the obligations of the
Remarketing Agent hereunder may be terminated by it by notice given to the
Company or the Trust prior to 10:00 A.M., New York City time, on the Remarketing
Date if, prior to that time, any of the events described in Sections 6(j), (k),
(l) or (m) shall have occurred or if the Remarketing Agent shall decline to
perform its obligations under this Agreement for any reason permitted hereunder.
<PAGE>
29
12. Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Remarketing Agent, shall be delivered or sent by mail,
telex or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: (212) 528-8822);
(b) if to the Issuers shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Prospectus, Attention: Treasurer. (Fax: 219-853-5352).
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Remarketing Agent, the Company,
Capital Markets, the Trust and their respective successors. This Agreement and
the terms and provisions hereof are for the sole benefit of only those persons,
except that (x) the representations, warranties, indemnities and agreements of
the Issuers contained in this Agreement shall also be deemed to be for the
benefit of the officers and employees of the Remarketing Agent and the person or
persons, if any, who control the Remarketing Agent within the meaning of Section
15 of the Securities Act and (y) the indemnity agreement of the Remarketing
Agent contained in Section 7(b) of this Agreement shall be deemed to be for the
benefit of directors, officers and employees of the Issuers and any person
controlling the Issuers within the meaning of Section 15 of the Securities Act.
Nothing in this Agreement is intended or shall be construed to give any person,
other than the persons referred to herein, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
14. Survival. The respective indemnities, representations,
warranties and agreements of the Issuers and the Remarketing Agent contained in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the Remarketing and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any of them or
any person controlling any of them.
15. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 under the Securities Act.
16. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of New York.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
<PAGE>
30
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE>
31
If the foregoing correctly sets forth the agreement among the
Company, the Trust and the Remarketing Agent, please indicate your acceptance in
the space provided for that purpose below.
Very truly yours,
NIPSCO INDUSTRIES, INC.
By:
------------------------------------
Title:
NIPSCO CAPITAL MARKETS, INC.
By:
------------------------------------
Title:
NIPSCO CAPITAL TRUST I
By: NIPSCO Capital Markets, as Sponsor
By:
--------------------------------
Title:
Accepted:
LEHMAN BROTHERS INC.
By:
-------------------------------
Authorized Representative
<PAGE>
EXHIBIT 3.1
NIPSCO INDUSTRIES, INC.
BY-LAWS
Effective January 30, 1999
<PAGE>
BY-LAWS
OF
NIPSCO INDUSTRIES, INC.
ARTICLE I.
OFFICES.
SECTION 1.1. Registered Office. The registered office of the Corporation
in the State of Indiana shall be at 5265 Hohman Avenue, in the City of Hammond,
County of Lake.
SECTION 1.2. Principal Business Office. The principal business office of
the Corporation shall be at 801 East 86th Avenue, in the Town of Merrillville,
County of Lake, in the State of Indiana.
ARTICLE II.
SHAREHOLDERS' MEETINGS.
SECTION 2.1. Place of Meetings. Meetings of the shareholders of the
Corporation shall be held at such place, within or without the State of Indiana,
as may be specified by the Board of Directors in the notice of such meeting, but
if no such designation is made, then at the principal business office of the
Corporation.
SECTION 2.2. Annual Meetings. The annual meeting of the shareholders
shall be held in each year on the second Wednesday in the month of April, if not
a legal holiday, and if a legal holiday, then on the next succeeding business
day that is not a legal holiday or on such other day as the Board of Directors
may determine; at the hour of ten o'clock a.m. or at such other time as the
Board of Directors
<PAGE>
may determine, for the purpose of electing Directors and for the transaction of
such other business as may legally come before the meeting.
If for any reason any annual meeting shall not be held at the time herein
provided, the same may be held at any time thereafter, upon notice as
hereinafter provided, or the business thereof may be transacted at any special
meeting of shareholders called for that purpose.
SECTION 2.3. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the Chairman, the President, or the Board of Directors, and shall be called
by the Chairman at the request in writing of a majority of the Board of
Directors, or at the request in writing of the shareholders holding at least
one-fourth of all the shares outstanding and entitled to vote on the business
proposed to be transacted thereat. All requests for special meetings of
shareholders shall state the time, place and the purpose or purposes thereof.
SECTION 2.4. Notice of Shareholders' Meetings. Notice of each meeting of
shareholders, stating the date, time and place, and, in the case of special
meetings, the purpose or purposes for which such meeting is called, shall be
given to each shareholder entitled to vote thereat not less than 10 nor more
than 60 days before the date of the meeting unless otherwise prescribed by
statute.
SECTION 2.5. Record Dates. (a) In order that the Corporation may
determine the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of shares
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a future date as the record date, which shall not be
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more than 60 nor less than 10 days before the date of such meeting or any other
action requiring a determination by shareholders.
(b) If a record date has not been fixed as provided in preceding subsection
(a), then:
(i) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held; and
(ii) The record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
(c) Only those who shall be shareholders of record on the record date so
fixed as aforesaid shall be entitled to such notice of, and to vote at, such
meeting and any adjournment thereof, or to receive payment of such dividend or
other distribution, or to receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding the transfer of any shares on the
books of the Corporation after the applicable record date; provided, however,
the Corporation shall fix a new record date if a meeting is adjourned to a date
more than 120 days after the date originally fixed for the meeting.
SECTION 2.6. Quorum and Adjournment. The holders of a majority of all the
capital shares issued and outstanding and entitled to vote at any meeting of the
shareholders, represented by the holders thereof in person or by proxy, shall be
requisite at all meetings of the shareholders to constitute a quorum for the
election of Directors or for the transaction of other business, unless otherwise
provided by law or
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by the Corporation's Articles of Incorporation, as amended (the "Articles of
Incorporation"). Whether or not there is such a quorum, the chairman of the
meeting or the shareholders present or represented by proxy representing a
majority of the shares present or represented may adjourn the meeting from time
to time without notice other than an announcement at the meeting. At such
adjourned meeting at which the requisite number of voting shares shall be
present or represented, any business may be transacted which might have been
transacted at the meeting originally called.
SECTION 2.7. Voting by Shareholders; Proxies. Every shareholder shall
have the right at every shareholders' meeting to one vote for each share
standing in his name on the books of the Corporation, except as otherwise
provided by law or by the Articles of Incorporation, and except that no share
shall be voted at any meeting upon which any installment is due and unpaid, or
which belongs to the Corporation. Election of directors at all meetings of the
shareholders at which directors are to be elected shall be by ballot, and a
plurality of the votes cast thereat shall be necessary to elect any Director.
If a quorum exists, action on a matter (other than the election of directors)
submitted to shareholders entitled to vote thereon at any meeting shall be
approved if the votes cast favoring the action exceed the votes cast opposing
the action, unless a greater number of affirmative votes is required by law or
by the Articles of Incorporation. A shareholder may vote either in person or by
proxy executed in writing by the shareholder or a duly authorized attorney in
fact. No proxy shall be valid after eleven months from the date of its
execution unless a longer time is expressly provided therein. All voting at
meetings of shareholders shall be by ballot, except that the presiding officer
of the meeting may call for a viva voce vote on any matter other than the
election of directors, unless the holder or holders of ten percent (10%) or more
of the shares entitled to vote demands or demand a vote by ballot.
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SECTION 2.8. List of Shareholders. The Secretary shall make, or cause the
agent having charge of the stock transfer books of the Corporation to make, at
least five (5) days before each meeting of shareholders, a complete list of the
shareholders entitled by the Articles of Incorporation to vote at said meeting,
arranged in alphabetical order, with the address and number of shares so
entitled to vote held by each, which list shall be on file at the principal
business office of the Corporation and subject to inspection by any shareholder
within the usual business hours during said five (5) days either at the
principal business office of the corporation or a place in the city where the
meeting is to be held, which place shall be specified in the notice of meeting,
or, if not so specified, at the place where said meeting is to be held. Such
list shall be produced and kept open at the time and place of the meeting and
subject to the inspection of any shareholder during the holding of such meeting.
SECTION 2.9. Conduct of Business. (a) Presiding Officer. The Chairman,
when present, and in the absence of the Chairman the President, shall be the
presiding officer at all meetings of shareholders, and in the absence of the
Chairman and the President, the Board of Directors shall choose a presiding
officer. The presiding officer of the meeting shall have plenary power to
determine procedure and rules of order and make definitive rulings at meetings
of the shareholders.
(b) Annual Meetings of Shareholders. (i) Nominations of persons for
election to the Board of Directors of the Corporation and the proposal of
business to be considered by the shareholders may be made at an annual meeting
of shareholders (A) pursuant to the Corporation's notice of meeting, (B) by or
at the direction of the Board of Directors or (C) by any shareholder of the
Corporation who was a shareholder of record at the time of giving of notice
provided for in this Section 2.9, who is entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section 2.9.
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(ii) For nominations or other business to be properly brought before
any annual meeting by a shareholder pursuant to clause (C) of paragraph (b)(i)
of this Section 2.9, the shareholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a shareholder's
notice shall be delivered to the Secretary at the principal business office of
the Corporation not later than 150 days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced by more than 30 days or delayed by more
than 60 days from such anniversary date, notice by the shareholder to be timely
must be so delivered not later than the 150th day prior to such annual meeting
or the 10th day following the day on which public announcement of the date of
such meeting is first made. Such shareholder's notice shall set forth (A) as to
each person whom the shareholder proposes to nominate for election or reelection
as a director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (B) as to any other business that the shareholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such shareholder and the
beneficial owner, if any, on whose behalf the proposal is made; and (C) as to
the shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (x) the name and address of such
shareholder, as they appear on the Corporation's books, and of such beneficial
owner and (y) the class and number of shares of the Corporation which are owned
beneficially and of record by such shareholder and such beneficial owner.
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(iii) The notice procedures of this Section 2.9 shall not apply to any
annual meeting if (A) with respect to annual meetings of shareholders subsequent
to the 1994 annual meeting of shareholders, the Corporation shall not have set
forth in its proxy statement for the preceding annual meeting of shareholders
the date by which notice of nominations by shareholders of persons for election
as directors or of other business proposed to be brought by shareholders at the
next annual meeting of shareholders must be received by the Corporation to be
considered timely pursuant to this Section 2.9 or (B) with respect to the 1994
annual meeting of shareholders, the Corporation shall have failed to issue a
public announcement setting forth such information not less than 30 days prior
to the date by which a shareholder's notice must be received by the Corporation
to be considered timely pursuant to this Section 2.9.
(c) Special Meetings of Shareholders. Only such business shall be
conducted at a special meeting of shareholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of shareholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (A) by or at the direction of the Board of
Directors or (B) by any shareholder of the Corporation who is a shareholder of
record at the time of giving of notice provided for in this Section 2.9, who is
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Section 2.9. Nominations by shareholders of persons for election
to the Board of Directors may be made at such a special meeting of shareholders
if a shareholder's notice containing the information set forth in paragraph
(b)(ii) of this Section 2.9 shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the 150th day prior to such
Special Meeting or the 10th day following the date on which public announcement
is first made of the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting.
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(d) General. (i) Only such persons who are nominated in accordance with
the procedures set forth in this Section 2.9 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of shareholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 2.9. The presiding officer at the meeting shall have
the power and duty to determine whether a nomination or any business proposed to
be brought before the meeting was made in accordance with the procedures set
forth in this Section 2.9 and, if any proposed nomination or business is not in
compliance with this Section 2.9, to declare that such defective proposal shall
be disregarded.
(ii) For purposes of this Section 2.9, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Sections 13, 14 or 15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this Section 2.9, a
shareholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 2.9. Nothing in this Section 2.9 shall be deemed to affect
any rights of shareholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
SECTION 2.10. Organization of Meetings. The Secretary, who may call on
any officer or officers of the Corporation for assistance, shall make all
necessary and appropriate arrangements for all meetings of shareholders, receive
all proxies and ascertain and report to each meeting of shareholders the number
of shares present, in person and by proxy. In the absence of the Secretary, the
Assistant Secretary shall perform the foregoing duties. The certificate and
report of the Secretary or Assistant Secretary, as
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to the regularity of such proxies and as to the number of shares present, in
person and by proxy, shall be received as prima facie evidence of the number of
shares present in person and by proxy for the purpose of establishing the
presence of a quorum at such meeting and for organizing the same, and for all
other purposes.
SECTION 2.11. Inspectors. At every meeting of shareholders it shall be
the duty of the presiding officer to appoint three (3) shareholders of the
Corporation inspectors of election to receive and count the votes of
shareholders. Each inspector shall take an oath to fairly and impartially
perform the duties of a inspector of the election and to honestly and truly
report the results thereof. Such inspectors shall be responsible for tallying
and certifying the vote taken on any matter at each meeting which is required to
be tallied and certified by them in the resolution of the Board of Directors
appointing them or the appointment of the presiding officer at such meeting as
the case may be. Except as otherwise provided by these By-Laws or by law, such
inspectors shall also decide all questions touching upon the qualification of
voters, the validity of proxies and ballots, and the acceptance and rejection of
votes. The Board of Directors shall have the authority to make rules
establishing presumptions as to the validity and sufficiency of proxies.
SECTION 2.12. Minutes of Shareholder Meetings. The presiding officer,
secretary, and inspectors of election serving at a shareholders' meeting shall
constitute a committee to correct and approve the minutes of such meeting. The
approval thereof shall be evidenced by an endorsement thereon signed by a
majority of the committee.
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ARTICLE III.
BOARD OF DIRECTORS.
SECTION 3.1. Powers. The Board of Directors shall have the general
direction, management and control of all the property, business and affairs of
the Corporation and shall exercise all the powers that may be exercised or
performed by the Corporation, under the statutes, the Articles of Incorporation,
and these By-Laws.
SECTION 3.2. Number, Election and Term of Office. The Board of Directors
shall consist of ten (10) members, classified with respect to the time for which
they shall severally hold office by dividing them into three classes, and after
being so classified one-third (1/3) of the Directors, or as near as may be,
shall be elected annually for a term of three (3) years.
SECTION 3.3. Vacancies. Any vacancy in the Board of Directors caused by
death, resignation or other reason shall be filled for the remainder of the
Director's term by a majority vote of the remaining Directors although less than
a quorum, or by the sole remaining director, and any director so chosen shall
hold office for a term expiring at the annual meeting of shareholders at which
the term of office of the class of directors to which such director has been
elected expires. All Directors of the Corporation shall hold office until their
successors are duly elected and qualified.
SECTION 3.4. Annual Meetings. A meeting of the Directors whose terms
have not expired and the newly elected Directors, to be known as the annual
meeting of the Board of Directors, for the election of officers and for the
transaction of such other business as may properly come before the meeting,
shall be held on the same day as the annual meeting of the shareholders, at that
time and place determined by the Board of Directors or at such date, time and
place otherwise set by the Chairman.
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SECTION 3.5. Regular Meetings. Regular monthly meetings of the Board of
Directors shall be held from time to time (either within or without the state)
as the Board may by resolution determine, without call and without notice, and
unless otherwise determined all such regular monthly meetings shall be held at
the principal business office of the Corporation on the fourth Tuesday of each
and every month at 10:30 a.m.
SECTION 3.6. Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman, by the President, or by the Chairman
upon the written request of any four (4) Directors by giving, or causing the
Secretary to give, to each Director, notice in accordance with Article IV of
these By-Laws.
SECTION 3.7. Quorum. At all meetings of the Board of Directors, a
majority of the Directors shall constitute a quorum for the transaction of
business and the act of a majority of those present shall be necessary and
sufficient for the taking of any action thereat, but a less number may adjourn
the meeting from time to time until a quorum is present.
SECTION 3.8. Action by Written Consent. Unless otherwise restricted by
statute, the Articles of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a written consent thereto is
signed by all directors or by all members of such committee, as the case may be,
and such written consent is filed with the minutes of proceedings of the Board
of Directors or of such committee.
SECTION 3.9. Attendance by Conference Telephone. Members of the Board of
Directors or any committee thereof may participate in a meeting of such Board of
Directors or committee by means of
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conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
in a meeting shall constitute presence in person at such meeting.
SECTION 3.10. Committees. (a) The Board of Directors may from time to
time, in its discretion, by resolution passed by a majority of the Board,
designate, and appoint, from the directors, committees of one or more persons
which shall have and may exercise such lawfully delegable powers and duties
conferred or authorized by the resolutions of designation and appointment. The
Board of Directors shall have power at any time to change the members of any
such committee, to fill vacancies, and to discharge any such committee.
(b) Unless the Board of Directors shall provide otherwise, the presence of
one-half of the total membership of any committee of the Board of Directors
shall constitute a quorum for the transaction of business at any meeting of such
committee and the act of a majority of those present shall be necessary and
sufficient for the taking of any action thereat.
ARTICLE IV.
NOTICES.
SECTION 4.1. Notices. Notices to directors and shareholders shall be in
writing and delivered personally or mailed to their addresses appearing on the
records of the Corporation or, if to directors, by telegram, cable, telephone,
telecopy, facsimile or a nationally recognized overnight delivery service.
Notice to directors of special meetings by mail shall be given at least two days
before the meeting. Notice to directors of special meetings by telegram, cable,
personal delivery, telephone, telecopy or facsimile
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shall be given a reasonable time before the meeting, but in no event less than
one hour before the meeting. Notice by mail or recognized overnight delivery
service shall be deemed to be given when sent to the director at his or her
address appearing on the records of the Corporation. Notice by telegram or cable
shall be deemed to be given when the telegram or cable addressed to the director
at his or her address appearing on the records of the Corporation is delivered
to the telegraph company. Notice by telephone, telecopy or facsimile shall be
deemed to be given when transmitted by telephone, telecopy or facsimile to the
telephone, telecopy or facsimile number appearing on the records of the
Corporation for the director (regardless of whether the director shall have
personally received such telephone call or telecopy or facsimile message).
SECTION 4.2. Waiver of Notice. Whenever any notice is required, a waiver
thereof signed by the person entitled to such notice, whether before or after
the time stated therein, and filed with the minutes or corporate records, shall
be deemed equivalent thereto. Attendance of any person at any meeting of
shareholders or directors shall constitute a waiver of notice of such meeting,
except when such person attends only for the express purpose of objecting, at
the beginning of the meeting (or in the case of a director's meeting, promptly
upon such director's arrival), to the transaction of any business at the meeting
and does not thereafter vote for or assent to action taken at the meeting.
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ARTICLE V.
OFFICERS.
SECTION 5.1. Designation; Number; Election. The officers of the Corporation
shall be chosen by the Board of Directors and may consist of a Chairman, a
President, one or more Vice Presidents, a Secretary, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers, a Controller, one or
more Assistant Controllers, an Auditor, and an Environmental Officer and
Counsel. One person may hold any two offices except those of Chairman or
President, and Secretary.
SECTION 5.2. Term of Office; Vacancies; Removal. Such officers shall be
elected by the Board of Directors at its annual meeting, and shall hold office
for one year and/or until their respective successors shall have been duly
elected. The Board of Directors may from time to time, elect or appoint such
other officers and agents as it shall deem necessary, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
may be prescribed by the Board of Directors. Vacancies among the officers of the
Corporation shall be filled by the Board of Directors. Any officer or agent
elected or appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the whole Board of Directors.
SECTION 5.3. Compensation of Officers. The Board of Directors or a
committee of the Board shall have the authority to fix the compensation of the
officers of the Corporation.
SECTION 5.4. Chairman. The Chairman shall be the chief executive officer of
the Company and shall have general authority and supervision over the management
and direction of the affairs of the Company, and supervision of all departments
and of all officers of the Company. The Chairman shall,
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subject to the other provisions of these by-laws, have such other powers and
perform such other duties as usually devolve upon the chief executive officer of
a company or as may be prescribed by the Board of Directors, and shall, when
present, preside at all meetings of the shareholders and of the Board of
Directors. When the Board of Directors is not in session, the Chairman shall
have authority to suspend the authority of any other officer or officers,
subject, however, to the pleasure of the Board of Directors at its next meeting.
In case of the absence, disability, death, resignation or removal from office of
the Chairman, the powers and duties of the Chairman shall for the time being
devolve upon and be exercised by the President, unless otherwise ordered by the
Board of Directors.
SECTION 5.5. President. The President shall be the chief operating
officer of the Corporation and shall have such general authority and supervision
over the management and direction of the affairs of the Corporation, subject to
the authority of the Chairman, as shall usually devolve upon a chief operating
officer of a corporation. The President shall, subject to the other provisions
of these By-Laws, have such other powers and perform such other duties as
usually devolve upon the President of a corporation, and such further duties as
may be prescribed for the President by the Chairman or the Board of Directors.
In case of the absence, disability, death, resignation or removal from office of
the President, the powers and duties of the President shall, for the time being,
devolve upon and be exercised by the Chairman, and in case of the absence,
disability, death, resignation, or removal from office of both the Chairman and
the President, the powers and duties of the President shall for the time being
devolve upon and be exercised by the Vice President so appointed by the Board
of Directors.
SECTION 5.6. Vice Presidents. Each of the Vice Presidents shall have such
powers and duties as may be prescribed by the Board of Directors, the Chairman
or the President.
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SECTION 5.7. Secretary. The Secretary shall attend and keep the minutes
of all meetings of the Board of Directors and of the shareholders. The Secretary
shall have charge and custody of the corporate records and corporate seal of the
Corporation, and shall in general perform all the duties incident to the office
of secretary of a corporation, subject at all times to the direction and control
of the Board of Directors, the Chairman and the President.
SECTION 5.8. Assistant Secretaries. Each of the Assistant Secretaries
shall have such duties and powers as may be prescribed by the Board of Directors
or be delegated by the Chairman or the President. In the absence or disability
of the Secretary, the powers and duties of the Secretary shall devolve upon such
one of the Assistant Secretaries as the Board of Directors, the Chairman or the
President may designate, or, if there be but one Assistant Secretary, then upon
such Assistant Secretary; and such Assistant Secretary shall thereupon have and
exercise such powers and duties during such absence or disability of the
Secretary.
SECTION 5.9. Treasurer. The Treasurer shall have charge of, and shall be
responsible for, the collection, receipt, custody and disbursement of the funds
of the Corporation, and shall also have the custody of all securities belonging
to the Corporation. The Treasurer shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, taking proper receipts or making
proper vouchers for such disbursements, and shall at all times preserve the same
during the term of office. When necessary or proper, the Treasurer shall
endorse, on behalf of the Corporation, all checks, notes, or other obligations
payable to the Corporation or coming into possession of the Treasurer for and on
behalf of the Corporation, and shall deposit the funds arising therefrom,
together with all other funds of the Corporation coming into possession of the
Treasurer, in the name and to the credit of the Corporation in such bank or
banks as the Board of Directors shall from time to time by resolution direct.
The Treasurer shall perform
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all duties which are incident to the office of treasurer of a corporation,
subject at all time to the direction and control of the Board of Directors, the
Chairman and the President.
The Treasurer shall give the Corporation a bond if required by the Board of
Directors in a sum, and with one or more sureties, satisfactory to the Board,
for the faithful performance of the duties of the office of Treasurer, and for
the restoration to the Corporation, in case of the death, resignation,
retirement or removal from office of the Treasurer, of all books, papers,
vouchers, money or other property of whatever kind in the possession or under
the control of the Treasurer belonging to the Corporation.
SECTION 5.10. Assistant Treasurers. Each of the Assistant Treasurers
shall have such powers and duties as may be prescribed by the Board of Directors
or be delegated by the Chairman or the President. In the absence or disability
of the Treasurer, the powers and duties shall devolve upon such one of the
Assistant Treasurers as the Board of Directors, the Chairman or the President
may designate, or, if there be but one Assistant Treasurer, then upon such
Assistant Treasurer who shall thereupon have and exercise such powers and duties
during such absence or disability of the Treasurer. Each Assistant Treasurer
shall likewise give the Corporation a bond if required by the Board of Directors
upon like terms and conditions as the bond required of the Treasurer.
SECTION 5.11. Controller. The Controller shall have control over all
accounts and records pertaining to moneys, properties, materials and supplies.
The Controller shall have executive direction of the bookkeeping and accounting
departments, and shall have general supervision over the records in all other
departments pertaining to moneys, properties, materials and supplies. The
Controller shall have charge of the preparation of the financial budget, and
such other powers and duties as are commonly
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incident to the office of controller of a corporation, subject at all times to
the direction and control of the Board of Directors, the Chairman and the
President.
SECTION 5.12. Assistant Controllers. Each of the Assistant Controllers
shall have such powers and duties as may be prescribed by the Board of Directors
or be delegated by the Chairman or the President. In the absence or disability
of the Controller, the powers and duties of the Controller shall devolve upon
such one of the Assistant Controllers as the Board of Directors, the Chairman or
the President may designate, or, if there be but one Assistant Controller, then
upon such Assistant Controller who shall thereupon have and exercise such powers
and duties during such absence or disability of the Controller.
SECTION 5.13. Auditor. The Auditor shall review and monitor the activities
of the Corporation and its subsidiaries, including development of and compliance
with policies and procedures, and shall in general perform all the duties
incident to the office of auditor of a corporation, subject at all times to
direction and control of the Board of Directors, the Chairman and the President.
SECTION 5.14. Environmental Officer and Counsel. The Environmental Officer
and Counsel shall supervise, review and monitor the environmental affairs of the
Corporation and its subsidiaries, including the development of and compliance
with policies and procedures, and shall in general perform all the duties
incident to such an office, subject at all times to the direction and control of
the Board of Directors, the Chairman and the President.
ARTICLE VI.
CONDUCT OF BUSINESS.
SECTION 6.1. Contracts, Deeds and Other Instruments. All agreements
evidencing obligations of the Corporation, including but not limited to
contracts, trust deeds, promissory notes, sight drafts, time drafts and letters
of credit (including applications therefor), may be signed by any one of the
Chairman, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary, any Assistant Secretary, any other person authorized
by a resolution of the Board of Directors, and any other person
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authorized by the Chairman, as evidenced by a written instrument of delegation.
Any such authorization by the Board of Directors or the Chairman shall remain in
effect until rescinded by action of the Board of Directors or (in the case of a
delegation by the Chairman) by the Chairman and, where it identifies the
authorized signatory by office rather than by name, shall not be rescinded
solely by virtue of a change in the person holding that office or a temporary
vacancy in that office.
A certified copy of these By-Laws and/or any authorization given hereunder
may be furnished as evidence of the authorities herein granted, and all persons
shall be entitled to rely on such authorities in the case of a specific
contract, conveyance or other transaction without the need of a resolution of
the Board of Directors specifically authorizing the transaction involved.
SECTION 6.2. Checks. Checks and other negotiable instruments for the
disbursement of Corporation funds may be signed by any one of the Chairman, the
President, any Vice President, the Treasurer, the Controller and the Secretary
in such manner as shall from time to time be determined by resolution of the
Board of Directors. Electronic or wire transfers to funds may be authorized by
any officer of the Corporation who is authorized pursuant to this Section 6.2 to
disburse Corporation funds by check or other negotiable instrument.
SECTION 6.3. Deposits. Securities, notes and other evidences of
indebtedness shall be kept in such places, and deposits of checks, drafts and
funds shall be made in such banks, trust companies or depositories, as shall be
recommended and approved by any two of the Chairman, the President, any Vice
President and the Treasurer.
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SECTION 6.4. Voting of Stock. Unless otherwise ordered by the Board of
Directors, the Chairman, the President or any Vice President shall have the
power to execute and deliver on behalf of the Corporation proxies on stock owned
by the Corporation appointing a person or persons to represent and vote such
stock at any meeting of stockholders, with full power of substitution, and shall
have power to alter or rescind such appointment. Unless otherwise ordered by
the Board of Directors, the Chairman, the President or any Vice President shall
have the power on behalf of the Corporation to attend and to act and vote at any
meeting of stockholders of any corporation in which the Corporation holds stock
and shall possess and may exercise any and all rights and powers incident to the
ownership of such stock, which, as the owner thereof, the Corporation might have
possessed and exercised if present. The Board may confer like powers upon any
other person or persons.
SECTION 6.5. Transfer of Stock. Such form of transfer or assignment
customary or necessary to effect a transfer of stocks or other securities
standing in the name of the Corporation shall be signed by the Chairman, the
President, any Vice President or the Treasurer, and the Secretary or an
Assistant Secretary shall sign as witness if required on the form. A
corporation or person transferring any such stocks or other securities pursuant
to a form of transfer or assignment so executed shall be fully protected and
shall be under no duty to inquire whether the Board of Directors has taken
action in respect thereof.
ARTICLE VII.
SHARE CERTIFICATES AND THEIR TRANSFER.
SECTION 7.1. Share Certificates. Certificates for shares of the
Corporation shall be signed by the Chairman, the President or any Vice
President, and by the Secretary or any Assistant Secretary, and shall not be
valid unless so signed. Such certificates shall be appropriately numbered and
contain the name
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of the registered holder, the number of shares and the date of issue. If such
certificate is countersigned (a) by a transfer agent other than the Corporation
or its employee, or (b) by a registrar other than the Corporation or its
employee, any other signature on the certificate may be a facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent, or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he, she or it were
such officer, transfer agent, or registrar at the date of issue.
SECTION 7.2. Transfer of Shares. Upon surrender to the Corporation or a
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation and such transfer agent to
issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction. No certificate shall be issued in
exchange for any certificate until the former certificate for the same number of
shares of the same class and series shall have been surrendered and cancelled,
except as provided in Section 7.4.
SECTION 7.3. Regulations. The Board of Directors shall have authority to
make rules and regulations concerning the issue, transfer and registration of
certificates for shares of the Corporation.
SECTION 7.4. Lost, Stolen and Destroyed Certificates. The Corporation may
issue a new certificate or certificates for shares in place of any issued
certificate alleged to have been lost, stolen or destroyed upon such terms and
conditions as the Board of Directors may prescribe.
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SECTION 7.5. Registered Shareholders. The Corporation shall be entitled
to treat the holder of record (according to the books of the Corporation) of any
share or shares as the holder in fact thereof and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other party whether or not the Corporation shall have express or
other notice thereof, except as expressly provided by law.
SECTION 7.6. Transfer Agents and Registrars. The Board of Directors may
from time to time appoint a transfer agent and a registrar in one or more
cities, may require all certificates evidencing shares of the Corporation to
bear the signatures of a transfer agent and a registrar, may provide that such
certificates shall be transferable in more than one city, and may provide for
the functions of transfer agent and registrar to be combined in one agency.
ARTICLE VIII.
INDEMNIFICATION.
SECTION 8.1. Litigation Brought by Third Parties. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, formal or informal (other than
an action by or in the right of the Corporation) (an "Action") by reasons of the
fact that he or she is or was a director, officer, employee or agent of the
Corporation (a "Corporate Person"), or is or was serving at the request of the
Corporation as a director, officer, employee, agent, partner, trustee or member
or in another authorized capacity (collectively, an "Authorized Capacity") of or
for another corporation, unincorporated association, business trust,
partnership, joint venture, trust, individual or other legal entity, whether or
not organized or formed for profit (collectively, "Another Entity"), against
expenses (including
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attorneys' fees), judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such Action
("Expenses") if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any Action by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the Corporation, or,
with respect to any criminal action or proceeding, that the person had
reasonable cause to believe his or her conduct was unlawful.
SECTION 8.2. Litigation by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any action by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a Corporate
Person, or is or was serving at the request of the Corporation in an Authorized
Capacity of or for Another Entity against Expenses actually and reasonably
incurred by him or her in connection with that defense or settlement of such
action if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Corporation,
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for willful
negligence or misconduct in the performance of his duty to the Corporation
unless and only to the extent that a court of equity or the court in which such
action was pending shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court of equity or other court shall deem proper.
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SECTION 8.3. Successful Defense. To the extent that a person who is or
was a Corporate Person or is or was serving in an Authorized Capacity of
Another Entity at the request of the Corporation and has been successful on the
merits or otherwise in defense of any action, referred to in Section 8.1 or 8.2
of this Article, or in defense of any claim, issue or matter therein, he or she
shall be indemnified against Expenses actually and reasonably incurred by him or
her in connection therewith.
SECTION 8.4 Determination of Conduct. Any indemnification under Section
8.1 or 8.2 of this Article (unless ordered by a court) shall be made by the
Corporation only upon a determination that indemnification of the person is
proper in the circumstances because he or she has met the applicable standard of
conduct set forth in said Section 8.1 or 8.2. Such determination shall be made
(a) by the Board of Directors by a majority vote of a quorum consisting of
directors not at the time parties to such action, suit or proceeding, or (b) if
a quorum cannot be obtained, by a majority vote of a committee duly designated
by the Board of Directors (in which designation directors who are parties may
participate) consisting of two or more directors not at the time parties to such
action, suit or proceeding, or (c) by special legal counsel, or (d) by the
shareholders; provided, however, that shares owned by or voted under the control
of persons who are at the time parties to such action, suit or proceeding may
not be voted on the determination.
SECTION 8.5. Advance Payment. The Corporation shall advance Expenses
reasonably incurred by any Corporate Person in any Action in advance of the
final disposition thereof upon the undertaking of such party to repay the
advance unless it is ultimately determined that such party is entitled to
indemnification hereunder, if (a) the indemnitee furnishes the Corporation a
written affirmation of his or her good faith belief that he or she has satisfied
the standard of conduct in Section 8.1 or 8.2 and (b) a
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determination is made by those making the decision pursuant to Section 8.4 that
the facts then known would not preclude indemnification under these By-Laws.
SECTION 8.6. By-Law Not Exclusive. The indemnification provided by this
Article 8 shall not be deemed exclusive of any other rights to which any person
may be entitled under any by-law, agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
SECTION 8.7. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Corporate Person or is or was
serving at the request of the Corporation in an Authorized Capacity of or for
Another Entity against any liability asserted against him or her and incurred by
him or her in any such capacity, or arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify him or her
against such liability under the provisions of this Article 8 or the Indiana
Business Corporation Law.
SECTION 8.8. Effect of Invalidity. The invalidity or unenforceability of
any provision of this Article 8 shall not affect the validity or enforceability
of the remaining provisions of this Article 8.
SECTION 8.9. Definition of Corporation. For purposes of this Article 8,
references to "the Corporation" shall include, in addition to the surviving or
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger.
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SECTION 8.10. Change in Law. Notwithstanding the foregoing provisions of
Article 8, the Corporation shall indemnify any person who is or was a Corporate
Person or is or was serving at the request of the Corporation in an Authorized
Capacity of or for Another Entity to the full extent permitted by the Indiana
Business Corporation Law or by any other applicable law, as may from time to
time be in effect.
ARTICLE IX.
GENERAL.
SECTION 9.1. Fiscal Year. The fiscal year of the Corporation shall begin
on the 1st day of January and end on the 31st day of December in each year.
SECTION 9.2. Corporate Seal. The corporate seal shall be circular in form
and shall have inscribed thereon the words "NIPSCO Industries, Inc. - Corporate
Seal - Indiana."
SECTION 9.3. Amendments. These By-Laws may be altered, amended or
repealed in whole or in part, and new By-Laws may be adopted, at any annual,
regular or special meeting of the Board of Directors by the affirmative vote of
a majority of a quorum of the Board of Directors.
SECTION 9.4. Dividends. Subject to any provisions of any applicable
statute or of the Articles of Incorporation, dividends may be declared upon the
capital stock of the Corporation by the Board of Directors at any regular or
special meeting thereof; and such dividends may be paid in cash, property or
shares of the Corporation.
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SECTION 9.5. Control Shares. The Terms "control shares" and "control
share acquisition" used in this Section 9.5 shall have the meanings set forth
in Indiana Business Corporation Law Section 23-1-42-1, et seq. (the "Act").
Control shares of the Corporation acquired in a control share acquisition shall
have only such voting rights as are conferred by the Act.
Control shares of the Corporation acquired in a control share acquisition
with respect to which the acquiring person has not filed with the Corporation
the Statement required by the Act may, at any time during the period ending
sixty days after the last acquisition of control shares by the acquiring person,
be redeemed by the Corporation at the fair value thereof pursuant to procedures
authorized by a resolution of the Board of Directors. Such authority may be
exercised generally or confined to specific instances.
Control shares of the Corporation acquired in a control share acquisition
with respect to which the acquiring person was not granted full voting rights by
the shareholders as provided in the Act may, at any time after the shareholder
vote required by the Act, be redeemed by the Corporation at the fair value
thereof pursuant to procedures authorized by a resolution of the Board of
Directors. Such authority may be exercised generally or confined to specific
instances.
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EXHIBIT 4.1
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of___________________________,
1999 (this "First Supplemental Indenture"), among NIPSCO Capital Markets, Inc.,
an Indiana corporation ("Capital Markets"), NIPSCO Industries, Inc., an Indiana
corporation ("Industries"), and The Chase Manhattan Bank, as trustee (the
"Trustee"), under the Indenture dated as of February 14, 1997 among Capital
Markets, Industries and the Trustee (the "Indenture").
WHEREAS, Industries and Capital Markets executed and delivered the
Indenture to the Trustee to provide for the issuance from time to time of
Capital Markets' unsecured debentures, notes or other evidences of indebtedness
(collectively the "Securities," and individually, a "Security") to be issued in
one or more series as might be determined by Capital Markets under the
Indenture, in an unlimited aggregate principal amount which may be authenticated
and delivered as provided in the Indenture;
WHEREAS, pursuant to the terms of the Indenture, Capital Markets
desires to provide for the establishment of a new series of Securities to be
known as the 5.90% Senior Debentures due 2005 (the "Debentures"), the form and
substance of such Debentures and the terms, provisions and conditions thereof to
be as set forth in the Indenture and this First Supplemental Indenture;
WHEREAS, NIPSCO Capital Trust I, a Delaware statutory business trust
(the "Trust"), has offered to the public up to $345,000,000 in aggregate
liquidation amount of its 5.90% Trust Preferred Securities (the "Preferred
Securities") and, in connection therewith, Capital Markets has agreed to
purchase up to $10,700,000 in aggregate liquidation amount of the Trust's common
securities (the "Common Securities" and, together with the Preferred Securities,
the "Trust Securities"), each representing an undivided beneficial interest in
the assets of the Trust, and proposes to invest the proceeds from such offerings
in up to $355,700,000 aggregate principal amount of the Debentures;
WHEREAS, Capital Markets and Industries have requested that the
Trustee execute and deliver this First Supplemental Indenture, all requirements
necessary to make this First Supplemental Indenture a valid instrument in
accordance with its terms (and to make the Debentures, when executed by Capital
Markets and authenticated and delivered by the Trustee, the valid obligations of
Capital Markets) have been performed, and the execution and delivery of this
First Supplemental Indenture has been duly authorized in all respects;
NOW, THEREFORE, in consideration of the purchase and acceptance of the
Debentures by the Holders thereof, and for the purpose of setting forth, as
provided in the Indenture, the form and substance of the Debentures and the
terms, provisions and conditions thereof, Capital Markets and Industries
covenant and agree with the Trustee as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.1 Definition of Terms.
Unless the context otherwise requires:
(a) a term not defined herein that is defined in the Indenture has the
same meaning when used in this First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental Indenture has the
same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or Article of this
First Supplemental Indenture;
(e) headings are for convenience of reference only and do not affect
interpretation;
(f) the following terms have the meanings given to them in the
Declaration: (i) Applicable Margin; (ii) Applicable Principal Amount;
(iii) Delaware Trustee; (iv) Failed Remarketing; (v) Preferred
Securities; (vi) Preferred Security Certificate; (vii) Property
Trustee; (viii) Redemption Amount; (ix) Regular Trustees; (x)
Remarketing Agreement; (xi) Remarketing Date; (xii) Treasury Portfolio
Purchase Price; and (xiii) Two-Year Benchmark Treasury Rate;
(g) the following terms have the meanings given to them in the Purchase
Contract Agreement:
(i) Cash Settlement; (ii) Corporate PIES; (iii) Purchase Contract and
(iv) Purchase Contract Settlement Date
(h) the following terms have the meanings given to them in this Section
1.1(h):
"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 principal office of
the Trustee or the Property Trustee is closed for business.
"Declaration" means the Amended and Restated Declaration of Trust of
the Trust, dated as of _______________________, 1999, as amended and restated
from time to time.
"Direct Action" has the meaning specified in Section 7.2.
"Primary Treasury Dealer" means a primary U.S. government securities
dealer in New York City.
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"Purchase Contract Agreement" means the Purchase Contract Agreement
dated as of ______________________, 1999 between Industries and The Chase
Manhattan Bank, as Purchase Contract Agent.
"Quotation Agent" means (i) Lehman Brothers Inc. and its respective
successors, provided that if Lehman Brothers Inc. ceases to be a Primary
Treasury Dealer, Capital Markets will substitute another Primary Treasury Dealer
therefor, or (ii) any other Primary Treasury Dealer selected by Capital Markets.
"Redemption Amount" means, for each Debenture, the product of the
principal amount of such Debenture and a fraction, the numerator of which is the
Treasury Portfolio Purchase Price and the denominator of which is the Applicable
Principal Amount.
"Redemption Price" means, for each Debenture, the sum of the
Redemption Amount plus accrued and unpaid interest thereon to the Tax Event
Redemption Date.
"Remarketing" means (i) as long as the Trust has not been liquidated,
the operation of the procedures for remarketing specified in Section 7.13 of the
Declaration and (ii) if the Trust has been liquidated, the operation of the
procedures for remarketing specified in Article VIII.
"Remarketing Agent" shall mean Lehman Brothers Inc. or any successor
remarketing agent selected by Capital Markets.
"Reset Rate" means the rate per annum that results from the
remarketing of the Preferred Securities that are a part of the Corporate PIES as
to which the holders have not given notice of their election to settle the
related Purchase Contracts with cash, or have given such notice but failed to
deliver cash, and the Preferred Securities that are not a part of the Corporate
PIES as to which the holders have requested remarketing.
"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 which proposed change, pronouncement,
action or decision is announced on or after the date of issuance of the
Preferred Securities, 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 accrued on
the Debentures, (ii) interest payable by Capital Markets on the Debentures is
not, or within 90 days of the date of such opnion, 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 amountof other taxes, duties or other
governmental charges.
"Tax Event Redemption Date" has the meaning specified in Section
2.5(a).
"Treasury Portfolio" means, with respect to the Applicable Principal
Amount of Debentures (i) 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 (a) principal or interest strips of U.S. Treasury
Securities that mature on or prior to the Purchase Contract Settlement Date in
an aggregate amount at maturity equal
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to the Applicable Principal Amount and (b) with respect to each scheduled
interest payment date on the Debentures 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 at maturity equal to the
aggregate interest payment that would be due on the Applicable Principal Amount
of the Debentures on such date and (ii) if the Tax Event Redemption Date occurs
after the Purchase Contract Settlement Date, a portfolio of zero-coupon U.S.
Treasury Securities consisting of (a) principal or interest strips of U.S.
Treasury Securities that mature on or prior to February 19, 2005, in an
aggregate amount at maturity equal to the Applicable Principal Amount and (b)
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 at maturity equal to the aggregate interest payment that would be due on
the Applicable Principal Amount of the Debentures on such date.
ARTICLE II
TERMS AND CONDITIONS OF THE DEBENTURES
Section 2.1 Designation and Principal Amount.
There is hereby authorized a series of Securities designated the
"5.90% Senior Debentures due 2005," limited in aggregate principal amount to
$355,700,000.
Section 2.2 Maturity.
The Stated Maturity will be February 19, 2005.
Section 2.3 Global Debentures.
If distributed to holders of Preferred Securities in connection with
the involuntary or voluntary dissolution of the Trust:
(a) The Debentures in certificated form may be presented to the
Trustee by the Property Trustee in exchange for a Global Security in an
aggregate principal amount equal to all Outstanding Debentures (a "Global
Debenture"). The Depositary for the Debentures will be The Depository Trust
Company. The Global Debentures will be registered in the name of the Depositary
or its nominee, Cede & Co., and delivered by the Trustee to the Depositary or a
custodian appointed by the Depositary for crediting to the accounts of its
participants pursuant to the instructions of the Regular Trustees. Capital
Markets upon any such presentation shall execute a Global Debenture in such
aggregate principal amount and deliver the same to the Trustee for
authentication and delivery in accordance with the Indenture and this First
Supplemental Indenture. Payments on the Debentures issued as a Global Debenture
will be made to the Depositary or its nominee.
(b) If any Preferred Securities are held in non book-entry
certificated form, the Debentures in certificated form may be presented to the
Trustee by the Property Trustee, and any Preferred Security Certificate which
represents Preferred Securities other than Preferred Securities held by the
depositary for the Preferred Securities or its nominee ("Non Book-Entry
Preferred Securities") will be deemed to represent beneficial interests in
Debentures presented to the Trustee by the Property Trustee having an aggregate
principal amount equal to the aggregate liquidation amount of the Non Book-Entry
Preferred Securities until such Preferred Security Certificates are presented to
the Security Registrar for
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transfer or reissuance, at which time such Preferred Security Certificates will
be canceled and a Debenture registered in the name of the holder of the
Preferred Security Certificate or the transferee of the holder of such Preferred
Security Certificate, as the case may be, with an aggregate principal amount
equal to the aggregate liquidation amount of the Preferred Security Certificate
canceled will be executed by Capital Markets and delivered to the Trustee for
authentication and delivery in accordance with the Indenture and this First
Supplemental Indenture. On issue of such Debentures, Debentures with an
equivalent aggregate principal amount that were presented by the Property
Trustee to the Trustee will be deemed to have been canceled.
Section 2.4 Interest.
(a) Each Debenture will bear interest at the rate of 5.90% per annum
from February 16, 1999 until the Purchase Contract Settlement Date, and at the
Reset Rate thereafter, payable quarterly in arrears on the Interest Payment
Dates, which shall be February 19, May 19, August 19 and November 19 of each
year, commencing May 19, 1999.
(b) The Regular Record Dates for the Debentures shall be (i) as long as
the Debentures are represented by a Global Debenture, the Business Day preceding
each Interest Payment Date or (ii) if the Debentures are issued in certificated
form, the 15th Business Day prior to each Interest Payment Date.
(c) The interest rate on the Debentures outstanding on and after the
Purchase Contract Settlement Date will be reset on the third Business Day
preceding the Purchase Contract Settlement Date to the Reset Rate. The Reset
Rate will be equal to the rate per annum that results from the Remarketing,
provided that if a Failed Remarketing occurs, the Reset Rate will be equal to
(i) the Two-Year Benchmark Treasury Rate plus (ii) the Applicable Margin.
(d) The amount of interest payable on the Debentures for any period
will be computed (i) for any full quarterly period on the basis of a 360-day
year of twelve 30-day months and (ii) for any period shorter than a full
quarterly period, on the basis of a 30-day month and, for any period less than a
month, on the basis of the actual number of days elapsed per 30-day month. In
the event that any date on which interest is payable on the Debentures is not a
Business Day, then payment of the interest payable on such date will be made on
the next day that is a Business Day (and without interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
calendar year, then such payment will be made on the preceding Business Day.
Section 2.5 Redemption.
(a) If a Tax Event occurs and is continuing, Capital Markets may, at
its option and upon not less than 30 nor more than 60 days' notice to the
Holders of the Debentures, redeem the Debentures in whole (but not in part)
within 90 days following the occurrence of such Tax Event, at a price equal to,
for each Debenture, the Redemption Price. The Redemption Amount shall be paid
prior to 12:00 noon, New York City time, on the date of redemption (the "Tax
Event Redemption Date") or such earlier time as Capital Markets determines,
provided that Capital Markets shall have deposited with the Trustee an amount
sufficient to pay the Redemption Amount by 10:00 a.m. on the Tax Event
Redemption Date. Such redemption shall otherwise be in accordance with the
provisions of Article Eleven of the Indenture.
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(b) Except as provided in Section 2.5(a), Capital Markets will have no
right to redeem the Debentures.
(c) The Debentures will not be subject to a sinking fund provision.
Section 2.6 Events of Default.
It shall be an Event of Default with respect to the Debentures if the
Trust shall have voluntarily or involuntarily dissolved, wound up its business
or otherwise terminated its existence except in connection with (i) the
distribution of the Securities held by the Trust to the holders of the Trust
Securities in liquidation of their interests in the Trust, (ii) the redemption
of all of the outstanding Trust Securities or (iii) a consolidation, conversion,
amalgamation, merger or other transaction involving the Trust that is permitted
under Section 3.15 of the Declaration.
Section 2.7 Paying Agent; Security Registrar.
If the Debentures are issued in certificated form, the Paying Agent
and the Security Registrar for the Debentures shall be the Corporate Trust
Office.
ARTICLE III
FORM OF DEBENTURE
SECTION 3.1. Form of Debenture.
The Debentures and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the following forms:
(FORM OF FACE OF DEBENTURE)
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT: This Debenture is a
Global Security within the meaning of the Indenture 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 Debenture
is exchangeable for Debentures registered in the name of a person other than the
Depositary or its nominee only in the limited circumstances described in the
Indenture, and no transfer of this Debenture (other than a transfer of this
Debenture 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 Debenture is presented by an authorized representative of the
Depositary to the issuer or its agent for registration of transfer, exchange or
payment, and any Debenture 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 Indenture, 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.]
No._______________
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$_________________
CUSIP No. 654638 AC9
----------
5.90% SENIOR DEBENTURE DUE 2005
NIPSCO Capital Markets, Inc., an Indiana corporation ("Capital Markets", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to ______________________, or
registered assigns, the principal sum of _______ Dollars on __________________,
2005, and to pay interest on said principal sum from February 16, 1999, or from
the most recent interest payment date (each such date, an "Interest Payment
Date") to which interest has been paid or duly provided for, quarterly in
arrears on February 19, May 19, August 19 and November 19 of each year
commencing May 19, 1999, at the rate of 5.90% per annum until February 19, 2003,
and at the Reset Rate thereafter, until the principal hereof shall have become
due and payable, and on any overdue principal and premium, if any, and (without
duplication and to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the same rate per
annum compounded quarterly. The amount of interest payable for any period will
be computed (1) for any full quarterly period on the basis of a 360-day year of
twelve 30-day months and (2) for any period shorter than a full quarterly
period, on the basis of a 30-day month and, for any period less than a month, on
the basis of the actual number of days elapsed per 30-day month. In the event
that any date on which interest is payable is not a Business Day, then payment
of the interest payable on such date will be made on the next day that is a
Business Day (and without any interest or other payment in respect of such
delay), except that, if such Business Day is in the next calendar year, then
such payment will be made on the preceding Business Day. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture referred to on the
reverse side hereof, be paid to the person in whose name this Debenture (or one
or more Predecessor Securities, as defined in said Indenture) is registered at
the close of business on the Regular Record Date for such interest installment,
which, if this Debenture is a Global Security, shall be the close of business on
the Business Day preceding such Interest Payment Date or, if this Debenture is
not a Global Security, shall be the close of business on the 15th Business Day
preceding such Interest Payment Date; provided that interest paid at maturity
shall be paid to the Person to whom principal is paid. Any such interest
installment not punctually paid or duly provided for shall forthwith cease to be
payable to the registered Holder on such Regular Record Date and may be paid to
the Person in whose name this Debenture (or one or more Predecessor Securities)
is registered at the close of business on a special record date to be fixed by
the Trustee referred to on the reverse side hereof for the payment of such
defaulted interest, notice whereof shall be given to the registered Holders of
the Debentures not less than 10 days prior to such special record date, or may
be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Debentures may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. The principal of and interest on this Debenture
shall be payable at the office or agency of the Trustee maintained for that
purpose in any coin or currency of the United States of America that at the time
of payment is legal tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of Capital Markets
by check mailed to the registered Holder at such address as shall appear in the
Security Register. Notwithstanding the foregoing, so long as the Holder of this
Debenture is the Property Trustee, the payment of the principal of (and premium,
if any) and interest on this Debenture will be made at such place and to such
account as may be designated by the Property Trustee.
7
<PAGE>
This Debenture is, to the extent provided in the Indenture, senior and unsecured
and will rank in right of payment on a parity with all other senior unsecured
obligations of Capital Markets.
Unless the Certificate of Authentication hereon has been executed by the
Trustee, this Debenture shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose. The provisions of this Debenture are
continued on the reverse side hereof, and such continued provisions shall for
all purposes have the same effect as though fully set forth at this place.
8
<PAGE>
IN WITNESS WHEREOF, Capital Markets has caused this instrument to be
executed.
NIPSCO CAPITAL MARKETS, INC.
By:_________________________________
Attest:
By:______________________________
Secretary
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series referred to in the within-mentioned
Indenture.
Dated:__________________________________ THE CHASE MANHATTAN BANK, as Trustee
By:_________________________________
Authorized Officer
9
<PAGE>
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Securities of Capital
Markets (herein sometimes referred to as the "Debentures"), all issued under and
pursuant to an Indenture dated as of February 14, 1997, duly executed and
delivered among NIPSCO Industries, Inc. ("Industries"), NIPSCO Capital Markets,
Inc. ("Capital Markets") and The Chase Manhattan Bank, as Trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture thereto dated as
of _________________________, 1999, among Industries, Capital Markets and the
Trustee (such Indenture as so supplemented, the "Indenture"), to which Indenture
and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, Capital Markets, Industries and the
Holders of the Debentures. By the terms of the Indenture, the Securities are
issuable in series that may vary as to amount, date of maturity, rate of
interest and in other respects as provided in the Indenture. This series of
Securities is limited in aggregate principal amount to $355,700,000.
All terms used in this Debenture that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
If a Tax Event occurs and is continuing, Capital Markets may, at its option and
upon not less than 30 nor more than 60 days' notice to the Holders of the
Debentures, redeem the Debentures in whole (but not in part) within 90 days
following the occurrence of such Tax Event at the Redemption Price. The
Redemption Price shall be paid prior to 12:00 noon, New York City time, on the
Tax Event Redemption Date, by check or wire transfer in immediately available
funds at such place and to such account as may be designated by each such
Holder.
The Debentures will not be subject to a sinking fund provision.
In case an Event of Default shall have occurred and be continuing, the principal
of all of the Debentures may be declared, and upon such declaration shall
become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
The Indenture contains provisions permitting Capital Markets and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Debentures and all other series of Securities affected
at the time Outstanding, as defined in the Indenture, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders of the
Debentures; provided, however, that no such supplemental indenture may, without
the consent of the Holder of each outstanding Debenture, among other things, (i)
change the stated maturity of the principal of, or any installment of interest
on, any Debenture, (ii) reduce the principal amount of, or the rate of interest
on or any premium payable upon the redemption of, the Debentures, (iii) impair
the right to institute suit for the enforcement of any such payment on or after
the stated maturity of or any redemption date for the Debentures or (iv) reduce
the above-stated percentage of principal amount of Debentures, the Holders of
which are required to modify or amend the Indenture, to consent to any waiver
thereunder or to approve any supplemental indenture. The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount of
the Debentures at the time outstanding affected thereby, on behalf of all of the
Holders of the Debentures, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to the Debentures, and its consequences, except a default
in the payment of the principal of or interest on any of the Debentures (unless
10
<PAGE>
cured as provided in the Indenture) or in respect of a covenant or provision
that cannot be modified or amended without the consent of the Holders of each
Debenture then outstanding. Any such consent or waiver by the registered Holder
of this Debenture (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of this Debenture and of any Debenture issued in exchange herefor or in place
hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this
Debenture.
No reference herein to the Indenture and no provision of this Debenture or of
the Indenture shall alter or impair the obligation of Capital Markets, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Debenture at the time and place and at the rate and in the
money herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, this Debenture is transferable by the registered Holder hereof on the
Security Register of Capital Markets, upon surrender of this Debenture for
registration of transfer at the office or agency of Capital Markets in the City
and State of New York accompanied by a written instrument or instruments of
transfer in form satisfactory to Capital Markets or the Trustee duly executed by
the registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Debentures of authorized denominations and for the
same aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be made for any such transfer, but Capital
Markets may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Debenture, Capital
Markets, the Trustee, any paying agent and any Security Registrar may deem and
treat the registered holder hereof as the absolute owner hereof (whether or not
this Debenture shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Security Registrar) for the purpose
of receiving payment of or on account of the principal hereof and premium, if
any, and interest due hereon and for all other purposes, and neither Capital
Markets nor the Trustee nor any paying agent nor any Security Registrar shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the interest on
this Debenture, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Indenture, against any incorporator,
stockholder, officer or director, past, present or future, as such, of Capital
Markets or of any predecessor or successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issuance hereof, expressly waived and
released.
The Indenture imposes certain limitations on the ability of Capital Markets and
Industries to, among other things, merge, consolidate or sell, assign, transfer
or lease all or substantially all of its properties or assets. Such covenants
and limitations are subject to a number of important qualifications and
exceptions. Capital Markets and Industries must report periodically to the
Trustee on compliance with the covenants in the Indenture.
The Debentures of this series are issuable only in registered form without
coupons in denominations of $50 and any integral multiple thereof. As provided
in the Indenture and subject to certain limitations herein and therein set
forth, Debentures of this series so issued are exchangeable for a like aggregate
principal amount
11
<PAGE>
of Debentures of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
ARTICLE IV
EXPENSES
Section 4.1 Payment of Expenses.
In connection with the offering, sale and issuance of the Debentures
to the Trust in connection with the sale of the Preferred Securities by the
Trust, Capital Markets will:
(a) pay for all costs and expenses relating to the offering, sale and
issuance of the Debentures, including compensation to the underwriters payable
pursuant to the Underwriting Agreement and compensation of the Trustee under the
Indenture in accordance with the provisions of Section 607 of the Indenture; and
(b) pay for all costs and expenses of the Trust, including, but not
limited to, costs and expenses relating to the organization of the Trust, the
offering, sale and issuance of the Trust Securities (including compensation to
the underwriters payable pursuant to the Underwriting Agreement in connection
therewith); the fees and expenses of the Property Trustee (including, without
limitation, those incurred in connection with the enforcement by the Property
Trustee of the rights of the holders of the Preferred Securities), the Delaware
Trustee and the Regular Trustees; the costs and expenses relating to the
operation of the Trust (including, without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses); and costs and expenses incurred in connection with
the acquisition, financing and disposition of Trust assets;
(c) be primarily liable for any indemnification obligations arising
with respect to the Declaration; and
(d) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and expenses
with respect to such taxes of the Trust.
ARTICLE V
COVENANTS
Section 5.1 Covenant to List on Exchange.
If the Debentures are distributed to the holders of the Preferred
Securities upon dissolution of the Trust, Industries and Capital Markets will
use their best efforts to list such Debentures on the New York Stock Exchange or
on such other exchange as the Preferred Securities are then listed.
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<PAGE>
Section 5.2 Covenants in the Event of an Event of Default.
If an Event of Default occurs and written notice of such event has
been given to Capital Markets, then neither Capital Markets nor Industries may:
(a) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of its
capital stock; or
(b) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities that rank on a parity with or
junior in interest to the Debentures or make any guarantee payments with respect
to any guarantee 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 (i) 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, (ii) 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,
(iii) 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, (iv) dividends
or distributions in capital stock of Capital Markets or Industries, (v)
redemptions or repurchases of any rights pursuant to a rights agreement and (vi)
payments under the Guarantee.
Section 5.3 Additional Covenants Relating to the Trust.
For as long as the Preferred Securities remain outstanding, Capital
Markets will:
(a) maintain, directly or indirectly, 100% ownership of the Common
Securities;
(b) cause the Trust to remain a statutory business trust and not to
voluntarily dissolve, wind up, liquidate or be terminated, except as permitted
by the Declaration;
(c) 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 of 1940;
(d) not 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; and
(e) pay all of the debts and obligations of the Trust (other than with
respect to the securities issued by the Trust) and all costs and expenses of the
Trust (including, but not limited to, all costs and expenses relating to the
organization of the Trust, the fees and expenses of the trustees and all costs
and expenses relating to the operation of the Trust) and any and all taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed on the Trust by the United States, or any other
taxing authority, so that the net amounts received and retained by the Trust
after paying such expenses
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<PAGE>
will be equal to the amounts the Trust would have received had no such costs or
expenses been incurred by or imposed on the Trust. The obligations of Capital
Markets in Section 5.35(e) are for the benefit of, and shall be enforceable by,
any Person to whom any such debts, obligations, costs, expenses and taxes are
owed whether or not such Person has received notice thereof. Any such Person may
enforce such obligations of Capital Markets directly against Capital Markets,
and Capital Markets irrevocably waives any right or remedy to require that any
such Person take any action against the Trust or any other Person before
proceeding against Capital Markets.
ARTICLE VI
ORIGINAL ISSUE OF DEBENTURES
Section 6.1 Original Issue of Debentures.
Debentures in an aggregate principal amount of up to $355,700,000 may,
upon execution of this First Supplemental Indenture, be executed by Capital
Markets and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Debentures upon receipt of a Company
Order, without any further action by Industries or Capital Markets.
ARTICLE VII
RIGHTS OF HOLDERS OF PREFERRED SECURITIES
Section 7.1 Preferred Security Holders' Rights.
Notwithstanding Section 507 of the Indenture, 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.
Section 7.2 Direct Action.
Notwithstanding any other provision of the Indenture, for as long as
any Preferred Securities remain outstanding, to the fullest extent permitted by
law, if an 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 Debentures having an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder.
Section 7.3 Payments Pursuant to Direct Actions.
Capital Markets will have the right to set off against its obligations
to the Trust, as Holder of the Debentures, any payment made to a holder of
Preferred Securities in connection with a Direct Action.
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ARTICLE VIII
REMARKETING
Section 8.1 Effectiveness of this Article.
This Article VIII will become effective only upon a distribution of
the Debentures upon dissolution of the Trust which occurs prior to the
Remarketing of the Preferred Securities pursuant to the Declaration. Until such
a distribution, or if such distribution occurs after the Remarketing of the
Preferred Securities pursuant to the Declaration, this Article VIII will have no
effect.
Section 8.2 Remarketing.
(a) Capital Markets 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 Debentures and the holders of the Corporate PIES and the Treasury
PIES of the Remarketing and of the procedures that must be followed if a Holder
of Debentures 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
Debentures may elect to have the Debentures held by such Holder remarketed in
the Remarketing. Under Section 5.4 of the Purchase Contract Agreement, holders
of Corporate PIES that do not give notice of their intention to make a Cash
Settlement of the Purchase Contract component of their Corporate PIES prior to
such time in the manner specified in such Section, or that give 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 Debenture component of their
Corporate PIES in the Remarketing. Holders of Debentures that are not a
component of Corporate PIES wishing to have their Debentures remarketed shall
give to the Purchase Contract Agent 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 Purchase Contract Agent, 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 Capital Markets and the Remarketing Agent of the
amount of Debentures to be tendered for purchase in the Remarketing.
(c) If any Holder of Debentures 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 the foregoing subsection (b), or gives a notice of election
to have Debentures that are not a component of Corporate PIES remarketed, then
the Debentures 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 Agent for purchase.
(d) The right of each Holder to have Debentures tendered for purchase
will be limited to the extent that (i) the Remarketing Agent conducts a
remarketing pursuant to the terms of the Remarketing Agreement, (ii) the
Debentures tendered have not been called for redemption, (iii) the Remarketing
Agent is able to find a purchaser or purchasers for the tendered Debentures and
(iv) such purchaser or purchasers deliver the purchase price therefor to the
Remarketing Agent.
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(e) On the Remarketing Date, the Remarketing Agent will use
commercially reasonable efforts to remarket, at a price equal to 100% of the
aggregate principal amount thereof, the Debentures tendered or deemed tendered
for purchase.
(f) If, as a result of the efforts described in the foregoing
subsection (e), the Remarketing Agent determines that it will be able to
remarket all of the Debentures tendered or deemed tendered for purchase at a
price of 100% of their aggregate principal amount prior to 4:00 p.m., New York
City time, on the Remarketing Date, the Remarketing Agent 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 Agent
determines, in its sole judgment, to be the lowest rate per annum that will
enable it to remarket all of the Debentures tendered or deemed tendered for
Remarketing.
(g) If none of the Holders of the Debentures or the holders of the
Corporate PIES elects to have Debentures remarketed in the Remarketing, the
Reset Rate shall be the rate determined by the Remarketing Agent, in its 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 Agent is unable to remarket all of the Debentures tendered or deemed
tendered for purchase, a "Failed Remarketing" shall be deemed to have occurred
and the Remarketing Agent shall so advise by telephone the Depositary, the
Property Trustee, the Debenture Trustee and Capital Markets. 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 and Capital Markets of the Reset Rate determined in the
Remarketing and the amount of Debentures sold in the Remarketing, (ii) each
purchaser (or the Depositary participant thereof) of the Reset Rate and the
amount of Debentures 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
Debentures 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 Debenture 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 Debentures delivered by
book-entry as necessary to effect purchases and sales of such Debentures. The
Depositary shall make payment in accordance with its normal procedures.
(k) If any Holder of Debentures selling Debentures in the Remarketing
fails to deliver such Debentures, the Depositary participant of such selling
holder and of any other Person that was to have purchased Debentures in the
Remarketing may deliver to any such other Person an amount of Debentures that is
less than the amount of Debentures that otherwise was to be purchased by such
Person. In such event, the amount of Debentures to be so delivered shall be
determined by such Depositary participant, and delivery of such lesser amount of
Debentures shall constitute good delivery.
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(l) The Remarketing Agent is not obligated to purchase any Debentures
that otherwise would remain unsold in the Remarketing. Neither the Capital
Markets nor the Remarketing Agent shall be obligated in any case to provide
funds to make payment upon tender of the Debentures for Remarketing.
(m) Under the Remarketing Agreement, Capital Markets, in its capacity
as issuer of the Debentures, shall be liable for, and shall pay, any and all
costs and expenses incurred in connection with the Remarketing.
(n) The tender and settlement procedures set in this Section 8.2,
including provisions for payment by purchasers of the Debentures 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 Debentures
at the time of the Remarketing, to facilitate the tendering and remarketing of
the Debentures in certificated form. In addition, the Remarketing Agent may
modify the settlement procedures set forth herein in order to facilitate the
settlement process.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Ratification of Indenture.
The Indenture, as supplemented by this First Supplemental Indenture,
is in all respects ratified and confirmed, and this First Supplemental Indenture
shall be deemed part of the Indenture in the manner and to the extent herein and
therein provided.
SECTION 9.2. Trustee Not Responsible for Recitals.
The recitals herein contained are made by Industries and Capital
Markets and not by the Trustee, and the Trustee assumes no responsibility for
the correctness thereof. The Trustee makes no representation as to the validity
or sufficiency of this First Supplemental Indenture.
SECTION 9.3. Governing Law.
This First Supplemental Indenture and each Debenture shall be deemed
to be a contract made under the internal laws of the State of New York and for
all purposes shall be construed in accordance with the laws of said State.
SECTION 9.4. Severability.
In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Debentures shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this First
Supplemental Indenture or of the Debentures, but this First Supplemental
Indenture and the Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
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SECTION 9.5. Counterparts.
This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
NIPSCO INDUSTRIES, INC.
By: _________________________________
Name:
Title:
Attest:
- -------------------------
Name:
Title:
NIPSCO CAPITAL MARKETS, INC.
By: _________________________________
Name:
Title:
Attest:
- -------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Trustee
By: _________________________________
Name:
Title:
Attest:
- -------------------------
Name:
Title:
19
<PAGE>
Exhibit 4.2
STB DRAFT
February 9, 1999
================================================================================
NIPSCO INDUSTRIES, INC.
and
THE FIRST NATIONAL BANK OF CHICAGO, as Collateral Agent
and
THE FIRST NATIONAL BANK OF CHICAGO, as Securities Intermediary
and
THE CHASE MANHATTAN BANK, as Purchase Contract
------------------------------
PLEDGE AGREEMENT
Dated as of February __, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Section 1. Definitions........................................................1
Section 2. Pledge.............................................................5
2.1 Pledge.............................................................5
2.2 Control; Financing Statement.......................................5
Section 3. Distributions on Pledged Collateral ...............................6
3.1 Income Distributions...............................................6
3.2 Principal Payments Following Termination Event.....................6
3.3 Principal Payments Prior To or On Purchase Contract
Settlement Date....................................................6
3.4 Payments to Purchase Contract Agent................................6
3.5 Assets Not Properly Released.......................................7
Section 4. Control............................................................7
4.1 Establishment of Collateral Account................................7
4.2 Treatment as Financial Assets......................................7
4.3 Sole Control by Collateral Agent...................................7
4.4 Securities Intermediary's Location.................................7
4.5 No Other Claims....................................................8
4.6 Investment and Release.............................................8
4.7 Statements and Confirmations.......................................8
4.8 Tax Allocations....................................................8
4.9 No Other Agreements................................................8
4.10 Powers Coupled With An Interest....................................8
Section 5. Initial Deposit; Establishment of Treasury PIES
and Reestablishment of Corporate PIES..............................8
5.1 Initial Deposit of Trust Preferred Securities......................8
5.2 Establishment of Treasury PIES.....................................9
5.3 Reestablishment of Corporate PIES.................................11
5.4 Termination Event.................................................13
5.5 Cash Settlement...................................................14
5.6 Early Settlement..................................................14
5.7 Application of Proceeds Settlement................................15
5.8 Tax Event Redemption..............................................16
5.9 Liquidation of the Trust..........................................16
Section 6. Voting Rights -- Trust Preferred Securities
and Pledged Debentures............................................16
Section 7. Rights and Remedies; Distribution of the Debentures;
Tax Event Redemption..............................................17
7.1 Rights and Remedies of the Collateral Agent.......................17
7.2 Substitution of Debentures........................................18
7.3 Tax Event Redemption..............................................18
-i-
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7.4 Substitutions.....................................................18
Section 8. Representations and Warranties; Covenants.........................18
8.1 Representations and Warranties....................................18
8.2 Covenants.........................................................19
Section 9. The Collateral Agent and the Securities Intermediary..............20
9.1 Appointment, Powers and Immunities................................20
9.2 Instructions of the Company.......................................20
9.3 Reliance by Collateral Agent and Securities Intermediary..........21
9.4 Rights in Other Capacities........................................21
9.5 Non-Reliance on Collateral Agent and Securities Intermediary......21
9.6 Compensation and Indemnity........................................21
9.7 Failure to Act....................................................22
9.8 Resignation of Collateral Agent...................................22
9.9 Right to Appoint Agent or Advisor.................................23
9.10 Survival..........................................................23
9.11 Exculpation.......................................................23
Section 10. Amendment.........................................................23
10.1 Amendment Without Consent of Holders..............................23
10.2 Amendment with Consent of Holders.................................24
10.3 Execution of Amendments...........................................24
10.4 Effect of Amendments..............................................24
10.5 Reference to Amendments...........................................25
Section 11. Miscellaneous.....................................................25
11.1 No Waiver.........................................................25
11.2 Governing Law.....................................................25
11.3 Notices...........................................................25
11.4 Successors and Assigns............................................26
11.5 Counterparts......................................................26
11.6 Severability......................................................26
11.7 Expenses, etc.....................................................26
11.8 Security Interest Absolute........................................26
EXHIBIT A Instruction from Purchase Contract Agent to Collateral Agent
(Establishment of Treasury PIES)
EXHIBIT B Instruction from Collateral Agent to Securities Intermediary
(Establishment of Treasury PIES)
EXHIBIT C Instruction from Purchase Contract Agent to Collateral Agent
(Reestablishment of Corporate PIES)
EXHIBIT D Instruction from Collateral Agent to Securities Intermediary
(Reestablishment of Corporate PIES)
-ii-
<PAGE>
EXHIBIT E Notice of Cash Settlement from the Securities Intermediary to the
Purchase Contract Agent.
-iii-
<PAGE>
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of February __, 1999 (this "Agreement") among
NIPSCO INDUSTRIES, INC., an Indiana corporation (the "Company"), THE FIRST
NATIONAL BANK OF CHICAGO, a national banking association, not individually but
solely as collateral agent (in such capacity, together with its successors in
such capacity, the "Collateral Agent"), THE FIRST NATIONAL BANK OF CHICAGO, a
national banking association, not individually but solely in its capacity as a
securities intermediary with respect to the Collateral Account (in such
capacity, together with its successors in such capacity, the "Securities
Intermediary"), and THE CHASE MANHATTAN BANK, a New York banking corporation,
not individually but solely as purchase contract agent and as attorney-in-fact
of the Holders from time to time of the Securities (in such capacity, together
with its successors in such capacity, the "Purchase Contract Agent") under the
Purchase Contract Agreement.
RECITALS
The Company and the Purchase Contract Agent are parties to the Purchase
Contract Agreement dated as of the date hereof (as modified and supplemented and
in effect from time to time, the "Purchase Contract Agreement"), pursuant to
which there may be issued up to 6,900,000 PIES (the "Securities").
Each Corporate PIES, at issuance, consists of a unit comprised of (a) one
stock purchase contract (the "Purchase Contract") under which (i) the Holder
will purchase from the Company on ___________, 2003, for an amount equal to $50
(the "Stated Amount"), a number of shares of Common Stock equal to the
Settlement Rate, and (ii) the Company will pay the Holder Contract Adjustment
Payments, if any, and (b) beneficial ownership of a Trust Preferred Security (a
"Trust Preferred Security") issued by NIPSCO Capital Trust I (the "Trust"),
having a liquidation amount equal to the Stated Amount and maturing on ________,
2005.
Pursuant to the terms of the Purchase Contract Agreement and the Purchase
Contracts, the Holders of the Securities have irrevocably authorized the
Purchase Contract Agent, as attorney-in-fact of such Holders, among other
things, to execute and deliver this Agreement on behalf of such Holders and to
grant the pledge provided herein of the Collateral Account to secure the
Obligations.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary and the Purchase Contract Agent, on its own behalf and as
attorney-in-fact of the Holders from time to time of the Securities, agree as
follows:
Section 1. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
<PAGE>
2
(b) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, Exhibit or other subdivision;
(c) the following terms which are defined in the Code shall have the
meanings set forth therein: "certificated security," "control," "financial
asset," "entitlement order," "securities account" and "security entitlement";
(d) the following terms have the meanings assigned to them in the Purchase
Contract Agreement: (1) Act, (2) Agent, (3) Board Resolution, (4) Cash
Settlement, (5) Certificate, (6) Common Stock, (7) Contract Adjustment Payments,
(8) Corporate PIES, (9) Debentures, (10) Early Settlement, (11) Early Settlement
Amount, (12) Early Settlement Date, (13) Finance Subsidiary, (14) Holders, (15)
Opinion of Counsel, (16) Outstanding Securities, (17) PIES, (18) Purchase
Contract, (19) Purchase Contract Settlement Date, (20) Purchase Price, (21)
Remarketing Agent, (22) Remarketing Agreement, (23) Settlement Rate, (24)
Termination Event, (25) Treasury PIES and (26) Underwriting Agreement;
(e) the following terms have the meanings assigned to them in the
Declaration: (1) Applicable Ownership Interest (2) Applicable Principal Amount,
(3) Failed Remarketing, (4) Indenture, (5) Primary Treasury Dealer, (6) Property
Trustee, (7) Quotation Agent, (8) Redemption Amount, (9) Redemption Price, (10)
Tax Event, (11) Tax Event Redemption, (12) Tax Event Redemption Date, (13)
Treasury Portfolio and (14) Treasury Portfolio Purchase Price; and
(f) the following terms have the meanings given to them in this section
1(f):
"Agreement" means this Agreement, as the same may be amended, modified or
supplemented from time to time.
"Bankruptcy Code" means title 11 of the United States Code, or any other
law of the United States that from time to time provides a uniform system of
bankruptcy laws.
"Business Day" means any day other than (i) a Saturday or Sunday or a day
on which banking institutions in The City of New York are authorized or required
by law or executive order to remain closed or (ii) a day on which the principal
office of either the Debenture Trustee or the Property Trustee under the
Declaration is closed for business.
"Capital Markets" means NIPSCO Capital Markets, Inc., an Indiana
corporation, until a successor shall have become such, and thereafter "Capital
Markets" shall mean such successor.
"Cash" means any coin or currency of the United States as at the time
shall be legal tender for payment of public and private debts.
"Code" means the Uniform Commercial Code as in effect in the State of New
York from time to time.
<PAGE>
3
"Collateral Account" means the collective reference to (1) Securities
Account No. _________ entitled "First National Bank of Chicago, as Collateral
Agent, Securities Account (NIPSCO Capital Trust I)" maintained by the Securities
Intermediary for the Purchase Contract Agent on behalf of and as
attorney-in-fact for the Holders, (2) all investment property and other
financial assets from time to time credited to the Collateral Account,
including, without limitation, (A) the Trust Preferred Securities and security
entitlements relating thereto which are a component of the Corporate PIES from
time to time, (B) the Applicable Ownership Interests (as specified in clause (A)
of the definition of such term) of the Holders with respect to the Treasury
Portfolio which are a component of the Corporate PIES from time to time, (C) the
Debentures and security entitlements relating thereto which are a component of
Corporate PIES from time to time, (D) any Treasury Securities and security
entitlements relating thereto delivered from time to time upon establishment of
Treasury PIES in accordance with Section 5.2 hereof and (E) payments made by
Holders pursuant to Section 5.5 hereof (collectively, the "Collateral"), (3) all
Proceeds of any of the foregoing (whether such Proceeds arise before or after
the commencement of any proceeding under any applicable bankruptcy, insolvency
or other similar law, by or against the pledgor or with respect to the pledgor)
and (4) all powers and rights now owned or hereafter acquired under or with
respect to the Collateral Account.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor shall have become such, and thereafter
"Company" shall mean such successor.
"Debenture Trustee" means The Chase Manhattan Bank, as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Declaration" means the Amended and Restated Declaration of Trust of the
Trust, dated as of February __, 1999, among the Capital Markets as sponsor, the
trustees named therein and the holders from time to time of undivided beneficial
interests in the assets of the Trust.
"Obligations" means, with respect to each Holder, the collective reference
to all obligations and liabilities of such Holder under such Holder's Purchase
Contract and this Agreement or any other document made, delivered or given in
connection herewith or therewith, in each case whether on account of principal,
interest (including, without limitation, interest accruing before and after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to such Holder, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
fees, indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Company or the Collateral Agent or
the Securities Intermediary that are required to be paid by the Holder pursuant
to the terms of any of the foregoing agreements).
"Permitted Investments" means any one of the following which shall mature
not later than the next succeeding Business Day: (i) any evidence of
indebtedness with an original maturity of 365 days or less issued, or directly
and fully guaranteed or insured, by the United States of America or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States of
<PAGE>
4
America is pledged in support of the timely payment thereof or such indebtedness
constitutes a general obligation of it); (ii) deposits, certificates of deposit
or acceptances with an original maturity of 365 days or less of any institution
which is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $200.0 million at the time of
deposit; (iii) investments with an original maturity of 365 days or less of any
Person that is fully and unconditionally guaranteed by a bank referred to in
clause (ii); (iv) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States Government or issued by any agency thereof and backed as to
timely payment by the full faith and credit of the United States Government; (v)
investments in commercial paper, other than commercial paper issued by the
Company or its affiliates, of any corporation incorporated under the laws of the
United States or any State thereof, which commercial paper has a rating at the
time of purchase at least equal to "A-1" by Standard & Poor's Ratings Services
("S&P") or at least equal to "P-1" by Moody's Investors Service, Inc.
("Moody's"); and (vi) investments in money market funds registered under the
Investment Company Act of 1940, as amended, rated in the highest applicable
rating category by S&P or Moody's.
"Person" means any legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Pledge" means the lien and security interest created by this Agreement.
"Pledged Debentures" means Debentures and security entitlements with
respect thereto from time to time credited to the Collateral Account and not
then released from the Pledge.
"Pledged Preferred Securities" means the Trust Preferred Securities and
security entitlements with respect thereto from time to time credited to the
Collateral Account and not then released from the Pledge.
"Pledged Treasury Securities" means Treasury Securities and security
entitlements with respect thereto from time to time credited to the Collateral
Account and not then released from the Pledge.
"Proceeds" has the meaning ascribed thereto in the Code and includes,
without limitation, all interest, dividends, cash, instruments, securities,
financial assets (as defined in ss. 8-102(a)(9) of the Code) and other property
received, receivable or otherwise distributed upon the sale, exchange,
collection or disposition of any financial assets from time to time held in the
Collateral Account.
"Purchase Contract Agent" has the meaning specified in the paragraph
preceding the recitals of this Agreement.
"TRADES" means the Treasury/Reserve Automated Debt Entry System maintained
by the Federal Reserve Bank of New York pursuant to the TRADES Regulations.
<PAGE>
5
"TRADES Regulations" means the regulations of the United States Department
of the Treasury, published at 31 C.F.R. Part 357, an amended from time to time.
Unless otherwise defined herein, all terms defined in the TRADES Regulations are
used herein as therein defined.
"Transfer" means:
(a) in the case of certificated securities in registered form, delivery as
provided in ss. 8-301(a) of the Code, indorsed to the transferee or in blank by
an effective indorsement;
(b) in the case of Treasury Securities, registration of the transferee as
the owner of such Treasury Securities on TRADES; and
(c) in the case of security entitlements, including, without limitation,
security entitlements with respect to Treasury Securities, a securities
intermediary indicating by book entry that such security entitlement has been
credited to the transferee's securities account.
"Treasury Security" means a zero-coupon U.S. Treasury Security (Cusip
Number ________) which are the principal strips of the __% U.S. Treasury
Securities which mature on ________, 2003.
"Value" with respect to any item of Collateral on any date means, as to
(i) a Trust Preferred Security, the liquidation amount, (ii) Cash, the face
amount thereof and (iii) Treasury Securities, Debentures or the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, in each case the aggregate principal amount thereof
at maturity.
Section 2. Pledge
Section 2.1 Pledge. Each Holder, acting through the Purchase Contract
Agent as such Holder's attorney-in-fact, hereby pledges and grants to the
Collateral Agent, as agent of and for the benefit of the Company, a continuing
first priority security interest in and to, and a lien upon and right of set off
against, all of such Holder's right, title and interest in and to the Collateral
Account to secure the prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of the Obligations.
The Collateral Agent shall have all of the rights, remedies and recourses with
respect to the Collateral afforded a secured party by the Code, in addition to,
and not in limitation of, the other rights, remedies and recourses afforded to
the Collateral Agent by this Agreement.
Section 2.2 Control; Financing Statement.
(a) The Collateral Agent shall have control of the Collateral Account
pursuant to the provisions of Section 4 of this Agreement.
(b) On the date of initial issuance of the Securities, the Purchase
Contract Agent shall deliver to the Collateral Agent a financing statement
prepared by the Company for filing in the Office of the
<PAGE>
6
Secretary of State of the State of New York, signed by the Purchase Contract
Agent, as attorney-in-fact for the Holders, as Debtors, and describing the
Collateral.
Section 3. Distributions on Pledged Collateral
Section 3.1 Income Distributions. All income distributions received by the
Securities Intermediary on account of the Trust Preferred Securities or the
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio or the Debentures or Permitted Investments
from time to time held in the Collateral Account shall be distributed to the
Purchase Contract Agent for the benefit of the applicable Holders as provided in
the Purchase Contracts.
Section 3.2 Principal Payments Following Termination Event. All payments
received by the Securities Intermediary following a Termination Event of (1) the
liquidation amount of Pledged Preferred Securities or securities entitlements
thereto, (2) the Applicable Ownership Interests (as specified in clause (A) of
the definition thereof) of the Treasury Portfolio, (3) the aggregate principal
amount of Pledged Debentures or securities entitlements thereto, or (4) the
principal amount of the Pledged Treasury Securities or securities entitlements
thereto shall be distributed to the Purchase Contract Agent for the benefit of
the Holders for distribution to such Holders in accordance with their respective
interests.
Section 3.3 Principal Payments Prior To or On Purchase Contract Settlement
Date. (a) Subject to the provisions of Section 7.3, and except as provided in
clause 3.3(b) below, if no Termination Event shall have occurred, all payments
received by the Securities Intermediary of (1) the liquidation amount with
respect to Pledged Preferred Securities or security entitlements thereto, (2)
Applicable Ownership Interests (as specified in clause (A) of the definition
thereof) of the Treasury Portfolio, (3) the aggregate principal amount with
respect to the Pledged Debentures or security entitlements thereto or (4) the
principal amount of Pledged Treasury Securities or security entitlements thereto
shall be held and invested in Permitted Investments until the Purchase Contract
Settlement Date and on the Purchase Contract Settlement Date distributed to the
Company as provided in Section 5.7 hereof. Any balance remaining in the
Collateral Account shall be distributed to the Purchase Contract Agent for the
benefit of the applicable Holders for distribution to such Holders in accordance
with their respective interests.
(b) All payments received by the Securities Intermediary of (1) the
liquidation amount with respect to Trust Preferred Securities or security
entitlements thereto, (2) Applicable Ownership Interests (as specified in clause
(A) of the definition thereof) of the Treasury Portfolio, (3) the aggregate
principal amount of Debentures or security entitlements thereto or (4) the
principal amount of Treasury Securities or security entitlements thereto that in
each case have been released from the Pledge shall be distributed to the
Purchase Contract Agent for the benefit of the Holders to be distributed to such
Holders in accordance with their respective interests.
Section 3.4 Payments to Purchase Contract Agent. Payments to the Purchase
Contract Agent hereunder shall be made to the account designated by the Purchase
Contract Agent for such purpose
<PAGE>
7
not later than 12:00 p.m., New York City time, on the Business Day such payment
is received by the Securities Intermediary; provided, however, that if such
payment is received on a day that is not a Business Day or after 12:30 p.m., New
York City time, on a Business Day, then such payment shall be made no later than
10:30 a.m., New York City time, on the next succeeding Business Day.
Section 3.5 Assets Not Properly Released. If the Purchase Contract Agent
or any Holder shall receive any payments of the liquidation amount or principal
payments on account of financial assets credited to the Collateral Account and
not released therefrom in accordance with this Agreement, the Purchase Contract
Agent or such Holder shall hold the same as trustee of an express trust for the
benefit of the Company and upon receipt of an Officers' Certificate (as defined
in the Purchase Contract Agreement) of the Company so directing, promptly
deliver the same to the Securities Intermediary for credit to the Collateral
Account or to the Company for application to the obligations of the Holders
under the related Purchase Contracts, and the Purchase Contract Agent and
Holders shall acquire no right, title or interest in any such payments of
liquidation or principal amounts so received.
Section 4. Control
Section 4.1 Establishment of Collateral Account. The Securities
Intermediary hereby confirms that (a) the Securities Intermediary has
established the Collateral Account, (b) the Collateral Account is a securities
account, (c) subject to the terms of this Agreement, the Securities Intermediary
shall treat the Purchase Contract Agent as entitled to exercise the rights that
comprise any financial asset credited to the Collateral Account, (d) all
property delivered to the Securities Intermediary pursuant to this Pledge or the
Purchase Contract Agreement or the Indenture will be credited promptly to the
Collateral Account and (e) all securities or other property underlying any
financial assets credited to the Collateral Account shall be registered in the
name of the Securities Intermediary, indorsed to the Securities Intermediary or
in blank or credited to another securities account maintained in the name of the
Securities Intermediary and in no case will any financial asset credited to the
Collateral Account be registered in the name of the Purchase Contract Agent or
any Holder, payable to the order of the Purchase Contract Agent or any Holder or
specially indorsed to the Purchase Contract Agent or any Holder.
Section 4.2 Treatment as Financial Assets. Each item of property (whether
investment property, financial asset, security, instrument or cash) credited to
the Collateral Account shall be treated as a financial asset.
Section 4.3 Sole Control by Collateral Agent. Except as provided in
Section 6, at all times prior to the termination of the Pledge, the Collateral
Agent shall have sole control of the Collateral Account, and the Securities
Intermediary shall take instructions and directions with respect to the
Collateral Account solely from the Collateral Agent. If at any time the
Securities Intermediary shall receive an entitlement order issued by the
Collateral Agent and relating to the Collateral Account, the Securities
Intermediary shall comply with such entitlement order without further consent by
the Purchase Contract Agent or any Holder or any other Person. Until termination
of the Pledge, the
<PAGE>
8
Securities Intermediary will not comply with any entitlement orders issued by
the Purchase Contract Agent or any Holder.
Section 4.4 Securities Intermediary's Location. The Collateral Account and
the rights and obligations of the Securities Intermediary, the Collateral Agent,
the Purchase Contract Agent and the Holders with respect thereto shall be
governed by the laws of the State of New York. Regardless of any provision in
any other agreement, for purposes of the Code, New York shall be deemed to be
the Securities Intermediary's location and the Collateral Account (as well as
the securities entitlements related thereto) shall be governed by the laws of
the State of New York.
Section 4.5 No Other Claims. Except for the claims and interest of the
Collateral Agent and of the Purchase Contract Agent and the Holders in the
Collateral Account, the Securities Intermediary does not know of any claim to,
or interest in, the Collateral Account or in any financial asset credited
thereto. If any person asserts any lien, encumbrance or adverse claim (including
any writ, garnishment, judgment, warrant of attachment, execution or similar
process) against the Collateral Account or in any financial asset carried
therein, the Securities Intermediary will promptly notify the Collateral Agent
and the Purchase Contract Agent.
Section 4.6 Investment and Release. All proceeds of financial assets from
time to time deposited in the Collateral Account shall be invested and
reinvested as provided in this Agreement. At all times prior to termination of
the Pledge, no property shall be released from the Collateral Account except in
accordance with this Agreement or upon written instructions of the Collateral
Agent.
Section 4.7 Statements and Confirmations. The Securities Intermediary will
promptly send copies of all statements, confirmations and other correspondence
concerning the Collateral Account and any financial assets credited thereto
simultaneously to each of the Purchase Contract Agent and the Collateral Agent
at their addresses for notices under this Agreement.
Section 4.8 Tax Allocations. All items of income, gain, expense and loss
recognized in the Collateral Account shall be reported to the Internal Revenue
Service and all state and local taxing authorities under the names and taxpayer
identification numbers of the holders which are the beneficial owners thereof.
Section 4.9 No Other Agreements. The Securities Intermediary has not
entered into and prior to the termination of the Pledge will not enter into any
agreement with any other Person relating to the Collateral Account or any
financial assets credited thereto, including, without limitation, any agreement
to comply with entitlement orders of any Person other than the Collateral Agent.
Section 4.10 Powers Coupled With An Interest. The rights and powers
granted in this Section 4 to the Collateral Agent have been granted in order to
perfect its security interests in the Collateral Account, are powers coupled
with an interest and will be affected neither by the bankruptcy of the Purchase
Contract Agent or any Holder nor by the lapse of time. The obligations
<PAGE>
9
of the Securities Intermediary under this Section 4 shall continue in effect
until the termination of the Pledge.
Section 5. Initial Deposit; Establishment of Treasury PIES and
Reestablishment of Corporate PIES.
Section 5.1 Initial Deposit of Trust Preferred Securities. Prior to or
concurrently with the execution and delivery of this Agreement, the Purchase
Contract Agent, on behalf of the initial Holders of the Corporate PIES, shall
Transfer to the Securities Intermediary, for credit to the Collateral Account,
the Trust Preferred Securities or security entitlements relating to such Trust
Preferred Securities, and the Securities Intermediary shall indicate by book
entry that a securities entitlement to such Trust Preferred Securities has been
credited to the Collateral Account.
Section 5.2 Establishment of Treasury PIES. (a) So long as no Tax Event
Redemption shall have occurred, and the Trust shall not have been liquidated, at
any time on or prior to the seventh Business Day immediately preceding the
Purchase Contract Settlement Date, a Holder of Corporate PIES shall have the
right to establish or reestablish Treasury PIES by substitution of Treasury
Securities or security entitlements thereto for the Pledged Preferred Securities
comprising a part of such Holder's Corporate PIES in integral multiples of 20
Corporate PIES by:
(1) Transferring to the Securities Intermediary for credit to the
Collateral Account Treasury Securities or security entitlements thereto
having a Value equal to the liquidation amount of the Pledged Preferred
Securities to be released, accompanied by a notice, substantially in the
form of Exhibit C to the Purchase Contract Agreement, whereupon the
Purchase Contract Agent shall deliver to the Collateral Agent a notice,
substantially in the form of Exhibit A hereto, (A) stating that such
Holder has Transferred Treasury Securities or security entitlements
thereto to the Securities Intermediary for credit to the Collateral
Account, (B) stating the Value of the Treasury Securities or security
entitlements thereto Transferred by such Holder and (C) requesting that
the Collateral Agent release from the Pledge the Pledged Preferred
Securities that are a component of such Corporate PIES; and
(2) delivering the related Corporate PIES to the Purchase Contract
Agent.
Upon receipt of such notice and confirmation that Treasury Securities or
security entitlements thereto have been credited to the Collateral Account as
described in such notice, the Collateral Agent shall instruct the Securities
Intermediary by a notice, substantially in the form of Exhibit B hereto, to
release such Pledged Preferred Securities from the Pledge by Transfer to the
Purchase Contract Agent for distribution to such Holder.
(b) If a Tax Event Redemption has occurred and the Treasury Portfolio has
become a component of the Corporate PIES, at any time on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement Date, a
Holder of Corporate PIES shall have the right to establish or reestablish
Treasury PIES by substitution of Treasury Securities or security entitlements
thereto for the Applicable Ownership Interest (as specified in clause (A) of the
<PAGE>
10
definition of such term) of the Treasury Portfolio that are a component of such
Holder's Corporate PIES in integral multiples of 160,000 Corporate PIES by:
(1) Transferring to the Securities Intermediary for credit to the
Collateral Account Treasury Securities or security entitlements thereto
having a Value equal to such Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) of the Treasury Portfolio to
be released, accompanied by a notice, substantially in the form of Exhibit
C to the Purchase Contract Agreement, whereupon the Purchase Contract
Agent shall deliver to the Collateral Agent a notice, substantially in the
form of Exhibit A hereto, (A) stating that such Holder has Transferred
Treasury Securities or security entitlements thereto to the Securities
Intermediary for credit to the Collateral Account, (B) stating the Value
of the Treasury Securities Transferred by such Holder and (C) requesting
that the Collateral Agent release from the Pledge the Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of
the Treasury Portfolio that is a component of such Corporate PIES; and
(2) delivering the related Corporate PIES to the Purchase Contract
Agent.
Upon receipt of such notice and confirmation that Treasury Securities or
security entitlements thereto have been credited to the Collateral Account as
described in such notice, the Collateral Agent shall instruct the Securities
Intermediary by a notice, substantially in the form of Exhibit B hereto, to
release such Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio from the Pledge by Transfer
to the Purchase Contract Agent for distribution to such Holder.
(c) If no Tax Event Redemption shall have occurred, but the Trust shall
have been liquidated, and the Debentures have become a component of the
Corporate PIES, at any time on or prior to the seventh Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of Corporate PIES
shall have the right to substitute Treasury Securities or security entitlements
thereto for the Pledged Debentures comprising a part of such Holder's Corporate
PIES in integral multiples of 20 Corporate PIES by:
(1) Transferring to the Securities Intermediary for credit to the
Collateral Account Treasury Securities or security entitlements thereto
having a Value at maturity equal to the aggregate principal amount at
maturity of Pledged Debentures to be released, accompanied by a notice,
substantially in the form of Exhibit C to the Purchase Contract Agreement,
whereupon the Purchase Contract Agent shall deliver to the Collateral
Agent a notice, substantially in the form of Exhibit A hereto, (A) stating
that such Holder has Transferred Treasury Securities or security
entitlements thereto to the Securities Intermediary for credit to the
Collateral Account, (B) stating the Value of the Treasury Securities
Transferred by such Holder and (C) requesting that the Collateral Agent
release from the Pledge the Pledged Debentures that are a component of
such Corporate PIES; and
(2) delivering the related Corporate PIES to the Purchase Contract
Agent.
<PAGE>
11
Upon receipt of such notice and confirmation that Treasury Securities or
security entitlements thereto have been credited to the Collateral Account as
described in such notice, the Collateral Agent shall instruct the Securities
Intermediary by a notice, substantially in the form of Exhibit B hereto, to
release such Pledged Debentures from the Pledge by Transfer to the Purchase
Contract Agent for distribution to such Holder.
(d) Upon credit to the Collateral Account of Treasury Securities or
security entitlements thereto delivered by a Holder of Corporate PIES and
receipt of the related instruction from the Collateral Agent, the Securities
Intermediary shall release the Pledged Preferred Securities or the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio or the Pledged Debentures, as the case may be, and
shall promptly transfer the same to the Purchase Contract Agent for distribution
to such Holder, free and clear of any lien, pledge or security interest created
hereby.
Section 5.3 Reestablishment of Corporate PIES. (a) So long as no Tax Event
Redemption shall have occurred, and the Trust shall not have been liquidated, at
any time on or prior to the seventh Business Day immediately preceding the
Purchase Contract Settlement Date, a Holder of Treasury PIES shall have the
right to reestablish Corporate PIES by substitution of Trust Preferred
Securities or security entitlements thereto for Pledged Treasury Securities in
integral multiples of 20 Treasury PIES by:
(1) Transferring to the Securities Intermediary for credit to the
Collateral Account Trust Preferred Securities or security entitlements
thereto having a liquidation amount equal to the Value of the Pledged
Treasury Securities to be released, accompanied by a notice, substantially
in the form of Exhibit C to the Purchase Contract Agreement, whereupon the
Purchase Contract Agent shall deliver to the Collateral Agent a notice,
substantially in the form of Exhibit C hereto, stating that such Holder
has Transferred Trust Preferred Securities or security entitlements
thereto to the Securities Intermediary for credit to the Collateral
Account and requesting that the Collateral Agent release from the Pledge
the Pledged Treasury Securities related to such Treasury PIES; and
(2) delivering the related Treasury PIES to the Purchase Contract
Agent.
Upon receipt of such notice and confirmation that Trust Preferred Securities or
security entitlements thereto have been credited to the Collateral Account as
described in such notice, the Collateral Agent shall instruct the Securities
Intermediary by a notice in the form provided in Exhibit D to release such
Pledged Treasury Securities from the Pledge by Transfer to the Purchase Contract
Agent for distribution to such Holder.
(b) If a Tax Event Redemption has occurred and the Treasury Portfolio has
become a component of the Corporate PIES, at any time on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement Date, a
Holder of Treasury PIES shall have the right to reestablish Corporate PIES by
substitution of an Applicable Ownership Interest (as specified in
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12
clause (A) of the definition of such term) of the Treasury Portfolio for Pledged
Treasury Securities in integral multiples of 160,000 Treasury PIES by:
(1) Transferring to the Securities Intermediary for credit to the
Collateral Account an Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio equal
to the Value of the Pledged Treasury Securities to be released,
accompanied by a notice, substantially in the form provided in Exhibit C
to the Purchase Contract Agreement, whereupon the Purchase Contract Agent
shall deliver to the Collateral Agent a notice, substantially in the form
of Exhibit C hereto, stating that such Holder has Transferred an
Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio to the Securities
Intermediary for credit to the Collateral Account and requesting that the
Collateral Agent release from the Pledge the Pledged Treasury Securities
related to such Treasury PIES; and
(2) delivering the related Treasury PIES to the Purchase Contract
Agent.
Upon receipt of such notice and confirmation that an Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio equal to the Value of the Pledged Treasury Securities to be
released has been credited to the Collateral Account as described in such
notice, the Collateral Agent shall instruct the Securities Intermediary by a
notice in the form provided in Exhibit D to release such Pledged Treasury
Securities from the Pledge by Transfer to the Purchase Contract Agent for
distribution to such Holder.
(c) If no Tax Event Redemption shall have occurred, but the Trust shall
have been liquidated, and the Debentures have become a component of the
Corporate PIES, at any time on or prior to the seventh Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of Treasury PIES shall
have the right to reestablish Corporate PIES by substitution of Debentures or
security entitlements thereto for Pledged Treasury Securities in integral
multiples of 20 Treasury PIES by:
(1) Transferring to the Securities Intermediary for credit to the
Collateral Account Debentures or security entitlements thereto having a
principal amount equal to the Value of the Pledged Treasury Securities to
be released, accompanied by a notice, substantially in the form of Exhibit
C to the Purchase Contract Agreement, whereupon the Purchase Contract
Agent shall deliver to the Collateral Agent a notice, substantially in the
form of Exhibit C hereto, stating that such Holder has Transferred
Debentures or security entitlements thereto to the Securities Intermediary
for credit to the Collateral Account and requesting that the Collateral
Agent release from the Pledge the Pledged Treasury Securities related to
such Treasury PIES; and
(2) delivering the related Treasury PIES to the Purchase Contract
Agent.
Upon receipt of such notice and confirmation that Debentures or security
entitlements thereto have been credited to the Collateral Account as described
in such notice, the Collateral Agent shall
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13
instruct the Security Intermediary by a notice in the form provided in Exhibit D
to release such Pledged Treasury Securities from the Pledge by Transfer to the
Purchase Contract Agent for distribution to such Holder.
(d) Upon credit to the Collateral Account of Trust Preferred Securities or
security entitlements thereto, or an appropriate Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio or the Debentures or security entitlements thereto, as the case may
be, and receipt of the related instruction from the Collateral Agent, the
Securities Intermediary shall release the applicable Pledged Treasury Securities
and shall promptly Transfer the same to the Purchase Contract Agent for
distribution to such Holder, free and clear of any lien, pledge or security
interest created hereby.
Section 5.4 Termination Event. (a) Upon receipt by the Collateral Agent of
written notice from the Company or the Purchase Contract Agent that a
Termination Event has occurred, the Collateral Agent shall release all
Collateral from the Pledge and shall promptly Transfer:
(1) any Pledged Preferred Securities or the Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of
the Treasury Portfolio (if a Tax Event Redemption has occurred and the
Treasury Portfolio has become a component of the Corporate PIES) or the
Pledged Debentures (if the Trust has been liquidated, and the Debentures
or security entitlements thereto have become a component of the Corporate
PIES); or
(2) any Pledged Treasury Securities
to the Purchase Contract Agent for the benefit of the Holders, for distribution
to such Holders in accordance with their respective interests, free and clear of
any lien, pledge or security interest or other interest created hereby.
(b) If such Termination Event shall result from the Company's becoming a
debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail promptly to effectuate the release and Transfer of all Pledged
Preferred Securities, the Applicable Ownership Interest (as specified in clause
(A) of the definition of such term) of the Treasury Portfolio, the Pledged
Debentures or the Pledged Treasury Securities, as the case may be, as provided
by this Section 5.4, the Purchase Contract Agent shall:
(1) use its best efforts to obtain an opinion of a nationally
recognized law firm reasonably acceptable to the Collateral Agent to the
effect that, as a result of the Company's being the debtor in such a
bankruptcy case, the Collateral Agent will not be prohibited from
releasing or Transferring the Collateral as provided in this Section 5.4,
and shall deliver such opinion to the Collateral Agent within ten days
after the occurrence of such Termination Event, and if (A) the Purchase
Contract Agent shall be unable to obtain such opinion within ten days
after the occurrence of such Termination Event or (B) the Collateral Agent
shall continue, after delivery of such opinion, to refuse to effectuate
the release and Transfer of
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14
all Pledged Preferred Securities, Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, all the Pledged Debentures or the Pledged Treasury Securities,
as the case may be, as provided in this Section 5.4, then the Purchase
Contract Agent shall within fifteen days after the occurrence of such
Termination Event commence an action or proceeding in the court having
jurisdiction of the Company's case under the Bankruptcy Code seeking an
order requiring the Collateral Agent to effectuate the release and
transfer of all Pledged Preferred Securities, the Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of
the Treasury Portfolio, all the Pledged Debentures or the Pledged Treasury
Securities, as the case may be, as provided by this Section 5.4; or
(2) commence an action or proceeding like that described in clause
5.4(b)(1)(B) hereof within ten days after the occurrence of such
Termination Event.
Section 5.5 Cash Settlement. (a) Upon receipt by the Collateral Agent of
(1) a notice from the Purchase Contract Agent promptly after the receipt by the
Purchase Contract Agent of a notice that a Holder of a Corporate PIES or
Treasury PIES has elected, in accordance with the procedures specified in
Section 5.4(a)(i) or (d)(i) of the Purchase Contract Agreement, respectively, to
settle its Purchase Contract with cash and (2) payment by such Holder by deposit
in the Collateral Account on or prior to 11:00 a.m., New York City time, on the
fifth Business Day immediately preceding the Purchase Contract Settlement Date
of lawful money of the United States by certified or cashier's check or wire
transfer of immediately available funds payable to or upon the order of the
Securities Intermediary, then the Collateral Agent shall (i) instruct the
Securities Intermediary promptly to invest any such Cash in Permitted
Investments and (ii) release from the Pledge, (1) Pledged Preferred Securities
or the appropriate Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio or Pledged Debentures in
the case of a Holder of Corporate PIES or (2) Pledged Treasury Securities in the
case of a Holder of Treasury PIES, as the case may be, with a liquidation or
principal amount equal to the product of (x) the Stated Amount times (y) the
number of such Purchase Contracts as to which such Holders have elected to
effect a cash settlement pursuant to this Section 5.5(a) and shall instruct the
Securities Intermediary to Transfer all such Pledged Preferred Securities or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio or Pledged Debentures or
Pledged Treasury Securities, as the case may be, to the Purchase Contract Agent
for the benefit of such Holders, in each case free and clear of the Pledge
created hereby, for distribution to such Holders in accordance with their
respective interests. Upon receipt of the proceeds upon the maturity of the
Permitted Investments on the Purchase Contract Settlement Date, the Collateral
Agent shall (A) instruct the Securities Intermediary to pay the portion of such
proceeds and deliver any certified or cashier's checks received, in an aggregate
amount equal to the Purchase Price, to the Company on the Purchase Contract
Settlement Date, and (B) instruct the Securities Intermediary to release any
amounts in respect of the interest earned from such Permitted Investments to the
Purchase Contract Agent for distribution to the relevant Holders in accordance
with their respective interests.
<PAGE>
15
(b) If a Holder of a Corporate PIES notifies the Purchase Contract Agent
as provided in paragraph 5.4(a)(i) of the Purchase Contract Agreement of its
intention to pay the Purchase Price in cash, but fails to make such payment as
required by paragraph 5.4(a)(ii) of the Purchase Contract Agreement, such Holder
shall be deemed to have consented to the disposition of the Pledged Preferred
Securities or Pledged Debentures of such Holder in accordance with paragraph
5.4(a)(iii) of the Purchase Contract Agreement.
(c) If a Holder of a Treasury PIES or Corporate PIES (if a Tax Event
Redemption has occurred) notifies the Purchase Contract Agent as provided in
paragraph 5.4(d)(i) of the Purchase Contract Agreement of its intention to pay
the Purchase Price in cash, but fails to make such payment as required by
paragraph 5.4(d)(ii) of the Purchase Contract Agreement, such Holder shall be
deemed to have elected to pay the Purchase Price in accordance with paragraph
5.4(d)(iii) of the Purchase Contract Agreement..
(d) Prior to 3:00 p.m., New York City time, on the fourth Business Day
immediately preceding the Purchase Contract Settlement Date, the Securities
Intermediary shall deliver to the Purchase Contract Agent a notice,
substantially in the form of Exhibit E hereto, stating (i) the amount of cash
that it has received with respect to the Cash Settlement of Corporate PIES and
(ii) the amount of cash that it has received with respect to the Cash Settlement
of Treasury PIES.
Section 5.6 Early Settlement. Upon written notice to the Collateral Agent
by the Purchase Contract Agent that one or more Holders of Securities have
elected to effect Early Settlement of their respective obligations under the
Purchase Contracts forming a part of such Securities in accordance with the
terms of the Purchase Contracts and the Purchase Contract Agreement (setting
forth the number of such Purchase Contracts as to which such Holders have
elected to effect Early Settlement), and that the Purchase Contract Agent has
received from such Holders, and paid to the Company as confirmed in writing by
the Company, the related Early Settlement Amounts pursuant to the terms of the
Purchase Contracts and the Purchase Contract Agreement and that all conditions
to such Early Settlement have been satisfied, then the Collateral Agent shall
release from the Pledge, (a0 Pledged Preferred Securities or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio or Pledged Debentures in the case of a
Holder of Corporate PIES or (b) Pledged Treasury Securities in the case of a
Holder of Treasury PIES, as the case may be, with a liquidation or principal
amount equal to the product of (i) the Stated Amount times (ii) the number of
such Purchase Contracts as to which such Holders have elected to effect Early
Settlement and shall instruct the Securities Intermediary to Transfer all such
Pledged Preferred Securities or the appropriate Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio or Pledged Debentures or Pledged Treasury Securities, as the case may
be, to the Purchase Contract Agent for the benefit of such Holders, in each case
free and clear of the Pledge created hereby, for distribution to such Holders in
accordance with their respective interests.
Section 5.7 Application of Proceeds Settlement. (a) If a Holder of
Corporate PIES (if a Tax Event Redemption has not occurred and the Trust
Preferred Securities or Debentures or security entitlements to either of them
are a component of the Corporate PIES) has not elected to make an
<PAGE>
16
effective Cash Settlement by notifying the Purchase Contract Agent in the manner
provided for in Section 5.4(a)(i) in the Purchase Contract Agreement, or has
given such notice but failed to deliver the required cash prior to 11:00 A.M.,
New York City time, on the fifth Business Day immediately preceding the Purchase
Contract Settlement Date, such Holder shall be deemed to have elected to pay for
the shares of Common Stock to be issued under such Purchase Contract(s) from the
Proceeds of the related Pledged Preferred Securities or Pledged Debentures. In
such event, the Collateral Agent shall instruct the Securities Intermediary to
Transfer the related Pledged Preferred Securities or Pledged Debentures to the
Remarketing Agent for remarketing. Upon receiving such Pledged Preferred
Securities or Pledged Debentures, the Remarketing Agent, pursuant to the terms
of the Remarketing Agreement, will use its reasonable efforts to remarket such
Pledged Preferred Securities or Pledged Debentures on such date at a price of
100% of the aggregate liquidation amount of such Pledged Preferred Securities or
aggregate principal amount of such Pledged Debentures, as the case may be. The
Remarketing Agent will deposit the entire amount of the Proceeds of such
remarketing in the Collateral Account. On the Purchase Contract Settlement Date,
the Collateral Agent shall instruct the Securities Intermediary to apply the
Proceeds from such remarketing equal to the aggregate liquidation amount of such
Pledged Preferred Securities or aggregate principal amount of such Pledged
Debentures, as the case may be, to satisfy in full the obligations of such
Holders of Corporate PIES to pay the Purchase Price to purchase the Common Stock
under the related Purchase Contracts. If the Remarketing Agent advises the
Collateral Agent in writing that it cannot remarket the related Pledged
Preferred Securities or Pledged Debentures, as the case may be, of such Holders
of Corporate PIES at a price equal to 100% of the aggregate liquidation amount
of such Pledged Preferred Securities or aggregate principal amount of such
Pledged Debentures, thus resulting in a Failed Remarketing and an event of
default under the Purchase Contract Agreement and hereunder, the Collateral
Agent, for the benefit of the Company shall, at the written direction of the
Company, dispose of the Pledged Preferred Securities or Pledged Debentures, as
the case may be, in accordance with applicable law and satisfy in full, from
such disposition, such Holders' obligation to pay the Purchase Price for the
Common Stock.
(b) If a Holder of Treasury PIES or Corporate PIES (if a Tax Event
Redemption has occurred) has not elected to make an effective cash settlement by
notifying the Purchase Contract Agent in the manner provided for in Section
5.4(d)(i) of the Purchase Contract Agreement, or has given such notice but
failed to make such payment in the manner required by Section 5.4(d)(ii) of the
Purchase Contract Agreement, such Holder shall be deemed to have elected to pay
for the shares of Common Stock to be issued under such Purchase Contract(s) from
the Proceeds of the related Pledged Treasury Securities or such Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as the case may be. On the Business Day immediately
prior to the Purchase Contract Settlement Date, the Securities Intermediary, at
the written direction of the Collateral Agent, shall invest the Cash Proceeds of
the maturing Pledged Treasury Securities or such Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, in Permitted Investments. Without receiving any
instruction from any such Holder of Treasury PIES or Corporate PIES, the
Collateral Agent shall apply the Proceeds of the related Pledged Treasury
Securities or such Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio to the settlement of such
Purchase Contracts on the Purchase Contract Settlement
<PAGE>
17
Date. In the event the sum of the Proceeds from the related Pledged Treasury
Securities or such Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio and the investment
earnings from the investment in Permitted Investments is in excess of the
aggregate Purchase Price of the Purchase Contracts being settled thereby, the
Collateral Agent shall instruct the Securities Intermediary to distribute such
excess, when received, to the Purchase Contract Agent for the benefit of such
Holders for distribution to such Holders in accordance with their respective
interests.
Section 5.8 Tax Event Redemption. If the Tax Event Redemption shall occur
prior to the Purchase Contract Settlement Date, the Securities Intermediary
shall apply the Redemption Amount to purchase the Treasury Portfolio and the
Securities Intermediary shall credit the Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio to the Collateral Account and shall transfer the Applicable Ownership
Interest (as specified in clause (B) of the definition of such term) of the
Treasury Portfolio to the Purchase Contract Agent for distribution to the
Holders of the Corporate PIES. Upon credit to the Collateral Account of the
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio having a Value equal to the liquidation
amount of the Pledged Preferred Securities or the aggregate principal amount of
the Pledged Debentures, the Securities Intermediary shall release the Pledged
Preferred Securities or the Pledged Debentures, as applicable, from the
Collateral Account and shall promptly transfer the Pledged Preferred Securities
to the Trust and the Pledged Debentures to the Finance Subsidiary, as
applicable.
Section 6. Voting Rights -- Trust Preferred Securities and Pledged
Debentures. The Purchase Contract Agent may exercise, or refrain from
exercising, any and all voting and other consensual rights pertaining to the
Pledged Preferred Securities or the Pledged Debentures or any part thereof for
any purpose not inconsistent with the terms of this Agreement and in accordance
with the terms of the Purchase Contract Agreement; provided, that the Purchase
Contract Agent shall not exercise or, as the case may be, shall not refrain from
exercising such right if, in the judgment of the Purchase Contract Agent, such
action would impair or otherwise have a material adverse effect on the value of
all or any of the Pledged Preferred Securities or the Pledged Debentures; and
provided, further, that the Purchase Contract Agent shall give the Company and
the Collateral Agent at least five days' prior written notice of the manner in
which it intends to exercise, or its reasons for refraining from exercising, any
such right. Upon receipt of any notices and other communications in respect of
any Pledged Preferred Securities or any Pledged Debentures, including notice of
any meeting at which holders of Trust Preferred Securities or Debentures are
entitled to vote or solicitation of consents, waivers or proxies of holders of
Trust Preferred Securities or Debentures, the Collateral Agent shall use
reasonable efforts to send promptly to the Purchase Contract Agent such notice
or communication, and as soon as reasonably practicable after receipt of a
written request therefor from the Purchase Contract Agent, execute and deliver
to the Purchase Contract Agent such proxies and other instruments in respect of
such Pledged Preferred Securities or Pledged Debentures (in form and substance
satisfactory to the Collateral Agent) as are prepared by the Purchase Contract
Agent with respect to the Pledged Preferred Securities or Pledged Debentures.
Section 7. Rights and Remedies; Distribution of the Debentures; Tax Event
Redemption
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18
Section 7.1 Rights and Remedies of the Collateral Agent. (a) In addition
to the rights and remedies specified in Section 5.5 hereof or otherwise
available at law or in equity, after an event of default (as specified in
Section 7.1(b) below) hereunder the Collateral Agent shall have all of the
rights and remedies with respect to the Collateral of a secured party under the
Code (whether or not the Code is in effect in the jurisdiction where the rights
and remedies are asserted) and the TRADES Regulations and such additional rights
and remedies to which a secured party is entitled under the laws in effect in
any jurisdiction where any rights and remedies hereunder may be asserted.
Without limiting the generality of the foregoing, such remedies may include, to
the extent permitted by applicable law, (i) retention of the Pledged Preferred
Securities or Pledged Debentures in full satisfaction of the Holders'
obligations under the Purchase Contracts or (ii) sale of the Pledged Preferred
Securities or Pledged Debentures in one or more public or private sales.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Company on account of the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio or on account of principal payments of any Pledged
Treasury Securities as provided in Section 3 hereof, in satisfaction of the
Obligations of the Holder of the Securities of which such Pledged Treasury
Securities or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, as
applicable, is a part under the related Purchase Contracts, the inability to
make such payments shall constitute an event of default hereunder and the
Collateral Agent shall have and may exercise, with reference to such Pledged
Treasury Securities or such appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as applicable, and such obligations of such Holder, any and all of
the rights and remedies available to a secured party under the Code and the
TRADES Regulations after default by a debtor, and as otherwise granted herein or
under any other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) the liquidation amount of
or, cash distributions on, the Pledged Preferred Securities, (ii) the principal
amount of the Pledged Treasury Securities, (iii) the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio and (iv) the principal amount of the Pledged
Debentures, subject, in each case, to the provisions of Section 3 hereof, and as
otherwise granted herein.
(d) The Purchase Contract Agent and each Holder of Securities, in the
event such Holder becomes the Holder of a Treasury PIES, agrees that, from time
to time, upon the written request of the Collateral Agent, the Purchase Contract
Agent or such Holder shall execute and deliver such further documents and do
such other acts and things as the Collateral Agent may reasonably request in
order to maintain the Pledge, and the perfection and priority thereof, and to
confirm the rights of the Collateral Agent hereunder. The Purchase Contract
Agent shall have no liability to any Holder for executing any documents or
taking any such acts requested by the Collateral Agent hereunder, except for
liability for its own negligent act, its own negligent failure to act or its own
willful misconduct.
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19
Section 7.2 Substitution of Debentures. If the Trust shall have been
liquidated prior to the Purchase Contract Settlement Date, the Collateral Agent
shall transfer to the Securities Intermediary Debentures having a Value equal to
the liquidation amount of the Pledged Preferred Securities for credit to the
Collateral Account. Upon credit to the Collateral Account of such Debentures,
the Securities Intermediary shall release the Pledged Preferred Securities from
the Collateral Account and shall promptly transfer the same to the Trust.
Section 7.3 Tax Event Redemption. Upon the occurrence of a Tax Event
Redemption prior to the Purchase Contract Settlement Date, the Redemption Price
payable on the Tax Event Redemption Date with respect to the Applicable
Principal Amount shall be credited to the Collateral Account by the Property
Trustee or, upon a dissolution of the Trust and the distribution of the related
Debentures, by the Debenture Trustee on or prior to 12:30 p.m., New York City
time, by federal funds check or wire transfer of immediately available funds.
The Collateral Agent is hereby authorized to present the Pledged Preferred
Securities or the Pledged Debentures for payment as may be required by their
respective terms. Upon receipt of such funds, the Pledged Preferred Securities
or Pledged Debentures, as the case may be, shall be released from the Collateral
Account. In the event such funds are credited to the Collateral Account, the
Collateral Agent, at the written direction of the Company, shall instruct the
Securities Intermediary to (a) apply an amount equal to the Redemption Amount of
such Redemption Price to purchase the Treasury Portfolio from the Quotation
Agent for credit to the Collateral Account and (b) promptly remit the remaining
portion of such Redemption Price to the Purchase Contract Agent for payment to
the Holders of Corporate PIES.
Section 7.4 Substitutions. Whenever a Holder has the right to substitute
Treasury Securities, Trust Preferred Securities, Debentures or security
entitlements to any of them or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, for financial assets held in the
Collateral Account, such substitution shall not constitute a novation of the
security interest created hereby.
Section 8. Representations and Warranties; Covenants.
Section 8.1 Representations and Warranties. The Holders from time to time,
acting through the Purchase Contract Agent as their attorney-in-fact (it being
understood that the Purchase Contract Agent shall not be liable for any
representation or warranty made by or on behalf of a Holder), hereby represent
and warrant to the Collateral Agent, which representations and warranties shall
be deemed repeated on each day a Holder Transfers Collateral that:
(a) such Holder has the power to grant a security interest in and
lien on the Collateral;
(b) such Holder is the sole beneficial owner of the Collateral
and, in the case of Collateral delivered in physical form, is
the sole holder of such Collateral and is the sole beneficial
owner of, or has the right to Transfer, the Collateral it
Transfers to the Securities Intermediary for credit to the
Collateral Account, free and clear of any security interest,
lien, encumbrance, call, liability to pay
<PAGE>
20
money or other restriction other than the security interest
and lien granted under Section 2 hereof;
(c) upon the Transfer of the Collateral to the Securities
Intermediary for credit to the Collateral Account, the
Collateral Agent, for the benefit of the Company, will have a
valid and perfected first priority security interest therein
(assuming that any central clearing operation or any
securities intermediary or other entity not within the control
of the Holder involved in the Transfer of the Collateral,
including the Collateral Agent and the Securities
Intermediary, gives the notices and takes the action required
of it hereunder and under applicable law for perfection of
that interest and assuming the establishment and exercise of
control pursuant to Section 4 hereof); and
(d) the execution and performance by the Holder of its obligations
under this Agreement will not result in the creation of any
security interest, lien or other encumbrance on the Collateral
other than the security interest and lien granted under
Section 2 hereof or violate any provision of any existing law
or regulation applicable to it or of any mortgage, charge,
pledge, indenture, contract or undertaking to which it is a
party or which is binding on it or any of its assets.
Section 8.2 Covenants. The Holders from time to time, acting through the
Purchase Contract Agent as their attorney-in-fact (it being understood that the
Purchase Contract Agent shall not be liable for any covenant made by or on
behalf of a Holder), hereby covenant to the Collateral Agent that for so long as
the Collateral remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders will
create or purport to create or allow to subsist any mortgage,
charge, lien, pledge or any other security interest whatsoever
over the Collateral or any part of it other than pursuant to
this Agreement; and
(b) neither the Purchase Contract Agent nor such Holders will sell
or otherwise dispose (or attempt to dispose) of the Collateral
or any part of it except for the beneficial interest therein,
subject to the Pledge hereunder, transferred in connection
with the Transfer of the Securities.
Section 9. The Collateral Agent and the Securities Intermediary. It is
hereby agreed as follows:
Section 9.1 Appointment, Powers and Immunities. The Collateral Agent shall
act as agent for the Company hereunder with such powers as are specifically
vested in the Collateral Agent by the terms of this Agreement, together with
such other powers as are reasonably incidental thereto. The Collateral Agent:
(a) shall have no duties or responsibilities except those expressly set forth in
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21
this Agreement and no implied covenants or obligations shall be inferred from
this Agreement against the Collateral Agent, nor shall the Collateral Agent be
bound by the provisions of any agreement by any party hereto beyond the specific
terms hereof; (b) shall not be responsible for any recitals contained in this
Agreement, or in any certificate or other document referred to or provided for
in, or received by it under, this Agreement, the Securities or the Purchase
Contract Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement (other than as against the
Collateral Agent), the Securities or the Purchase Contract Agreement or any
other document referred to or provided for herein or therein or for any failure
by the Company or any other Person (except the Collateral Agent) to perform any
of its obligations hereunder or thereunder or for the perfection, priority or,
except as expressly required hereby, maintenance of any security interest
created hereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder (except pursuant to directions
furnished under Section 9.2 hereof, subject to Section 9.6 hereof); (d) shall
not be responsible for any action taken or omitted to be taken by it hereunder
or under any other document or instrument referred to or provided for herein or
in connection herewith or therewith, except for its own negligence or willful
misconduct; and (e) shall not be required to advise any party as to selling or
retaining, or taking or refraining from taking any action with respect to, any
securities or other property deposited hereunder. Subject to the foregoing,
during the term of this Agreement, the Collateral Agent shall take all
reasonable action in connection with the safekeeping and preservation of the
Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. In no event shall the Collateral
Agent be liable for any amount in excess of the Value of the Collateral.
Notwithstanding the foregoing, each of the Collateral Agent and the Securities
Intermediary in its individual capacity hereby waives any right of setoff,
bankers lien, liens or perfection rights as securities intermediary or any
counterclaim with respect to any of the Collateral.
Section 9.2 Instructions of the Company. The Company shall have the right,
by one or more instruments in writing executed and delivered to the Collateral
Agent, to direct the time, method and place of conducting any proceeding for the
realization of any right or remedy available to the Collateral Agent, or of
exercising any power conferred on the Collateral Agent, or to direct the taking
or refraining from taking of any action authorized by this Agreement; provided,
however, that (i) such direction shall not conflict with the provisions of any
law or of this Agreement and (ii) the Collateral Agent shall be adequately
indemnified as provided herein. Nothing in this Section 9.2 shall impair the
right of the Collateral Agent in its discretion to take any action or omit to
take any action which it deems proper and which is not inconsistent with such
direction.
Section 9.3 Reliance by Collateral Agent and Securities Intermediary. Each
of the Securities Intermediary and the Collateral Agent shall be entitled to
rely upon any certification, order, judgment, opinion, notice or other
communication (including, without limitation, any thereof by telephone,
telecopy, telex or facsimile) believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons
(without being required to determine the correctness of any fact stated
therein), and upon advice and statements of legal counsel and other experts
selected by the Collateral Agent and the Securities Intermediary. As to any
matters not ex-
<PAGE>
22
pressly provided for by this Agreement, the Collateral Agent and the Securities
Intermediary shall in all cases be fully protected in acting, or in refraining
from acting, hereunder in accordance with instructions given by the Company in
accordance with this Agreement.
Section 9.4 Rights in Other Capacities. The Collateral Agent and the
Securities Intermediary and their affiliates may (without having to account
therefor to the Company) accept deposits from, lend money to, make their
investments in and generally engage in any kind of banking, trust or other
business with the Purchase Contract Agent, any other Person interested herein
and any Holder of Securities (and any of their respective subsidiaries or
affiliates) as if it were not acting as the Collateral Agent, and the Collateral
Agent, the Securities Intermediary and their affiliates may accept fees and
other consideration from the Purchase Contract Agent and any Holder of
Securities without having to account for the same to the Company; provided that
each of the Securities Intermediary and the Collateral Agent covenants and
agrees with the Company that it shall not accept, receive or permit there to be
created in favor of itself and shall take no affirmative action to permit there
to be created in favor of any other Person, any security interest, lien or other
encumbrance of any kind in or upon the Collateral other than the lien created by
the Pledge.
Section 9.5 Non-Reliance on Collateral Agent and Securities Intermediary.
Neither the Securities Intermediary nor the Collateral Agent shall be required
to keep itself informed as to the performance or observance by the Purchase
Contract Agent or any Holder of Securities of this Agreement, the Purchase
Contract Agreement, the Securities or any other document referred to or provided
for herein or therein or to inspect the properties or books of the Purchase
Contract Agent or any Holder of Securities. Neither the Collateral Agent nor the
Securities Intermediary shall have any duty or responsibility to provide the
Company with any credit or other information concerning the affairs, financial
condition or business of the Purchase Contract Agent or any Holder of Securities
(or any of their respective affiliates) that may come into the possession of the
Collateral Agent or the Securities Intermediary or any of their respective
affiliates.
Section 9.6 Compensation and Indemnity. The Company agrees: (i) to pay the
Collateral Agent and the Securities Intermediary from time to time such
compensation as shall be agreed in writing between the Company and the
Collateral Agent or the Securities Intermediary, as the case may be, for all
services rendered by them hereunder and (ii) to indemnify the Collateral Agent
and the Securities Intermediary for, and to hold each of them harmless from and
against, any loss, liability or reasonable out-of-pocket expense incurred
without negligence, willful misconduct or bad faith on its part, arising out of
or in connection with the acceptance or administration of its powers and duties
under this Agreement, including the reasonable out-of-pocket costs and expenses
(including reasonable fees and expenses of counsel) of defending itself against
any claim or liability in connection with the exercise or performance of such
powers and duties.
Section 9.7 Failure to Act. In the event of any ambiguity in the
provisions of this Agreement or any dispute between or conflicting claims by or
among the parties hereto or any other Person with respect to any funds or
property deposited hereunder, the Collateral Agent and the Securities
Intermediary shall be entitled, after prompt notice to the Company and the
Purchase Contract Agent, at its sole option, to refuse to comply with any and
all claims, demands or instructions with respect
<PAGE>
23
to such property or funds so long as such dispute or conflict shall continue,
and the Collateral Agent and the Securities Intermediary shall not be or become
liable in any way to any of the parties hereto for its failure or refusal to
comply with such conflicting claims, demands or instructions. The Collateral
Agent and the Securities Intermediary shall be entitled to refuse to act until
either (i) such conflicting or adverse claims or demands shall have been finally
determined by a court of competent jurisdiction or settled by agreement between
the conflicting parties as evidenced in a writing satisfactory to the Collateral
Agent or the Securities Intermediary or (ii) the Collateral Agent or the
Securities Intermediary shall have received security or an indemnity
satisfactory to it sufficient to save it harmless from and against any and all
loss, liability or reasonable out-of-pocket expense which it may incur by reason
of its acting. The Collateral Agent and the Securities Intermediary may in
addition elect to commence an interpleader action or seek other judicial relief
or orders as the Collateral Agent or the Securities Intermediary may deem
necessary. Notwithstanding anything contained herein to the contrary, neither
the Collateral Agent nor the Securities Intermediary shall be required to take
any action that is in its opinion contrary to law or to the terms of this
Agreement, or which would in its opinion subject it or any of its officers,
employees or directors to liability.
Section 9.8 Resignation of Collateral Agent and Securities Intermediary.
(a) Subject to the appointment and acceptance of a successor Collateral Agent as
provided below, (i) the Collateral Agent may resign at any time by giving notice
thereof to the Company and the Purchase Contract Agent as attorney-in-fact for
the Holders of Securities, (ii) the Collateral Agent may be removed at any time
by the Company and (iii) if the Collateral Agent fails to perform any of its
material obligations hereunder in any material respect for a period of not less
than 20 days after receiving written notice of such failure by the Purchase
Contract Agent and such failure shall be continuing, the Collateral Agent may be
removed by the Purchase Contract Agent. The Purchase Contract Agent shall
promptly notify the Company of any removal of the Collateral Agent pursuant to
clause (iii) of the immediately preceding sentence. Upon any such resignation or
removal, the Company shall have the right to appoint a successor Collateral
Agent. If no successor Collateral Agent shall have been so appointed and shall
have accepted such appointment within 30 days after the retiring Collateral
Agent's giving of notice of resignation or such removal, then the retiring
Collateral Agent may petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent. The Collateral Agent shall be a
bank which has an office in New York, New York with a combined capital and
surplus of at least $50,000,000 and shall not be the Purchase Contract Agent or
any of its affiliates. Upon the acceptance of any appointment as Collateral
Agent hereunder by a successor Collateral Agent, such successor Collateral Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent, and the retiring
Collateral Agent shall take all appropriate action to transfer any money and
property held by it hereunder (including the Collateral) to such successor
Collateral Agent. The retiring Collateral Agent shall, upon such succession, be
discharged from its duties and obligations as Collateral Agent hereunder. After
any retiring Collateral Agent's resignation hereunder as Collateral Agent, the
provisions of this Section 9 shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as the
Collateral Agent.
(b) Subject to the appointment and acceptance of a successor Securities
Intermediary as provided below, (i) the Securities Intermediary may resign at
any time by giving notice thereof to
<PAGE>
24
the Company and the Purchase Contract Agent as attorney-in-fact for the Holders
of Securities, (ii) the Securities Intermediary may be removed at any time by
the Company and (iii) if the Securities Intermediary fails to perform any of its
material obligations hereunder in any material respect for a period of not less
than 20 days after receiving written notice of such failure by the Purchase
Contract Agent and such failure shall be continuing, the Securities Intermediary
may be removed by the Purchase Contract Agent. The Purchase Contract Agent shall
promptly notify the Company of any removal of the Securities Intermediary
pursuant to clause (iii) of the immediately preceding sentence. Upon any such
resignation or removal, the Company shall have the right to appoint a successor
Securities Intermediary. If no successor Securities Intermediary shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Securities Intermediary's giving of notice of resignation or such
removal, then the retiring Securities Intermediary may petition any court of
competent jurisdiction for the appointment of a successor Securities
Intermediary. The Securities Intermediary shall be a bank which has an office in
New York, New York with a combined capital and surplus of at least $50,000,000
and shall not be the Purchase Contract Agent or any of its affiliates. Upon the
acceptance of any appointment as Securities Intermediary hereunder by a
successor Securities Intermediary, such successor Securities Intermediary shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Securities Intermediary, and the retiring Securities
Intermediary shall take all appropriate action to transfer any money and
property held by it hereunder (including the Collateral) to such successor
Securities Intermediary. The retiring Securities Intermediary shall, upon such
succession, be discharged from its duties and obligations as Securities
Intermediary hereunder. After any retiring Securities Intermediary's resignation
hereunder as Securities Intermediary, the provisions of this Section 9 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Securities Intermediary.
Section 9.9 Right to Appoint Agent or Advisor. The Collateral Agent shall
have the right to appoint agents or advisors in connection with any of its
duties hereunder, and the Collateral Agent shall not be liable for any action
taken or omitted by, or in reliance upon the advice of, such agents or advisors
selected in good faith. The appointment of agents pursuant to this Section 9.9
shall be subject to prior consent of the Company, which consent shall not be
unreasonably withheld.
Section 9.10 Survival. The provisions of this Section 9 shall survive
termination of this Agreement and the resignation or removal of the Collateral
Agent or the Securities Intermediary.
Section 9.11 Exculpation. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Collateral Agent or the Securities
Intermediary or their officers, directors, employees or agents be liable under
this Agreement to any third party for indirect, special, punitive, or
consequential loss or damage of any kind whatsoever, including lost profits,
whether or not the likelihood of such loss or damage was known to the Collateral
Agent or the Securities Intermediary, or any of them, incurred without any act
or deed that is found to be attributable to gross negligence or willful
misconduct on the part of the Collateral Agent or the Securities Intermediary.
Section 10. Amendment
<PAGE>
25
Section 10.1 Amendment Without Consent of Holders. Without the consent of
any Holders, the Company, the Collateral Agent, the Securities Intermediary and
the Purchase Contract Agent, at any time and from time to time, may amend this
Agreement, in form satisfactory to the Company, the Collateral Agent, the
Securities Intermediary and the Purchase Contract Agent, for any of the
following purposes:
(1) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company;
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company so long as such covenants or such surrender do not adversely
affect the validity, perfection or priority of the Pledge created
hereunder;
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent, Securities Intermediary or
Purchase Contract Agent; or
(4) to cure any ambiguity (or formal defect), to correct or
supplement any provisions herein which may be inconsistent with any other
such provisions herein, or to make any other provisions with respect to
such matters or questions arising under this Agreement, provided such
action shall not adversely affect the interests of the Holders.
Section 10.2 Amendment with Consent of Holders. With the consent of the
Holders of not less than a majority of the Purchase Contracts at the time
outstanding, by Act of said Holders delivered to the Company, the Purchase
Contract Agent, the Securities Intermediary or the Collateral Agent, as the case
may be, the Company, when duly authorized, the Purchase Contract Agent, the
Securities Intermediary and the Collateral Agent may amend this Agreement for
the purpose of modifying in any manner the provisions of this Agreement or the
rights of the Holders in respect of the Securities; provided, however, that no
such supplemental agreement shall, without the unanimous consent of the Holders
of each Outstanding Security adversely affected thereby,
(1) change the amount or type of Collateral underlying a Security
(except for the rights of holders of Corporate PIES to substitute the
Treasury Securities for the Pledged Preferred Securities, the Pledged
Debentures or the appropriate Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) of the Treasury Portfolio,
as the case may be, or the rights of Holders of Treasury PIES to
substitute Trust Preferred Securities, Debentures or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as applicable, for the
Pledged Treasury Securities), impair the right of the Holder of any
Security to receive distributions on the underlying Collateral or
otherwise adversely affect the Holder's rights in or to such Collateral;
or
<PAGE>
26
(2) otherwise effect any action that would require the consent of
the Holder of each Outstanding Security affected thereby pursuant to the
Purchase Contract Agreement if such action were effected by an agreement
supplemental thereto; or
(3) reduce the percentage of Purchase Contracts the consent of whose
Holders is required for any such amendment;
provided that if any amendment or proposal referred to above would adversely
affect only the Corporate PIES or the Treasury PIES, then only the affected
class of Holder as of the record date for the Holders entitled to vote thereon
will be entitled to vote on such amendment or proposal, and such amendment or
proposal shall not be effective except with the consent of Holders of not less
than a majority of such class; provided that the unanimous consent of the
Holders of each outstanding Purchase Contract of such class affected thereby
shall be required to approve any amendment or proposal specified in clauses
(1) - (3) above.
It shall not be necessary for any Act of Holders under this Section to approve
the particular form of any proposed amendment, but it shall be sufficient if
such Act shall approve the substance thereof.
Section 10.3 Execution of Amendments. In executing any amendment permitted
by this Section, the Collateral Agent, the Securities Intermediary and the
Purchase Contract Agent shall be entitled to receive and (subject to Section 7.1
of the Purchase Contract Agreement with respect to the Purchase Contract Agent)
shall be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Agreement and
that all conditions precedent, if any, to the execution and delivery of such
amendment have been satisfied.
Section 10.4 Effect of Amendments. Upon the execution of any amendment
under this Section, this Agreement shall be modified in accordance therewith,
and such amendment shall form a part of this Agreement for all purposes; and
every Holder of Certificates theretofore or thereafter authenticated, executed
on behalf of the Holders and delivered under the Purchase Contract Agreement
shall be bound thereby.
Section 10.5 Reference to Amendments. Certificates authenticated, executed
on behalf of the Holders and delivered after the execution of any amendment
pursuant to this Section may, and shall if required by the Collateral Agent or
the Purchase Contract Agent, bear a notation in form approved by the Purchase
Contract Agent and the Collateral Agent as to any matter provided for in such
amendment. If the Company shall so determine, new Security Certificates so
modified as to conform, in the opinion of the Collateral Agent, the Purchase
Contract Agent and the Company, to any such amendment may be prepared and
executed by the Company and authenticated, executed on behalf of the Holders and
delivered by the Purchase Contract Agent in accordance with the Purchase
Contract Agreement in exchange for Outstanding Security Certificates.
<PAGE>
27
Section 11. Miscellaneous
Section 11.1 No Waiver. No failure on the part of the Collateral Agent or
any of its agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Collateral Agent
or any of its agents of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
Section 11.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Without limiting
the foregoing, the above choice of law is expressly agreed to by the Company,
the Securities Intermediary, the Collateral Agent and the Holders from time to
time acting through the Purchase Contract Agent, as their attorney-in-fact, in
connection with the establishment and maintenance of the Collateral Account. The
Company, the Collateral Agent, the Securities Intermediary and the Holders from
time to time of the Securities, acting through the Purchase Contract Agent as
their attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the
United States District Court for the Southern District of New York and of any
New York state court sitting in New York City for the purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. The Company, the Collateral Agent, the Securities
Intermediary and the Holders from time to time of the Securities, acting through
the Purchase Contract Agent as their attorney-in-fact, irrevocably waive, to the
fullest extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
Section 11.3 Notices. All notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made in writing (including, without limitation, by telecopy) delivered to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof or, as to any party, at such other address as shall be
designated by such party in a notice to the other parties. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telecopier or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
Section 11.4 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of the
Company, the Collateral Agent, the Securities Intermediary and the Purchase
Contract Agent, and the Holders from time to time of the Securities, by their
acceptance of the same, shall be deemed to have agreed to be bound by the
provisions hereof and to have ratified the agreements of, and the grant of the
Pledge hereunder by, the Purchase Contract Agent.
<PAGE>
28
Section 11.5 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 11.6 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in order to carry out the
intentions of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of such provision in any other
jurisdiction.
Section 11.7 Expenses, etc. The Company agrees to reimburse the Collateral
Agent and the Securities Intermediary for: (a) all reasonable out-of-pocket
costs and expenses of the Collateral Agent (including, without limitation, the
reasonable fees and expenses of counsel to the Collateral Agent and the
Securities Intermediary), in connection with (i) the negotiation, preparation,
execution and delivery or performance of this Agreement and (ii) any
modification, supplement or waiver of any of the terms of this Agreement; (b)
all reasonable costs and expenses of the Collateral Agent and the Securities
Intermediary (including, without limitation, reasonable fees and expenses of
counsel) in connection with (i) any enforcement or proceedings resulting or
incurred in connection with causing any Holder of Securities to satisfy its
obligations under the Purchase Contracts forming a part of the Securities and
(ii) the enforcement of this Section 11.7; and (c) all transfer, stamp,
documentary or other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Agreement or any other
document referred to herein and all costs, expenses, taxes, assessments and
other charges incurred in connection with any filing, registration, recording or
perfection of any security interest contemplated hereby.
Section 11.8 Security Interest Absolute. All rights of the Collateral
Agent and security interests hereunder, and all obligations of the Holders from
time to time hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of the
Purchase Contracts or the Securities or any other agreement or instrument
relating thereto;
(b) any change in the time, manner or place of payment of, or any
other term of, or any increase in the amount of, all or any of the
obligations of Holders of Securities under the related Purchase Contracts,
or any other amendment or waiver of any term of, or any consent to any
departure from any requirement of, the Purchase Contract Agreement or any
Purchase Contract or any other agreement or instrument relating thereto;
or
(c) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a
pledgor.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
NIPSCO INDUSTRIES, INC. THE CHASE MANHATTAN BANK, as Purchase
Contract Agent and as attorney-in-fact
of the Holders from time to time of the
Securities
By:
---------------------------------- By:
Name: -------------------------------------
Title: Name:
Title:
Address for Notices:
Address for Notices:
801 East 86th Avenue
Merrillville, Indiana 46410-6272 450 West 33rd Street
New York, New York 10001
Attention: Stephen P. Adik
Telecopy: 219-647-6060 Attention: Corporate Trust Group
Telecopy: 212-946-8159
THE FIRST NATIONAL BANK OF THE FIRST NATIONAL BANK OF
CHICAGO, as Collateral Agent CHICAGO, as Securities Intermediary
By: By:
---------------------------------- -------------------------------------
Name: Name:
Title: Title:
Address for Notices: Address for Notices:
One First National Plaza One First National Plaza
Suite 0126 Suite 0126
Chicago, Illinois 60670-0126 Chicago, Illinois 60670-0126
Attention: Global Corporate Services Attention: Global Corporate Services
Telecopy: 312-407-1708 Telecopy: 312-407-1708
<PAGE>
EXHIBIT A
INSTRUCTION
FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
(Establishment of Treasury PIES)
The First National Bank of Chicago
1 North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Corporate Trust Administration Department
Telecopy: 312-407-1708
Re: ________ PIES of NIPSCO Industries, Inc.
(the "Company") and NIPSCO Capital Trust I
Please refer to the Pledge Agreement dated as of February __, 1999 (the
"Pledge Agreement"), among the Company, you, as Collateral Agent, The First
National Bank of Chicago, as Securities Intermediary, and the undersigned, as
Purchase Contract Agent and as attorney-in-fact for the holders of PIES from
time to time. Capitalized terms used herein but not defined shall have the
meaning set forth in the Pledge Agreement.
We hereby notify you in accordance with Section 5.2 of the Pledge
Agreement that the holder of securities named below (the "Holder") has elected
to substitute $__________ Value of Treasury Securities or security entitlements
thereto in exchange for [an equal Value of [Pledged Preferred Securities]
[Pledged Debentures]] [the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio relating to _____ Corporate PIES] and has delivered to the undersigned
a notice stating that the Holder has Transferred such Treasury Securities or
security entitlements thereto to the Securities Intermediary, for credit to the
Collateral Account.
We hereby request that you instruct the Securities Intermediary, upon
confirmation that such Treasury Securities or security entitlements thereto have
been credited to the Collateral Account, to release to the undersigned [an equal
Value of [Pledged Preferred Securities] [Pledged Debentures]] [an appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio relating to __________ Corporate PIES] in
accordance with Section 5.2 of the Pledge Agreement.
THE CHASE MANHATTAN BANK
Date: By:
-------------------- -------------------------------------
Name:
Title:
<PAGE>
2
Please print name and address of Holder electing to substitute Treasury
Securities or security entitlements thereto for the [Pledged Preferred
Securities] [Pledged Debentures] [appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio]:
- ----------------------------------- ----------------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
- -----------------------------------
Address
- -----------------------------------
- -----------------------------------
<PAGE>
EXHIBIT B
INSTRUCTION
FROM COLLATERAL AGENT
TO SECURITIES INTERMEDIARY
(Establishment of Treasury PIES)
The First National Bank of Chicago
1 North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Corporate Trust Administration Department
Telecopy: 312-407-1708
Re: ________ PIES of NIPSCO Industries, Inc.
(the "Company") and NIPSCO Capital Trust I
Securities Account No. _________ entitled "The First National
Bank of Chicago, as Collateral Agent, Securities Account
(NIPSCO Capital Trust I)" (the "Collateral Account")
Please refer to the Pledge Agreement dated as of February __, 1999 (the
"Pledge Agreement"), among the Company, you, as Securities Intermediary, The
Chase Manhattan Bank, as Purchase Contract Agent and as attorney-in-fact for the
holders of PIES from time to time, and the undersigned, as Collateral Agent.
Capitalized terms used herein but not defined shall have the meaning set forth
in the Pledge Agreement.
When you have confirmed that $__________ Value of Treasury Securities or
security entitlements thereto has been credited to the Collateral Account by or
for the benefit of _________, as Holder of PIES (the "Holder"), you are hereby
instructed to release from the Collateral Account [an equal Value of [Trust
Preferred Securities or security entitlements thereto] [Debentures or security
entitlements thereto]] [the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio relating to ______ Corporate PIES of the Holder] by Transfer to the
Purchase Contract Agent.
THE FIRST NATIONAL BANK OF CHICAGO
Dated: By:
-------------------- -------------------------------------
Name:
Title:
<PAGE>
2
Please print name and address of Holder:
- ----------------------------------- ----------------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
- -----------------------------------
Address
- -----------------------------------
- -----------------------------------
<PAGE>
EXHIBIT C
INSTRUCTION
FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
(Reestablishment of Corporate PIES)
The First National Bank of Chicago
1 North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Corporate Trust Administration Department
Telecopy: 312-407-1708
Re: ________ PIES of NIPSCO Industries, Inc.
(the "Company") and NIPSCO Capital Trust I
Please refer to the Pledge Agreement dated as of February __, 1999 (the
"Pledge Agreement"), among the Company, you, as Collateral Agent, The First
National Bank of Chicago, as Securities Intermediary, and the undersigned, as
Purchase Contract Agent and as attorney-in-fact for the holders of PIES from
time to time. Capitalized terms used herein but not defined shall have the
meaning set forth in the Pledge Agreement.
We hereby notify you in accordance with Section 5.3(a) of the Pledge
Agreement that the holder of securities listed below (the "Holder") has elected
to substitute [$__________ Value of Trust Preferred Securities or security
entitlements thereto] [Debentures or security entitlements thereto]] [an
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio relating to _____ Corporate
PIES] in exchange for $__________ Value of Pledged Treasury Securities and has
delivered to the undersigned a notice stating that the Holder has Transferred
such [Trust Preferred Securities or security entitlements thereto] [Debentures
or security entitlements thereto] [Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) of the Treasury Portfolio] to the
Securities Intermediary, for credit to the Collateral Account.
We hereby request that you instruct the Securities Intermediary, upon
confirmation that such [Trust Preferred Securities or security entitlements
thereto] [Debentures or security entitlements thereto] [Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio] have been credited to the Collateral Account, to release to
the undersigned $__________ Value of Treasury Securities or security
entitlements thereto related to _____ Treasury PIES of such Holder in accordance
with Section 5.3(a) of the Pledge Agreement.
THE CHASE MANHATTAN BANK
Date: By:
-------------------- -------------------------------------
Name:
Title:
<PAGE>
2
Please print name and address of Holder electing to substitute [Trust Preferred
Securities or security entitlements thereto] [Pledged Debentures or security
entitlements thereto] [an appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio] for Pledged Treasury Securities:
- ----------------------------------- ----------------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
- -----------------------------------
Address
- -----------------------------------
- -----------------------------------
<PAGE>
EXHIBIT D
INSTRUCTION
FROM COLLATERAL AGENT
TO SECURITIES INTERMEDIARY
(Reestablishment of Corporate PIES)
The First National Bank of Chicago
1 North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Corporate Trust Administration Department
Telecopy: 312-407-1708
Re: ________ PIES of NIPSCO Industries, Inc.
(the "Company") and NIPSCO Capital Trust I
Securities Account No. _________ entitled "The First National
Bank of Chicago, as Collateral Agent, Securities Account
(NIPSCO Capital Trust I)" (the "Collateral Account")
Please refer to the Pledge Agreement dated as of February __, 1999 (the
"Pledge Agreement"), among the Company, you, as Securities Intermediary, THE
CHASE MANHATTAN BANK, as Purchase Contract Agent and as attorney-in-fact for the
holders of PIES from time to time, and the undersigned, as Collateral Agent.
Capitalized terms used herein but not defined shall have the meaning set forth
in the Pledge Agreement.
When you have confirmed that $_________ Value of [Trust Preferred
Securities or security entitlements thereto] [Debentures or security
entitlements thereto] [an appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio relating to _____ Corporate PIES] has been credited to the Collateral
Account by or for the benefit of _________, as Holder of PIES (the "Holder"),
you are hereby instructed to release from the Collateral Account $__________
Value of Treasury Securities or security entitlements thereto by Transfer to the
Purchase Contract Agent.
THE FIRST NATIONAL BANK OF CHICAGO
Dated: By:
-------------------- -------------------------------------
Name:
Title:
<PAGE>
2
Please print name and address of Holder:
- ----------------------------------- ----------------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
- -----------------------------------
Address
- -----------------------------------
- -----------------------------------
<PAGE>
EXHIBIT E
NOTICE OF CASH SETTLEMENT FROM SECURITIES INTERMEDIARY
TO PURCHASE CONTRACT AGENT
(Cash Settlement Amounts)
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Telecopier No.: 212-946-8159
Attention: Corporate Trust Group
Re: _________ PIES of NIPSCO Industries, Inc.
(the "Company") and NIPSCO Capital Trust I
Please refer to the Pledge Agreement, dated as of February __, 1999 (the
"Pledge Agreement"), by and among you, the Company, The First National Bank of
Chicago, as Collateral Agent and the undersigned, as Securities Intermediary.
Unless otherwise defined herein, terms defined in the Pledge Agreement are used
herein as defined therein
In accordance with Section 5.5(d) of the Pledge Agreement, we hereby
notify you that as of 11:00 a.m., [(on the fifth Business Day immediately
preceding the Purchase Contract Settlement Date)], we have received (i) $_____
in immediately available funds paid in an aggregate amount equal to the Purchase
Price to the Company on the Purchase Contract Settlement Date with respect to
__________ Corporate PIES and (ii) $_________ in immediately available funds
paid in an aggregate amount equal to the Purchase Price to the Company on the
Purchase Contract Settlement Date with respect to ______ Treasury PIES.
THE FIRST NATIONAL BANK OF CHICAGO
Date: By:
-------------------- -------------------------------------
Name:
Title:
<PAGE>
Exhibit 4.3
STB DRAFT
February 11, 1999
================================================================================
NIPSCO INDUSTRIES, INC.
AND
THE CHASE MANHATTAN BANK,
As Purchase Contract Agent
PURCHASE CONTRACT AGREEMENT
Dated as of February 16, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
RECITALS .......................................................1
ARTICLE I
Definitions and Other Provisions of General Applications
Section 1.1. Definitions.....................................................1
Section 1.2. Compliance Certificates and Opinions...........................11
Section 1.3. Form of Documents Delivered to Agent...........................12
Section 1.4. Acts of Holders; Record Dates..................................12
Section 1.5. Notices........................................................13
Section 1.6. Notice to Holders; Waiver......................................15
Section 1.7. Effect of Headings and Table of Contents.......................15
Section 1.8. Successors and Assigns.........................................15
Section 1.9. Separability Clause............................................15
Section 1.10. Benefits of Agreement..........................................15
Section 1.11. Governing Law..................................................16
Section 1.12. Legal Holidays.................................................16
Section 1.13. Counterparts...................................................16
Section 1.14. Inspection of Agreement........................................16
ARTICLE II
Certificate Forms
Section 2.1. Forms of Certificates Generally................................16
Section 2.2. Form of Agent's Certificate of Authentication..................18
ARTICLE III
The Securities
Section 3.1. Amount; Form and Denominations.................................18
Section 3.2. Rights and Obligations Evidenced by the Certificates...........18
Section 3.3. Execution, Authentication, Delivery and Dating.................19
Section 3.4. Temporary Certificates.........................................20
Section 3.5. Registration; Registration of Transfer and Exchange............20
Section 3.6. Book-Entry Interests...........................................21
Section 3.7. Notices to Holders.............................................22
Section 3.8. Appointment of Successor Clearing Agency.......................22
Section 3.9. Definitive Certificates........................................22
Section 3.10. Mutilated, Destroyed, Lost and Stolen Certificates.............23
Section 3.11. Persons Deemed Owners..........................................24
Section 3.12. Cancellation...................................................24
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Page
----
Section 3.13. Substitution of Securities.....................................25
Section 3.14. Reestablishment of Corporate PIES..............................26
Section 3.15. Transfer of Collateral upon Occurrence of Termination Event....28
Section 3.16. No Consent to Assumption.......................................28
ARTICLE IV
The Preferred Securities
Section 4.1. Payment of Distribution; Rights to Distributions Preserved;
Distribution Rate Reset; Notice................................29
Section 4.2. Notice and Voting..............................................30
Section 4.3. Distribution of Debentures; Tax Event Redemption...............30
ARTICLE V
The Purchase Contracts
Section 5.1. Purchase of Shares of Common Stock.............................32
Section 5.2. Contract Adjustment Payments...................................33
Section 5.3. ...............................................................34
Section 5.4. Payment of Purchase Price......................................34
Section 5.5. Issuance of Shares of Common Stock.............................37
Section 5.6. Adjustment of Settlement Rate..................................38
Section 5.7. Notice of Adjustments and Certain Other Events.................43
Section 5.8. Termination Event; Notice......................................43
Section 5.9. Early Settlement...............................................44
Section 5.10. No Fractional Shares...........................................45
Section 5.11. Charges and Taxes..............................................46
ARTICLE VI
Remedies
Section 6.1. Unconditional Right of Holders to Receive Contract Adjustment
Payments and to Purchase Common Stock..........................46
Section 6.2. Restoration of Rights and Remedies.............................46
Section 6.3. Rights and Remedies Cumulative.................................47
Section 6.4. Delay or Omission Not Waiver...................................47
Section 6.5. Undertaking for Costs..........................................47
Section 6.6. Waiver of Stay or Extension Laws...............................47
ARTICLE VII
The Agent
Section 7.1. Certain Duties and Responsibilities............................48
Section 7.2. Notice of Default..............................................49
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<PAGE>
Page
----
Section 7.3. Certain Rights of Agent........................................49
Section 7.4. Not Responsible for Recitals or Issuance of Securities.........50
Section 7.5. May Hold Securities............................................50
Section 7.6. Money Held in Custody..........................................50
Section 7.7. Compensation and Reimbursement.................................50
Section 7.8. Corporate Agent Required; Eligibility..........................51
Section 7.9. Resignation and Removal; Appointment of Successor..............51
Section 7.10. Acceptance of Appointment by Successor.........................52
Section 7.11. Merger, Conversion, Consolidation or Succession to Business....52
Section 7.12. Preservation of Information; Communications to Holders.........53
Section 7.13. No Obligations of Agent........................................53
Section 7.14. Tax Compliance.................................................53
ARTICLE VIII
Supplemental Agreements
Section 8.1. Supplemental Agreements Without Consent of Holders.............54
Section 8.2. Supplemental Agreements With Consent of Holders................54
Section 8.3. Execution of Supplemental Agreements...........................56
Section 8.4. Effect of Supplemental Agreements..............................56
Section 8.5. Reference to Supplemental Agreements...........................56
ARTICLE IX
Consolidation, Merger, Sale or Conveyance
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions................................56
Section 9.2. Rights and Duties of Successor Corporation.....................57
Section 9.3. Opinion of Counsel Given to Agent..............................57
ARTICLE X
Covenants
Section 10.1. Performance Under Purchase Contracts...........................57
Section 10.2. Maintenance of Office or Agency................................57
Section 10.3. Company to Reserve Common Stock................................58
Section 10.4. Covenants as to Common Stock...................................58
Section 10.5. Statements of Officers of the Company as to Default............58
Section 10.6. ERISA..........................................................59
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<PAGE>
EXHIBIT A Form of Corporate PIES Certificate
EXHIBIT B Form of Treasury PIES Certificate
EXHIBIT C Instruction to Purchase Contract Agent
EXHIBIT D Notice from Purchase Contract Agent to Holders (Transfer of
Collateral upon Occurrence of a Termination Event)
EXHIBIT E Notice to Settle by Separate Cash
EXHIBIT F Notice from Purchase Contract Agent to Collateral Agent and
Indenture Trustee (Payment of Purchase Contract Settlement
Price)
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<PAGE>
PURCHASE CONTRACT AGREEMENT, dated as of February 16, 1999, between
NIPSCO INDUSTRIES, INC., an Indiana corporation (the "Company"), and THE CHASE
MANHATTAN BANK, a New York banking corporation, acting as purchase contract
agent for the Holders of Securities from time to time (the "Agent").
RECITALS
The Company has duly authorized the execution and delivery of this
Agreement and the Certificates evidencing the Securities.
All things necessary to make the Purchase Contracts, when the Certificates
are executed by the Company and authenticated, executed on behalf of the Holders
and delivered by the Agent, as provided in this Agreement, the valid obligations
of the Company, and to constitute these presents a valid agreement of the
Company, in accordance with its terms, have been done.
W I T N E S S E T H :
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed as follows:
ARTICLE I
Definitions and Other Provisions
of General Applications
Section 1.1. Definitions.
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular, and nouns and
pronouns of the masculine gender include the feminine and neuter genders;
(b) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
the United States;
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, Exhibit or other subdivision;
<PAGE>
(d) the following terms have the meanings given to them in the
Declaration: (i) Applicable Ownership Interest; (ii) Applicable Principal
Amount; (iii) Authorized Newspaper; (iv) Guarantee; (v) Primary Treasury Dealer;
(vi) Quotation Agent; (vii) Redemption Amount; (viii) Redemption Price; (ix)
Remarketing; (x) Reset Rate; (xi) Tax Event; (xii) Tax Event Redemption; (xiii)
Tax Event Redemption Date; (xiv) Two-Year Benchmark Treasury Rate; (xv) Treasury
Portfolio; and (xvi) Treasury Portfolio Purchase Price; and
(e) the following terms have the meanings given to them in this Section
1.1(e):
"Act," when used with respect to any Holder, has the meaning specified in
Section 1.4.
"Adjusted Contract Adjustment Payment Rate," with respect to any Reset
Transaction, means the rate per annum that is the arithmetic average of the
rates quoted by two Reference Dealers selected by the Company or its successor
as the rate at which Contract Adjustment Payments should accrue so that the fair
market value, expressed in dollars, of a Corporate PIES immediately after the
later of (i) public announcement of such Reset Transaction or (ii) public
announcement of a change in dividend policy in connection with such Reset
Transaction will equal the average Trading Price of a Corporate PIES for the 20
Trading Days immediately preceding the date of public announcement of such Reset
Transaction; provided that the Adjusted Contract Adjustment Payment Rate shall
not be less than 1.85% per annum.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means the Person named as the "Agent" in the first paragraph of
this instrument until a successor Agent shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter "Agent" shall mean such
Person.
"Agreement" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Applicable Market Value" has the meaning specified in Section 5.1.
"Bankruptcy Code" means title 11 of the United States Code, or any other
law of the United States that from time to time provides a uniform system of
bankruptcy laws.
"Beneficial Owner" means, with respect to a Global Certificate, a Person
who is the beneficial owner of such Book-Entry Interest as reflected on the
books of the Clearing Agency or on the books of a Person maintaining an account
with such Clearing Agency (directly as a
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<PAGE>
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Board of Directors" means the board of directors of the Company or a duly
authorized committee of that board.
"Board Resolution" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification and delivered
to the Agent.
"Book-Entry Interest" means a beneficial interest in a Global Certificate,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 3.6.
"Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in The City of New York 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 under the Declaration, is closed
for business; provided that for purposes of the second paragraph of Section 1.12
only, the term "Business Day" shall also be deemed to exclude any day on which
trading on the New York Stock Exchange, Inc. is closed or suspended.
"Cash Settlement" has the meaning set forth in Section 5.4(a)(i).
"Certificate" means a Corporate PIES Certificate or a Treasury PIES
Certificate.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as a depositary for
the Securities and in whose name, or in the name of a nominee of that
organization, shall be registered a Global Certificate and which shall undertake
to effect book entry transfers and pledges of the Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Price" has the meaning specified in Section 5.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning specified in the Pledge Agreement.
"Collateral Account" has the meaning specified in the Pledge Agreement.
"Collateral Agent" means The First National Bank of Chicago, as Collateral
Agent under the Pledge Agreement until a successor Collateral Agent shall have
become such pursuant to the
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<PAGE>
applicable provisions of the Pledge Agreement, and thereafter "Collateral Agent"
shall mean the Person who is then the Collateral Agent thereunder.
"Collateral Substitution" has the meaning specified in Section 3.13.
"Common Stock" means the Common Shares, without par value, of the
Company.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor shall have become such pursuant to the
applicable provision of this Agreement, and thereafter "Company" shall mean such
successor.
"Contract Adjustment Payments" means, (a) if a Reset Transaction has not
occurred, the fee payable by the Company in respect of each Purchase Contract,
equal to 5.9% per annum of the Stated Amount, or (b) following the occurrence of
a Reset Transaction, the Adjusted Contract Adjustment Payment Rate related to
such Reset Transaction until any succeeding Reset Transaction shall occur,
computed (i) for any full quarterly period on the basis of a 360-day year of
twelve 30-day months and (ii) for any period shorter than a full quarterly
period for which such payments are calculated, on the basis of a 30-day month
and, for periods of less than a month, the actual number of days elapsed per
30-day month.
"Corporate PIES" means the collective rights and obligations of a Holder
of a Corporate PIES Certificate in respect of a Preferred Security, the
Debentures or an appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, subject in each case to the Pledge thereof, and
the related Purchase Contract; provided that the appropriate Applicable
Ownership Interest (as specified in clause (B) of the definition of such term)
of the Treasury Portfolio shall not be subject to the Pledge.
"Corporate PIES Certificate" means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Corporate PIES specified on
such certificate.
"Corporate PIES Register" and "Corporate PIES Registrar" have the
respective meanings specified in Section 3.5.
"Corporate Trust Office" means the principal corporate trust office of the
Agent 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 St.,
New York, New York, 10001 Attention: Corporate Trust Group.
"Coupon Rate" means the percentage rate per annum at which each Debenture
will bear interest initially.
"Current Market Price" has the meaning specified in Section 5.6(a)(8).
"Debentures" means the series of debentures to be issued by the Finance
Subsidiary under the Indenture and held by the Property Trustee.
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<PAGE>
"Declaration" means the Amended and Restated Declaration of Trust of
NIPSCO Capital Trust I, dated as of February 16, 1999, among the Finance
Subsidiary, as the sponsor, the trustees named therein and the holders from time
to time of undivided beneficial interests in the assets of the Trust.
"Depositary" means DTC until another Clearing Agency becomes its
successor.
"Dividend Yield," on any security for any period, means the dividends paid
or proposed to be paid pursuant to an announced dividend policy on such security
for such period divided by, if with respect to dividends paid on such security,
the average Closing Price of such security during such period and, if with
respect to dividends so proposed to be paid on such security, the Closing Price
of such security on the effective date of the related Reset Transaction.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Early Settlement" has the meaning specified in Section 5.9(a).
"Early Settlement Amount" has the meaning specified in Section 5.9(a).
"Early Settlement Date" has the meaning specified in Section 5.9(a).
"Early Settlement Rate" has the meaning specified in Section 5.9(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means 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.
"Expiration Date" has the meaning specified in Section 1.4.
"Expiration Time" has the meaning specified in Section 5.6(a)(6).
"Finance Subsidiary" means NIPSCO Capital Markets, Inc., an Indiana
corporation, until a successor shall have become such pursuant to the Indenture,
and thereafter "Finance Subsidiary" shall mean such successor.
"Global Certificate" means a Certificate that evidences all or part of the
Securities and is registered in the name of a Clearing Agency or a nominee
thereof.
"Holder," when used with respect to a Security, means the Person in whose
name the Security evidenced by a Corporate PIES Certificate and/or a Treasury
PIES Certificate is registered in the related Corporate PIES Register and/or the
Treasury PIES Register, as the case may be; provided, however, that in
determining whether the Holders of the requisite number of Corporate PIES and/or
Treasury PIES have voted on any matter, then for the purpose of such
-5-
<PAGE>
determination only (and not for any other purpose hereunder), if the Security
remains in the form of one or more Global Certificates and if the Clearing
Agency which is the holder of such Global Certificate has sent an omnibus proxy
assigning voting rights to the Clearing Agency Participants to whose accounts
the Securities are credited on the record date, the term "Holder" shall mean
such Clearing Agency Participant acting at the direction of the Beneficial
Owners.
"Indenture" means the Indenture, dated as of February 14, 1997, between
the Finance Subsidiary, the Company and the Indenture Trustee, as amended and
supplemented (including any provisions of the TIA that are deemed incorporated
therein), pursuant to which the Debentures are to be issued.
"Indenture Trustee" means The Chase Manhattan Bank, a New York banking
corporation, as trustee under the Indenture, or any successor thereto.
"Issuer Order" or "Issuer Request" means a written request or order signed
in the name of the Company by its Chairman of the Board, its President or one of
its Vice Presidents, and by its Treasurer, an Assistant Treasurer, its Secretary
or an Assistant Secretary, and delivered to the Agent.
"NYSE" has the meaning specified in Section 5.1.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, its President or one of its Vice Presidents, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company,
and delivered to the Agent. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Agreement shall
include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) 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
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company (and who may be an employee of the Company), and who
shall be reasonably acceptable to the Agent. An opinion of counsel may rely on
certificates as to matters of fact.
-6-
<PAGE>
"Outstanding Securities," with respect to any Corporate PIES or Treasury
PIES, means, as of the date of determination, all Corporate PIES or Treasury
PIES evidenced by Certificates theretofore authenticated, executed and delivered
under this Agreement, except:
(i) If a Termination Event has occurred, (A) Treasury PIES and (B)
Corporate PIES for which the underlying Preferred Securities or Debentures
or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, has been theretofore deposited with the
Agent in trust for the Holders of such Corporate PIES;
(ii) Corporate PIES and Treasury PIES evidenced by Certificates
theretofore cancelled by the Agent or delivered to the Agent for
cancellation or deemed cancelled pursuant to the provisions of this
Agreement; and
(iii) Corporate PIES and Treasury PIES evidenced by Certificates in
exchange for or in lieu of which other Certificates have been
authenticated, executed on behalf of the Holder and delivered pursuant to
this Agreement, other than any such Certificate in respect of which there
shall have been presented to the Agent proof satisfactory to it that such
Certificate is held by a bona fide purchaser in whose hands the Corporate
PIES or Treasury PIES evidenced by such Certificate are valid obligations
of the Company;
provided, however, that in determining whether the Holders of the requisite
number of the Corporate PIES or Treasury PIES have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Corporate PIES or
Treasury PIES owned by the Company or any Affiliate of the Company shall be
disregarded and deemed not to be Outstanding Securities, except that, in
determining whether the Agent shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Corporate PIES or Treasury PIES which a Responsible Officer of the Agent knows
to be so owned shall be so disregarded. Corporate PIES or Treasury PIES so owned
which have been pledged in good faith may be regarded as Outstanding Securities
if the pledgee establishes to the satisfaction of the Agent the pledgee's right
so to act with respect to such Corporate PIES or Treasury PIES and that the
pledgee is not the Company or any Affiliate of the Company.
"Payment Date" means each February 19, May 19, August 19 and November 19,
commencing May 19, 1999.
"Permitted Investments" has the meaning set forth in Section 1 of the
Pledge Agreement.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated organization or government or any
agency or political subdivision thereof or any other entity of whatever nature.
"PIES" means the collective reference to the Corporate PIES and the
Treasury PIES.
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<PAGE>
"Plan" means employee benefit plans that are subject to ERISA, plans and
individual retirement accounts that are subject to Section 4975 of the Code and
entities whose assets are considered assets of such plans.
"Pledge" means the pledge under the Pledge Agreement of the Preferred
Securities, the Debentures, the Treasury Securities or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio, in each case constituting a part of the
Securities.
"Pledge Agreement" means the Pledge Agreement, dated as of the date
hereof, by and among the Company, the Collateral Agent, the Securities
Intermediary and the Agent, on its own behalf and as attorney-in-fact for the
Holders from time to time of the Securities.
"Pledged Preferred Securities" has the meaning set forth in the Pledge
Agreement.
"Pledged Debentures" has the meaning set forth in the Pledge Agreement.
"Predecessor Certificate" means a Predecessor Corporate PIES Certificate
or a Predecessor Treasury PIES Certificate.
"Predecessor Corporate PIES Certificate" of any particular Corporate PIES
Certificate means every previous Corporate PIES Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Corporate PIES evidenced thereby; and, for the purposes of this definition, any
Corporate PIES Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Corporate PIES
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen Corporate
PIES Certificate.
"Predecessor Treasury PIES Certificate" of any particular Treasury PIES
Certificate means every previous Treasury PIES Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Treasury PIES evidenced thereby; and, for the purposes of this definition, any
Treasury PIES Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Treasury PIES
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen Treasury PIES
Certificate.
"Preferred Securities" means the Preferred Securities of the Trust, each
having a stated liquidation amount of $50, representing preferred undivided
beneficial interests in the assets of the Trust.
"Proceeds" has the meaning set forth in Section 1 of the Pledge Agreement.
"Property Trustee" means The Chase Manhattan Bank, as property trustee
under the Declaration, or any successor thereto that is a financial institution
unaffiliated with the Company.
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"Purchase Contract," when used with respect to any Security, means the
contract forming a part of such Security and obligating the Company to (i) sell
and the Holder of such Security to purchase Common Stock and (ii) pay the Holder
Contract Adjustment Payments, if any, on the terms and subject to the conditions
set forth in Article Five hereof.
"Purchase Contract Settlement Date" means February 19, 2003.
"Purchase Contract Settlement Fund" has the meaning specified in Section
5.5.
"Purchase Price" has the meaning specified in Section 5.1.
"Purchased Shares" has the meaning specified in Section 5.6(a)(6).
"Record Date" for the Contract Adjustment Payments payable on any Payment
Date means, as to any Global Certificate, the Business Day next preceding such
Payment Date, and as to any other Certificate, a day selected by the Company
which shall be more than one Business Day but less than 60 Business Days prior
to such Payment Date.
"Reference Dealer" means a dealer engaged in the trading of convertible
securities.
"Register" means the Corporate PIES Register and the Treasury PIES
Register.
"Registrar" means the Corporate PIES Registrar and the Treasury PIES
Registrar.
"Remarketing Agent" has the meaning specified in Section 5.4(b).
"Remarketing Agreement" means the Remarketing Agreement dated as of
February 16, 1999 by and between the Company, the Finance Subsidiary, the Trust
and the Remarketing Agent.
"Reorganization Event" has the meaning specified in Section 5.6(b).
"Reset Transaction" means a merger, consolidation or statutory share
exchange to which the Person that is the issuer of the common stock for which
the Purchase Contracts are then to be settled is a party, a sale of all or
substantially all assets of such Person, a recapitalization of such common stock
or a distribution described in Section 5.6(a)(4) by such Person, after the
effective date of which the Purchase Contracts are then to be settled for shares
of a Person (i) the common stock of which had a Dividend Yield for the four
fiscal quarters immediately preceding the public announcement thereof which was,
or (ii) that announces a dividend policy prior to the effective date thereof
which policy, if implemented, would result in a Dividend Yield on such common
stock for the next four fiscal quarters which would be, more than 250 basis
points higher than the Dividend Yield on the common stock for which the Purchase
Contracts are to be settled prior to such effective date for the four fiscal
quarters immediately preceding such public announcement.
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"Responsible Officer," when used with respect to the Agent, means any
officer of the Agent assigned by the Agent to administer its corporate trust
matters.
"Security" means a Corporate PIES or a Treasury PIES.
"Security Intermediary" means The First National Bank of Chicago, as
Securities Intermediary under the Pledge Agreement until a successor Securities
Intermediary shall have become such pursuant to the applicable provisions of the
Pledge Agreement, and thereafter "Securities Intermediary" shall mean such
successor.
"Settlement Rate" has the meaning specified in Section 5.1.
"Stated Amount" means $50.
"Termination Date" means the date, if any, on which a Termination Event
occurs.
"Termination Event" means the occurrence of any of the following events:
(i) at any time on or prior to the Purchase Contract Settlement Date, a
judgment, decree or court order shall have been entered granting relief under
the Bankruptcy Code, adjudicating the Company to be insolvent, or approving as
properly filed a petition seeking reorganization or liquidation of the Company
or any other similar applicable Federal or State law, and, unless such judgment,
decree or order shall have been entered within 60 days prior to the Purchase
Contract Settlement Date, such decree or order shall have continued undischarged
and unstayed for a period of 60 days; or (ii) a judgment, decree or court order
for the appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of the Company or of its property, or for the winding
up or liquidation of its affairs, shall have been entered, and, unless such
judgment, decree or order shall have been entered within 60 days prior to the
Purchase Contract Settlement Date, such judgment, decree or order shall have
continued undischarged and unstayed for a period of 60 days; or (iii) at any
time on or prior to the Purchase Contract Settlement Date, the Company shall
file a petition for relief under the Bankruptcy Code, or shall consent to the
filing of a bankruptcy proceeding against it, or shall file a petition or answer
or consent seeking reorganization or liquidation under the Bankruptcy Code or
any other similar applicable Federal or State law, or shall consent to the
filing of any such petition, or shall consent to the appointment of a receiver
or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its
property, or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become due.
"Threshold Appreciation Price" has the meaning specified in Section 5.1.
"TIA" means the Trust Indenture Act of 1939, as amended from time to time,
or any successor legislation.
"Trading Day" has the meaning specified in Section 5.1.
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"Trading Price" of a security on any date of determination means (i) the
closing sale price (or, if no closing price is reported, the last reported sale
price) of a security (regular way) on the NYSE on such date, (ii) if such
security is not listed for trading on the NYSE on any such date, the closing
sale price as reported in the composite transactions for the principal United
States securities exchange on which such security is so listed, (iii) if such
security is not so listed on a United States national or regional securities
exchange, the closing sale price as reported by the NASDAQ Stock Market, Inc.,
(iv) if such security is not so reported, the price quoted by Interactive Data
Corporation for such security or, if Interactive Data Corporation is not quoting
such price, a similar quotation service selected by the Company, (v) if such
security is not so quoted, the average of the mid-point of the last bid and ask
prices for such security from at least two dealers recognized as market-makers
for such security, or (vi) if such security is not so quoted, the average of the
last bid and ask prices for such security from a Reference Dealer.
"Treasury Security" means zero-coupon U.S. Treasury Securities (Cusip
Number ________) which are the principal strip of the __% U. S. Treasury
Securities which mature on February 15, 2003.
"Treasury PIES" means, following the substitution of one or more Treasury
Securities for Preferred Securities, Debentures or for the Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may be, as collateral to secure a holder's
obligations under a Purchase Contract, the collective rights and obligations of
a Holder of a Treasury PIES Certificate in respect of such Treasury Securities,
subject in each case to the Pledge thereof, and the related Purchase Contract.
"Treasury PIES Certificate" means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Treasury PIES specified on
such certificate.
"Treasury PIES Register" and "Treasury PIES Registrar" have the respective
meanings specified in Section 3.5.
"Trust" means NIPSCO Capital Trust I, a statutory business trust formed
under the laws of the State of Delaware, or any successor thereto by merger or
consolidation.
"Underwriting Agreement" means the Underwriting Agreement dated February
9, 1999 among the Company, the Trust, the Finance Subsidiary and Lehman Brothers
Inc., Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated.
"Vice President" means any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president."
Section 1.2. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Agent to take any action in
accordance with any provision of this Agreement, the Company shall furnish to
the Agent an Officers' Certificate stating that all
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conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with and, if requested by the Agent, an
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Agreement shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he or
she has made such examination or investigation as is necessary to enable
such individual to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3. Form of Documents Delivered to Agent.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 1.4. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Agent and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Agreement
and (subject to Section 7.1) conclusive in favor of the Agent and the Company,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Agent deems
sufficient.
(c) The ownership of Securities shall be proved by the Corporate PIES
Register or the Treasury PIES Register, as the case may be.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Certificate shall bind every future Holder of
the same Certificate and the Holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Agent or the
Company in reliance thereon, whether or not notation of such action is made upon
such Certificate.
(e) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Agreement to be given, made or taken by
Holders of Securities. If any record date is set pursuant to this paragraph, the
Holders of the Outstanding Corporate PIES and the Outstanding Treasury PIES, as
the case may be, on such record date, and no other Holders, shall be entitled to
take the relevant action with respect to the Corporate PIES or the Treasury
PIES, as the case may be, whether or not such Holders remain Holders after such
record date; provided that no such action shall be effective hereunder unless
taken on or prior to the applicable Expiration Date by Holders of the requisite
number of Outstanding Securities on such record date. Nothing in this paragraph
shall be construed to prevent the Company from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and be of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken
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by Holders of the requisite number of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Agent in writing and to each Holder of Securities in the manner set
forth in Section 1.6.
With respect to any record date set pursuant to this Section, the Company
may designate any date as the "Expiration Date" and from time to time may change
the Expiration Date to any earlier or later day; provided that no such change
shall be effective unless notice of the proposed new Expiration Date is given to
the Agent in writing, and to each Holder of Securities in the manner set forth
in Section 1.6, on or prior to the existing Expiration Date. If an Expiration
Date is not designated with respect to any record date set pursuant to this
Section, the Company shall be deemed to have initially designated the 180th day
after such record date as the Expiration Date with respect thereto, subject to
its right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.
Section 1.5. Notices.
Any notice or communication is duly given if in writing and delivered in
Person or mailed by first class mail (registered or certified, return receipt
requested), telecopier (with receipt confirmed) or overnight air courier
guaranteeing next day delivery, to the others' address; provided that notice
shall be deemed given to the Agent only upon receipt thereof:
If to the Agent:
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Telecopier No.: 212-946-8159
Attention: Corporate Trust Group
If to the Company:
NIPSCO Industries, Inc.
801 East 86th Avenue
Merrillville, Indiana 46410
Telecopier No.:
Attention:
If to the Collateral Agent:
The First National Bank of Chicago
1 First National Plaza, Suite 0126
Chicago, Illinois 60670
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Telecopier No.: 312-407-1708
Attention: Corporate Trust Administration Department
If to the Property Trustee:
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Telecopier No.: 212-946-8159
Attention: Corporate Trust Group
If to the Indenture Trustee:
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Telecopier No.: 212-946-8159
Attention: Corporate Trust Group
Section 1.6. Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the applicable Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Agreement provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Agent, but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Agent shall
constitute a sufficient notification for every purpose hereunder.
Section 1.7. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
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Section 1.8. Successors and Assigns.
All covenants and agreements in this Agreement by the Company shall bind
its successors and assigns, whether so expressed or not.
Section 1.9. Separability Clause.
In case any provision in this Agreement or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
Section 1.10. Benefits of Agreement.
Nothing in this Agreement or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and, to the extent provided hereby, the Holders, any benefits or any legal or
equitable right, remedy or claim under this Agreement. The Holders from time to
time shall be beneficiaries of this Agreement and shall be bound by all of the
terms and conditions hereof and of the Securities evidenced by their
Certificates by their acceptance of delivery of such Certificates.
Section 1.11. Governing Law.
This Agreement and the Securities shall be governed by and construed in
accordance with the laws of the State of New York.
Section 1.12. Legal Holidays.
In any case where any Payment Date shall not be a Business Day, then
(notwithstanding any other provision of this Agreement or the Corporate PIES
Certificates or the Treasury PIES Certificates) payment of the Contract
Adjustment Payments, if any, shall not be made on such date, but such payments
shall be made on the next succeeding Business Day with the same force and effect
as if made on such Payment Date, provided that no interest shall accrue or be
payable by the Company or any Holder for the period from and after any such
Payment Date, except that, if such next succeeding Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day with the same force and effect as if made on such Payment
Date.
In any case where any Purchase Contract Settlement Date shall not be a
Business Day, then (notwithstanding any other provision of this Agreement, the
Corporate PIES Certificates or the Treasury PIES Certificates) Purchase
Contracts shall not be performed on such date, but the Purchase Contracts shall
be performed on the immediately following Business Day with the same force and
effect as if performed on the Purchase Contract Settlement Date.
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Section 1.13. Counterparts.
This Agreement may be executed in any number of counterparts by the
parties hereto on separate counterparts, each of which, when so executed and
delivered, shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.
Section 1.14. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times during
normal business hours at the Corporate Trust Office for inspection by any Holder
or Beneficial Owner.
ARTICLE II
Certificate Forms
Section 2.1. Forms of Certificates Generally.
The Corporate PIES Certificates (including the form of Purchase Contract
forming part of the Corporate PIES evidenced thereby) shall be in substantially
the form set forth in Exhibit A hereto, with such letters, numbers or other
marks of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Corporate PIES are listed or any depositary
therefor, or as may, consistently herewith, be determined by the officers of the
Company executing such Corporate PIES Certificates, as evidenced by their
execution of the Corporate PIES Certificates.
The definitive Corporate PIES Certificates shall be printed, lithographed
or engraved on steel engraved borders or may be produced in any other manner,
all as determined by the officers of the Company executing the Corporate PIES
evidenced by such Corporate PIES Certificates, consistent with the provisions of
this Agreement, as evidenced by their execution thereof.
The Treasury PIES Certificates (including the form of Purchase Contracts
forming part of the Treasury PIES evidenced thereby) shall be in substantially
the form set forth in Exhibit B hereto, with such letters, numbers or other
marks of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Treasury PIES may be listed or any depositary
therefor, or as may, consistently herewith, be determined by the officers of the
Company executing such Treasury PIES Certificates, as evidenced by their
execution of the Treasury PIES Certificates.
The definitive Treasury PIES Certificates shall be printed, lithographed
or engraved on steel engraved borders or may be produced in any other manner,
all as determined by the officers of the Company executing the Treasury PIES
evidenced by such Treasury PIES Certificates, consistent with the provisions of
this Agreement, as evidenced by their execution thereof.
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Every Global Certificate authenticated, executed on behalf of the Holders
and delivered hereunder shall bear a legend in substantially the following form:
"THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT 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 CERTIFICATE IS
EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS
CERTIFICATE (OTHER THAN A TRANSFER OF THIS CERTIFICATE 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 FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REQUESTED 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), 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."
Section 2.2. Form of Agent's Certificate of Authentication.
The form of the Agent's certificate of authentication of the Corporate
PIES shall be in substantially the form set forth on the form of the Corporate
PIES Certificates.
The form of the Agent's certificate of authentication of the Treasury PIES
shall be in substantially the form set forth on the form of the Treasury PIES
Certificates.
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ARTICLE III
The Securities
Section 3.1. Amount; Form and Denominations.
The aggregate number of Securities evidenced by Certificates
authenticated, executed on behalf of the Holders and delivered hereunder is
limited to 6,900,000 except for Certificates authenticated, executed and
delivered upon registration of transfer of, in exchange for, or in lieu of,
other Certificates pursuant to Section 3.4, 3.5, 3.10, 3.13, 3.14, 5.9 or 8.5.
The Certificates shall be issuable only in registered form and only in
denominations of a single Corporate PIES or Treasury PIES and any integral
multiple thereof.
Section 3.2. Rights and Obligations Evidenced by the Certificates.
Each Corporate PIES Certificate shall evidence the number of Corporate
PIES specified therein, with each such Corporate PIES representing the ownership
by the Holder thereof of a beneficial interest in a Preferred Security, a
Debenture or the Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, subject to the Pledge of such Preferred Security, such Debenture or
the Applicable Ownership Interest (as specified in clause (A) of the definition
of such term) of the Treasury Portfolio, as the case may be, by such Holder
pursuant to the Pledge Agreement, and the rights and obligations of the Holder
thereof and the Company under one Purchase Contract. The Agent as
attorney-in-fact for, and on behalf of, the Holder of each Corporate PIES shall
pledge, pursuant to the Pledge Agreement, the Preferred Security, the Debenture
or the Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be, forming
a part of such Corporate PIES, to the Collateral Agent and grant to the
Collateral Agent a security interest in the right, title and interest of such
Holder in such Preferred Security, such Debenture or the Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may be, for the benefit of the Company, to
secure the obligation of the Holder under each Purchase Contract to purchase the
Common Stock of the Company. Prior to the purchase of shares of Common Stock
under each Purchase Contract, such Purchase Contracts shall not entitle the
Holder of a Corporate PIES Certificate to any of the rights of a holder of
shares of Common Stock, including, without limitation, the right to vote or
receive any dividends or other payments or to consent or to receive notice as a
stockholder in respect of the meetings of stockholders or for the election of
directors of the Company or for any other matter, or any other rights whatsoever
as a stockholder of the Company.
Each Treasury PIES Certificate shall evidence the number of Treasury PIES
specified therein, with each such Treasury PIES representing the ownership by
the Holder thereof of a 1/20 undivided beneficial interest in a Treasury
Security with a principal amount equal to $1,000, subject to the Pledge of such
Treasury Security by such Holder pursuant to the Pledge Agreement, and the
rights and obligations of the Holder thereof and the Company under one
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Purchase Contract. Prior to the purchase, if any, of shares of Common Stock
under each Purchase Contract, such Purchase Contract shall not entitle the
Holder of a Treasury PIES Certificate to any of the rights of a holder of shares
of Common Stock, including, without limitation, the right to vote or receive any
dividends or other payments or to consent or to receive notice as a stockholder
in respect of the meetings of stockholders or for the election of directors of
the Company or for any other matter, or any other rights whatsoever as a
stockholder of the Company.
Section 3.3. Execution, Authentication, Delivery and Dating.
Subject to the provisions of Sections 3.13 and 3.14 hereof, upon the
execution and delivery of this Agreement, and at any time and from time to time
thereafter, the Company may deliver Certificates executed by the Company to the
Agent for authentication, execution on behalf of the Holders and delivery,
together with its Issuer Order for authentication of such Certificates, and the
Agent in accordance with such Issuer Order shall authenticate, execute on behalf
of the Holders and deliver such Certificates.
The Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its President or one of its Vice Presidents. The
signature of any of these officers on the Certificates may be manual or
facsimile.
Certificates bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates
No Purchase Contract evidenced by a Certificate shall be valid until such
Certificate has been executed on behalf of the Holder by the manual signature of
an authorized signatory of the Agent, as such Holder's attorney-in-fact. Such
signature by an authorized signatory of the Agent shall be conclusive evidence
that the Holder of such Certificate has entered into the Purchase Contracts
evidenced by such Certificate.
Each Certificate shall be dated the date of its authentication.
No Certificate shall be entitled to any benefit under this Agreement or be
valid or obligatory for any purpose unless there appears on such Certificate a
certificate of authentication substantially in the form provided for herein
executed by an authorized signatory of the Agent by manual signature, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder.
Section 3.4. Temporary Certificates.
Pending the preparation of definitive Certificates, the Company shall
execute and deliver to the Agent, and the Agent shall authenticate, execute on
behalf of the Holders, and deliver, in lieu of such definitive Certificates,
temporary Certificates which are in substantially the form set
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forth in Exhibit A or Exhibit B hereto, as the case may be, with such letters,
numbers or other marks of identification or designation and such legends or
endorsements printed, lithographed or engraved thereon as may be required by the
rules of any securities exchange on which the Corporate PIES or Treasury PIES
are listed, or as may, consistently herewith, be determined by the officers of
the Company executing such Certificates, as evidenced by their execution of the
Certificates.
If temporary Certificates are issued, the Company will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office, at the expense of the Company and without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Company shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, one or more definitive Certificates of like tenor and denominations
and evidencing a like number of Corporate PIES or Treasury PIES, as the case may
be, as the temporary Certificate or Certificates so surrendered. Until so
exchanged, the temporary Certificates shall in all respects evidence the same
benefits and the same obligations with respect to the Corporate PIES or Treasury
PIES, as the case may be, evidenced thereby as definitive Certificates.
Section 3.5. Registration; Registration of Transfer and Exchange.
The Agent shall keep at the Corporate Trust Office a register (the
"Corporate PIES Register") in which, subject to such reasonable regulations as
it may prescribe, the Agent shall provide for the registration of Corporate PIES
Certificates and of transfers of Corporate PIES Certificates (the Agent, in such
capacity, the "Corporate PIES Registrar") and a register (the "Treasury PIES
Register") in which, subject to such reasonable regulations as it may prescribe,
the Agent shall provide for the registration of the Treasury PIES Certificates
and transfers of Treasury PIES Certificates (the Agent, in such capacity, the
"Treasury PIES Registrar").
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Company shall execute and deliver to the Agent, and
the Agent shall authenticate, execute on behalf of the designated transferee or
transferees, and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of any authorized denominations, like
tenor, and evidencing a like number of Corporate PIES or Treasury PIES, as the
case may be.
At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
Corporate PIES or Treasury PIES, as the case may be, upon surrender of the
Certificates to be exchanged at the Corporate Trust Office. Whenever any
Certificates are so surrendered for exchange, the Company shall execute and
deliver to the Agent, and the Agent shall authenticate, execute on behalf of the
Holder, and deliver the Certificates which the Holder making the exchange is
entitled to receive.
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All Certificates issued upon any registration of transfer or exchange of a
Certificate shall evidence the ownership of the same number of Corporate PIES or
Treasury PIES, as the case may be, and be entitled to the same benefits and
subject to the same obligations, under this Agreement as the Corporate PIES or
Treasury PIES, as the case may be, evidenced by the Certificate surrendered upon
such registration of transfer or exchange.
Every Certificate presented or surrendered for registration of transfer or
for exchange shall (if so required by the Agent) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Agent duly executed, by the Holder thereof or its attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of a Certificate, but the Company and the Agent may require payment
from the Holder 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 Certificates, other than any exchanges pursuant to Sections 3.6 and
8.5 not involving any transfer.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder and deliver any Certificate in
exchange for any other Certificate presented or surrendered for registration of
transfer or for exchange on or after the Business Day immediately preceding the
earlier of the Purchase Contract Settlement Date or the Termination Date. In
lieu of delivery of a new Certificate, upon satisfaction of the applicable
conditions specified above in this Section and receipt of appropriate
registration or transfer instructions from such Holder, the Agent shall (i) if
the Purchase Contract Settlement Date has occurred, deliver the shares of Common
Stock issuable in respect of the Purchase Contracts forming a part of the
Securities evidenced by such other Certificate or (ii) if a Termination Event
shall have occurred prior to the Purchase Contract Settlement Date, transfer the
Preferred Securities, the Debentures, the Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio or the Treasury Securities, as the case may be, evidenced thereby, in
each case subject to the applicable conditions and in accordance with the
applicable provisions of Article Five hereof.
Section 3.6. Book-Entry Interests.
The Certificates, on original issuance, will be issued in the form of one
or more fully registered Global Certificates, to be delivered to the Depositary
by, or on behalf of, the Company. Such Global Certificate shall initially be
registered on the books and records of the Company in the name of Cede & Co.,
the nominee of the Depositary, and no Beneficial Owner will receive a definitive
Certificate representing such Beneficial Owner's interest in such Global
Certificate, except as provided in Section 3.9. The Agent shall enter into an
agreement with the Depositary if so requested by the Company. Unless and until
definitive, fully registered Certificates have been issued to Beneficial Owners
pursuant to Section 3.9:
(a) the provisions of this Section 3.6 shall be in full force and effect;
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(b) the Company shall be entitled to deal with the Clearing Agency for all
purposes of this Agreement (including the payment of Contract Adjustment
Payments, if any, and receiving approvals, votes or consents hereunder) as the
Holder of the Securities and the sole holder of the Global Certificate(s) and
shall have no obligation to the Beneficial Owners;
(c) to the extent that the provisions of this Section 3.6 conflict with
any other provisions of this Agreement, the provisions of this Section 3.6 shall
control; and
(d) the rights of the Beneficial Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Beneficial Owners and the Clearing Agency and/or the
Clearing Agency Participants.
Section 3.7. Notices to Holders.
Whenever a notice or other communication to the Holders is required to be
given under this Agreement, the Company or the Company's agent shall give such
notices and communications to the Holders and, with respect to any Securities
registered in the name of a Clearing Agency or the nominee of a Clearing Agency,
the Company or the Company's agent shall, except as set forth herein, have no
obligations to the Beneficial Owners.
Section 3.8. Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Securities, the Company may, in its sole
discretion, appoint a successor Clearing Agency with respect to the Securities.
Section 3.9. Definitive Certificates.
If (i) a Clearing Agency elects to discontinue its services as securities
depositary with respect to the Securities and a successor Clearing Agency is not
appointed within 90 days after such discontinuance pursuant to Section 3.8 or
(ii) there shall have occurred and be continuing a default by the Company in
respect of its obligations under one or more Purchase Contracts, then upon
surrender of the Global Certificates representing the Securities by the Clearing
Agency, accompanied by registration instructions, the Company shall cause
definitive Certificates to be delivered to Beneficial Owners in accordance with
the instructions of the Clearing Agency. The Company shall not be liable for any
delay in delivery of such instructions and may conclusively rely on and shall be
protected in relying on, such instructions.
Section 3.10. Mutilated, Destroyed, Lost and Stolen Certificates.
If any mutilated Certificate is surrendered to the Agent, the Company
shall execute and deliver to the Agent, and the Agent shall authenticate,
execute on behalf of the Holder, and deliver in exchange therefor, a new
Certificate, evidencing the same number of Corporate PIES or Treasury PIES, as
the case may be, and bearing a Certificate number not contemporaneously
outstanding.
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If there shall be delivered to the Company and the Agent (i) evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) such security or indemnity as may be required by them to hold each of them
and any agent of any of them harmless, then, in the absence of notice to the
Company or the Agent that such Certificate has been acquired by a bona fide
purchaser, the Company shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holder, and deliver to the Holder,
in lieu of any such destroyed, lost or stolen Certificate, a new Certificate,
evidencing the same number of Corporate PIES or Treasury PIES, as the case may
be, and bearing a Certificate number not contemporaneously outstanding.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder, and deliver to the Holder, a
Certificate on or after the Business Day immediately preceding the earlier of
the Purchase Contract Settlement Date or the Termination Date. In lieu of
delivery of a new Certificate, upon satisfaction of the applicable conditions
specified above in this Section and receipt of appropriate registration or
transfer instructions from such Holder, the Agent shall (i) if the Purchase
Contract Settlement Date has occurred, deliver the shares of Common Stock
issuable in respect of the Purchase Contracts forming a part of the Securities
evidenced by such Certificate, or (ii) if a Termination Event shall have
occurred prior to the Purchase Contract Settlement Date, transfer the Preferred
Securities, the Debentures, the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio or the Treasury Securities, as the case may be, evidenced thereby, in
each case subject to the applicable conditions and in accordance with the
applicable provisions of Article Five hereof.
Upon the issuance of any new Certificate under this Section, the Company
and the Agent may require the payment by the Holder of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Agent) connected
therewith.
Every new Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Certificate shall constitute an original additional
contractual obligation of the Company and of the Holder in respect of the
Security evidenced thereby, whether or not the destroyed, lost or stolen
Certificate (and the Securities evidenced thereby) shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be subject
to all the obligations of this Agreement equally and proportionately with any
and all other Certificates delivered hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.11. Persons Deemed Owners.
Prior to due presentment of a Certificate for registration of transfer,
the Company and the Agent, and any agent of the Company or the Agent, may treat
the Person in whose name such
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Certificate is registered as the owner of the Corporate PIES or Treasury PIES
evidenced thereby, for the purpose of receiving distributions on the Preferred
Securities, the Debentures, or on the maturing quarterly interest strips of the
Treasury Portfolio, as applicable, receiving payments of Contract Adjustment
Payments, performance of the Purchase Contracts and for all other purposes
whatsoever, whether or not any distributions on the Preferred Securities, the
Debentures, Treasury Portfolio or the Contract Adjustment Payments payable in
respect of the Purchase Contracts constituting a part of the Corporate PIES or
Treasury PIES evidenced thereby shall be overdue and notwithstanding any notice
to the contrary, and neither the Company nor the Agent, nor any agent of the
Company or the Agent, shall be affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any Global Certificate,
nothing herein shall prevent the Company, the Agent or any agent of the Company
or the Agent, from giving effect to any written certification, proxy or other
authorization furnished by any Clearing Agency (or its nominee), as a Holder,
with respect to such Global Certificate or impair, as between such Clearing
Agency and owners of beneficial interests in such Global Certificate, the
operation of customary practices governing the exercise of rights of such
Clearing Agency (or its nominee) as Holder of such Global Certificate.
Section 3.12. Cancellation.
All Certificates surrendered for delivery of shares of Common Stock on or
after the Purchase Contract Settlement Date, upon the transfer of Preferred
Securities, Debentures, the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio or Treasury Securities, as the case may be, after the occurrence of a
Termination Event or pursuant to an Early Settlement, or upon the registration
of a transfer or exchange of a Security, or a Collateral Substitution or the
re-establishment of a Corporate PIES shall, if surrendered to any Person other
than the Agent, be delivered to the Agent and, if not already cancelled, shall
be promptly cancelled by it. The Company may at any time deliver to the Agent
for cancellation any Certificates previously authenticated, executed and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Certificates so delivered shall, upon Issuer Order, be
promptly cancelled by the Agent. No Certificates shall be authenticated,
executed on behalf of the Holder and delivered in lieu of or in exchange for any
Certificates cancelled as provided in this Section, except as expressly
permitted by this Agreement. All cancelled Certificates held by the Agent shall
be destroyed by the Agent unless otherwise directed by Issuer Order.
If the Company or any Affiliate of the Company shall acquire any
Certificate, such acquisition shall not operate as a cancellation of such
Certificate unless and until such Certificate is delivered to the Agent
cancelled or for cancellation.
Section 3.13. Substitution of Securities.
A Holder may separate the Preferred Securities, the Debentures or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as
applicable, from the related Purchase Contracts in respect of a Corporate PIES
by substituting for such Preferred Securities,
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Debentures or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, Treasury Securities in an aggregate principal
amount equal to the aggregate liquidation amount of such Preferred Securities,
the aggregate principal amount of such Debentures or the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as applicable (a "Collateral Substitution"), at any
time from and after the date of this Agreement and on or prior to the seventh
Business Day immediately preceding the Purchase Contract Settlement Date in the
case of the Preferred Securities and the Debentures and on or prior to the
second Business Day immediately preceding the Purchase Contract Settlement Date
in the case of the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, in each
case by (a) depositing with the Securities Intermediary Treasury Securities
having an aggregate principal amount equal to the aggregate liquidation amount
of the Preferred Securities or the aggregate principal amount of the Debentures
comprising part of such Corporate PIES or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio comprising part of such Corporate PIES, as the case may be,
and (b) transferring the related Corporate PIES to the Agent accompanied by a
notice to the Agent, substantially in the form of Exhibit C hereto, stating that
the Holder has transferred the relevant amount of Treasury Securities to the
Securities Intermediary and requesting that the Agent instruct the Collateral
Agent to release the Preferred Securities, the Debentures or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio, as the case may be, underlying such
Corporate PIES, whereupon the Agent shall promptly give such instruction to the
Collateral Agent, substantially in the form of Exhibit A to the Pledge
Agreement. Upon receipt of the Treasury Securities described in clause (a) above
and the instruction described in clause (b) above, in accordance with the terms
of the Pledge Agreement, the Collateral Agent will cause the Securities
Intermediary to release to the Agent, on behalf of the Holder, Preferred
Securities, Debentures or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, having a corresponding aggregate liquidation
amount of such Preferred Securities, aggregate principal amount of such
Debentures, or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, as the
case may be, from the Pledge, free and clear of the Company's security interest
therein, and upon receipt thereof the Agent shall promptly:
(i) cancel the related Corporate PIES;
(ii) transfer the Preferred Securities, the Debentures or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as
the case may be, to the Holder; and
(iii) authenticate, execute on behalf of such Holder and deliver a
Treasury PIES Certificate executed by the Company in accordance with
Section 3.3 evidencing the same number of Purchase Contracts as were
evidenced by the cancelled Corporate PIES.
Holders who elect to separate the Preferred Securities, the Debentures or
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, from the related
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Purchase Contract and to substitute Treasury Securities for such Preferred
Securities or Debentures or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, shall be responsible for any fees or expenses
payable to the Collateral Agent for its services as Collateral Agent in respect
of the substitution, and the Company shall not be responsible for any such fees
or expenses.
Holders may make Collateral Substitutions (i) only in integral multiples
of 20 Corporate PIES if Treasury Securities are being substituted for Preferred
Securities or Debentures, or (ii) only in integral multiples of 160,000
Corporate PIES if Treasury Securities are being substituted for the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio.
In the event a Holder making a Collateral Substitution pursuant to this
Section 3.13 fails to effect a book-entry transfer of the Corporate PIES or
fails to deliver a Corporate PIES Certificate(s) to the Agent after depositing
Treasury Securities with the Collateral Agent, the Preferred Securities, the
Debentures or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, constituting a part of such Corporate PIES, and
any distributions on such Preferred Securities, Debentures or the Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, shall be held
in the name of the Agent or its nominee in trust for the benefit of such Holder,
until such Corporate PIES is so transferred or the Corporate PIES Certificate is
so delivered, as the case may be, or, with respect to a Corporate PIES
Certificate, such Holder provides evidence satisfactory to the Company and the
Agent that such Corporate PIES Certificate has been destroyed, lost or stolen,
together with any indemnity that may be required by the Agent and the Company.
Except as described in this Section 3.13, for so long as the Purchase
Contract underlying a Corporate PIES remains in effect, such Corporate PIES
shall not be separable into its constituent parts, and the rights and
obligations of the Holder in respect of the Preferred Securities, the Debentures
or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as
the case may be, and the Purchase Contract comprising such Corporate PIES may be
acquired, and may be transferred and exchanged, only as a Corporate PIES.
Section 3.14. Reestablishment of Corporate PIES.
A Holder of a Treasury PIES may recreate Corporate PIES at any time (i) on
or prior to the seventh Business Day immediately preceding the Purchase Contract
Settlement Date, if a Tax Event Redemption has not occurred, and (ii) on or
prior to the second Business Day immediately preceding the Purchase Contract
Settlement Date, if a Tax Event Redemption has occurred, in each case by (a)
depositing with the Securities Intermediary Preferred Securities, Debentures or
the appropriate Applicable Ownership Interest (as defined in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be, having
an aggregate liquidation amount in the case of the Preferred Securities, an
aggregate principal amount in the case of the Debentures or an aggregate
Applicable Ownership Interest (as defined in clause (A) of the definition of
such term) of the Treasury Portfolio, as the case may be, equal to the aggregate
principal amount at
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maturity of the Treasury Securities comprising part of the Treasury PIES and (b)
transferring the related Treasury PIES to the Agent accompanied by a notice to
the Agent, substantially in the form of Exhibit C hereto, stating that the
Holder has transferred the relevant amount of Preferred Securities, Debentures
or the appropriate Applicable Ownership Interest (as defined in clause (A) of
the definition of such term) of the Treasury Portfolio, as the case may be, to
the Securities Intermediary and requesting that the Agent instruct the
Collateral Agent to release the Treasury Securities underlying such Treasury
PIES, whereupon the Agent shall promptly give such instruction to the Collateral
Agent, substantially in the form of Exhibit C to the Pledge Agreement. Upon
receipt of the Preferred Securities, the Debentures or the appropriate
Applicable Ownership Interest (as defined in clause (A) of the definition of
such term) of the Treasury Portfolio, as the case may be, described in clause
(a) above and the instruction described in clause (b) above, in accordance with
the terms of the Pledge Agreement, the Collateral Agent will cause the
Securities Intermediary to effect the release of the Treasury Securities having
a corresponding aggregate principal amount at maturity from the Pledge to the
Agent free and clear of the Company's security interest therein, and upon
receipt thereof the Agent shall promptly:
(i) cancel the related Treasury PIES;
(ii) transfer the Treasury Securities to the Holder; and
(iii) authenticate, execute on behalf of such Holder and deliver a
Corporate PIES Certificate executed by the Company in accordance with
Section 3.3 evidencing the same number of Purchase Contracts as were
evidenced by the cancelled Treasury PIES.
Holders who elect to recreate Corporate PIES shall be responsible for any
fees or expenses payable to the Collateral Agent for its services as Collateral
Agent in respect of the substitution, and the Company shall not be responsible
for any such fees or expenses.
Holders of Treasury PIES may reestablish Corporate PIES in integral
multiples of 20 Treasury PIES for 20 Corporate PIES if a Tax Event Redemption
has not occurred, and in integral multiples of 160,000 Treasury PIES for 160,000
Corporate PIES if a Tax Event Redemption has occurred.
Except as provided in this Section 3.14, for so long as the Purchase
Contract underlying a Treasury PIES remains in effect, such Treasury PIES shall
not be separable into its constituent parts and the rights and obligations of
the Holder of such Treasury PIES in respect of the 1/20 of a Treasury Security
and the Purchase Contract comprising such Treasury PIES may be acquired, and may
be transferred and exchanged, only as a Treasury PIES.
Section 3.15. Transfer of Collateral upon Occurrence of Termination Event.
Upon the occurrence of a Termination Event and the transfer to the Agent
of the Preferred Securities, the Debentures, the appropriate Applicable
Ownership Interest of the Treasury Portfolio or the Treasury Securities, as the
case may be, underlying the Corporate PIES and the
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Treasury PIES pursuant to the terms of the Pledge Agreement, the Agent shall
request transfer instructions with respect to such Preferred Securities or
Debentures or the appropriate Applicable Ownership Interest of the Treasury
Portfolio or Treasury Securities, as the case may be, from each Holder by
written request, substantially in the form of Exhibit D hereto, mailed to such
Holder at its address as it appears in the Corporate PIES Register or the
Treasury PIES Register, as the case may be. Upon book-entry transfer of the
Corporate PIES or Treasury PIES or delivery of a Corporate PIES Certificate or
Treasury PIES Certificate to the Agent with such transfer instructions, the
Agent shall transfer the Preferred Securities, the Debentures, the appropriate
Applicable Ownership Interest of the Treasury Portfolio or Treasury Securities,
as the case may be, underlying such Corporate PIES or Treasury PIES, as the case
may be, to such Holder by book-entry transfer, or other appropriate procedures,
in accordance with such instructions. In the event a Holder of Corporate PIES or
Treasury PIES fails to effect such transfer or delivery, the Preferred
Securities, the Debentures, the appropriate Applicable Ownership Interest of the
Treasury Portfolio or Treasury Securities, as the case may be, underlying such
Corporate PIES or Treasury PIES, as the case may be, and any distributions
thereon, shall be held in the name of the Agent or its nominee in trust for the
benefit of such Holder, until the earlier of (a) such Corporate PIES or Treasury
PIES are transferred or the Corporate PIES Certificate or Treasury PIES
Certificate is surrendered or such Holder provides satisfactory evidence that
such Corporate PIES Certificate or Treasury PIES Certificate has been destroyed,
lost or stolen, together with any indemnity that may be required by the Agent
and the Company and (b) the expiration of the time period specified in the
abandoned property laws of the relevant State.
Section 3.16. No Consent to Assumption.
Each Holder of a Security, by acceptance thereof, shall be deemed
expressly to have withheld any consent to the assumption under Section 365 of
the Bankruptcy Code or otherwise, of the Purchase Contract by the Company or its
trustee, receiver, liquidator or a person or entity performing similar functions
in the event that the Company becomes the debtor under the Bankruptcy Code or
subject to other similar state or federal law providing for reorganization or
liquidation.
ARTICLE IV
The Preferred Securities
Section 4.1. Payment of Distribution; Rights to Distributions Preserved;
Distribution Rate Reset; Notice.
A distribution on any Preferred Security, any Debenture or on the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, which is paid on any Payment Date shall, subject to receipt thereof by
the Agent from the Collateral Agent as provided by the terms of the Pledge
Agreement, be paid to the Person in whose name the Corporate PIES Certificate
(or one or more Predecessor Corporate PIES Certificates) of which such Preferred
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Security, such Debenture or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, is a part is registered at the close of
business on the Record Date for such Payment Date.
Each Corporate PIES Certificate evidencing Preferred Securities or
Debentures delivered under this Agreement upon registration of transfer of or in
exchange for or in lieu of any other Corporate PIES Certificate shall carry the
rights to distributions accrued and unpaid, and to accrue distributions, which
were carried by the Preferred Securities or Debentures or the appropriate
Applicable Ownership Interest of the Treasury Portfolio underlying such other
Corporate PIES Certificate.
In the case of any Corporate PIES with respect to which Cash Settlement of
the underlying Purchase Contract is effected on or prior to the fifth Business
Day immediately preceding the Purchase Contract Settlement Date pursuant to
prior notice, or with respect to which Early Settlement of the underlying
Purchase Contract is effected on an Early Settlement Date, or with respect to
which a Collateral Substitution is effected, in each case on a date that is
after any Record Date and on or prior to the next succeeding Payment Date,
distributions on the Preferred Securities, the Debentures or on the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
underlying such Corporate PIES otherwise payable on such Payment Date shall be
payable on such Payment Date notwithstanding such Cash Settlement or Early
Settlement or Collateral Substitution, and such distributions shall, subject to
receipt thereof by the Agent, be payable to the Person in whose name the
Corporate PIES Certificate (or one or more Predecessor Corporate PIES
Certificates) was registered at the close of business on the Record Date. Except
as otherwise expressly provided in the immediately preceding sentence, in the
case of any Corporate PIES with respect to which Cash Settlement or Early
Settlement of the underlying Purchase Contract is effected on or prior to the
fifth Business Day immediately preceding the Purchase Contract Settlement Date
or an Early Settlement Date, as the case may be, or with respect to which a
Collateral Substitution has been effected, distributions on the related
Preferred Securities or Debentures or on the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, that would otherwise be
payable after the Purchase Contract Settlement Date or Early Settlement Date
shall not be payable hereunder to the Holder of such Corporate PIES; provided,
however, that to the extent that such Holder continues to hold the separated
Preferred Securities or Debentures that formerly comprised a part of such
Holder's Corporate PIES, such Holder shall be entitled to receive the
distributions on such separated Preferred Securities or Debentures.
The applicable Coupon Rate on the Debentures on and after the Purchase
Contract Settlement Date shall be reset on the third Business Day immediately
preceding the Purchase Contract Settlement Date equal to the Reset Rate (such
Reset Rate to be in effect on and after the Purchase Contract Settlement Date).
Not later than 15 calendar days nor more than 30 calendar days prior to
the third Business Day immediately preceding the Purchase Contract Settlement
Date, the Company shall request DTC (or any successor Clearing Agency), to
notify the Beneficial Owners or Clearing Agency Participants holding Corporate
PIES or Treasury PIES of the procedures to be followed by
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Holders of Corporate PIES who intend to effect the settlement of their
obligations under the Purchase Contracts underlying such Corporate PIES with
separate cash on or prior to the fifth Business Day prior to the Purchase
Contract Settlement Date.
Section 4.2. Notice and Voting.
Under the terms of the Pledge Agreement, the Agent will be entitled to
exercise the voting and any other consensual rights pertaining to the Pledged
Preferred Securities or Pledged Debentures, as the case may be, but only to the
extent instructed in writing by the Holders as described below. Upon receipt of
notice of any meeting at which holders of Preferred Securities or Debentures are
entitled to vote or upon any solicitation of consents, waivers or proxies of
holders of Preferred Securities or Debentures, the Agent shall, as soon as
practicable thereafter, mail to the Holders of Corporate PIES a notice (a)
containing such information as is contained in the notice or solicitation, (b)
stating that each Holder on the record date set by the Agent therefor (which, to
the extent possible, shall be the same date as the record date for determining
the holders of Preferred Securities or Debentures, as the case may be, entitled
to vote) shall be entitled to instruct the Agent as to the exercise of the
voting rights pertaining to such Preferred Securities or Debentures underlying
their Corporate PIES and (c) stating the manner in which such instructions may
be given. Upon the written request of the Holders of Corporate PIES on such
record date received by the Agent at least six days prior to such meeting, the
Agent shall endeavor insofar as practicable to vote or cause to be voted, in
accordance with the instructions set forth in such requests, the maximum number
of Preferred Securities or Debentures, as the case may be, as to which any
particular voting instructions are received. In the absence of specific
instructions from the Holder of a Corporate PIES, the Agent shall abstain from
voting the Preferred Securities or Debentures underlying such Corporate PIES.
The Company hereby agrees, if applicable, to solicit Holders of Corporate PIES
to timely instruct the Agent in order to enable the Agent to vote such Preferred
Securities or Debentures and the Trust shall covenant to such effect in the
Declaration.
Section 4.3. Distribution of Debentures; Tax Event Redemption.
Upon the liquidation of the Trust in accordance with the Declaration, a
principal amount at maturity of Debentures constituting the assets of the Trust
and underlying the Preferred Securities equal to the aggregate liquidation
amount of the Pledged Preferred Securities shall be delivered to the Securities
Intermediary in exchange for the Pledged Preferred Securities. Thereafter, the
Debentures will be substituted for the Pledged Preferred Securities as the
Collateral, and will be held by the Securities Intermediary in the Collateral
Account in accordance with the terms of the Pledge Agreement to secure the
obligations of each Holder of a Corporate PIES to purchase the Common Stock of
the Company under the Purchase Contracts constituting a part of such Corporate
PIES. Following the liquidation of the Trust, the Holders and the Collateral
Agent shall have such security interests, rights and obligations with respect to
the Debentures as the Holders and the Collateral Agent had in respect of the
Preferred Securities subject to the Pledge thereof as provided in Articles II,
III, IV, V and VI of the Pledge Agreement. The Company may cause to be made in
any Corporate PIES Certificates thereafter to be issued such change in
phraseology and form (but not in substance) as may be appropriate to
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reflect the liquidation of the Trust and the substitution of Debentures for
Preferred Securities as Collateral.
Upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, the Redemption Price payable on the Tax Event
Redemption Date with respect to the Applicable Principal Amount shall be
deposited in the Collateral Account in exchange for the Pledged Preferred
Securities or the Pledged Debentures. Thereafter, pursuant to the terms of the
Pledge Agreement, the Collateral Agent shall cause the Securities Intermediary
to apply an amount equal to the Redemption Amount of such Redemption Price to
purchase on behalf of the Holders of Corporate PIES the Treasury Portfolio and
promptly remit the remaining portion of such Redemption Price, if any, to the
Agent for payment to the Holders of such Corporate PIES. The Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio will be substituted as Collateral for the Pledged
Preferred Securities or the Pledged Debentures, and will be held by the
Collateral Agent in accordance with the terms of the Pledge Agreement to secure
the obligation of each Holder of a Corporate PIES to purchase the Common Stock
of the Company under the Purchase Contract constituting a part of such Corporate
PIES. Following the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, the Holders of Corporate PIES and the Collateral Agent
shall have such security interest rights and obligations with respect to the
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio as the Holders of Corporate PIES and the
Collateral Agent had in respect of the Preferred Securities or Debentures, as
the case may be, subject to the Pledge thereof as provided in Articles II, III,
IV, V, and VI of the Pledge Agreement, and any reference herein to the Preferred
Securities or the Debentures shall be deemed to be reference to such Treasury
Portfolio. The Company may cause to be made in any Corporate PIES Certificates
thereafter to be issued such change in phraseology and form (but not in
substance) as may be appropriate to reflect the liquidation of the Trust and the
substitution of the Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio for Preferred Securities
or Debentures as Collateral.
ARTICLE V
The Purchase Contracts
Section 5.1. Purchase of Shares of Common Stock.
Each Purchase Contract shall, unless an Early Settlement has occurred in
accordance with Section 5.9 hereof, obligate the Holder of the related Security
to purchase, and the Company to sell, on the Purchase Contract Settlement Date
at a price equal to the Stated Amount (the "Purchase Price"), a number of newly
issued shares of Common Stock equal to the Settlement Rate unless, on or prior
to the Purchase Contract Settlement Date, there shall have occurred a
Termination Event with respect to the Security of which such Purchase Contract
is a part. The "Settlement Rate" is equal to (a) if the Applicable Market Value
(as defined below) is equal to or greater than $31.0500 (the "Threshold
Appreciation Price"), 1.6103 shares of Common Stock per Purchase Contract, (b)
if the Applicable Market Value is less than the Threshold Appreciation
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Price, but is greater than $26.3125, the number of shares of Common Stock equal
to the Stated Amount divided by the Applicable Market Value and (c) if the
Applicable Market Value is less than or equal to $26.3125, 1.9002 share of
Common Stock per Purchase Contract, in each case subject to adjustment as
provided in Section 5.6 (and in each case rounded upward or downward to the
nearest 1/10,000th of a share). As provided in Section 5.10, no fractional
shares of Common Stock will be issued upon settlement of Purchase Contracts.
The "Applicable Market Value" means the average of the Closing Price per
share of Common Stock on each of the 20 Trading Days ending on the third Trading
Day immediately preceding the Purchase Contract Settlement Date. The "Closing
Price" of the Common Stock on any date of determination means (i) the closing
sale price (or, if no closing price is reported, the last reported sale price)
of the Common Stock on the New York Stock Exchange (the "NYSE") on such date,
(ii) if the Common Stock is not listed for trading on the NYSE on any such date,
the closing sale price as reported in the composite transactions for the
principal United States securities exchange on which the Common Stock is so
listed, (iii) if the Common Stock is not so listed on a United States national
or regional securities exchange, the closing sale price as reported by The
Nasdaq Stock Market, (iv) if the Common Stock is not so reported, the last
quoted bid price for the Common Stock in the over-the-counter market as reported
by the National Quotation Bureau or similar organization, or (v) if such bid
price is not available, the average of the mid-point of the last bid and ask
prices of the Common Stock on such date from at least three nationally
recognized independent investment banking firms retained for this purpose by the
Company. A "Trading Day" means a day on which the Common Stock (A) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (B) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.
Each Holder of a Corporate PIES or a Treasury PIES, by its acceptance
thereof, irrevocably authorizes the Agent to enter into and perform the related
Purchase Contract on its behalf as its attorney-in-fact (including the execution
of Certificates on behalf of such Holder), agrees to be bound by the terms and
provisions thereof, covenants and agrees to perform its obligations under such
Purchase Contracts, and consents to the provisions hereof, irrevocably
authorizes the Agent as its attorney-in-fact to enter into and perform this
Agreement and the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to and agrees to be bound by the Pledge of the Preferred Securities,
the Debentures, the Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio or the Treasury
Securities pursuant to the Pledge Agreement; provided that upon a Termination
Event, the rights of the Holder of such Security under the Purchase Contract may
be enforced without regard to any other rights or obligations. Each Holder of a
Corporate PIES or a Treasury PIES, by its acceptance thereof, further covenants
and agrees, that to the extent and in the manner provided in Section 5.4 and the
Pledge Agreement, but subject to the terms thereof, payments in respect of the
Preferred Securities or the Debentures or the Proceeds of the Treasury
Securities or the Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio on the Purchase Contract
Settlement Date shall be paid by the Collateral
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Agent to the Company in satisfaction of such Holder's obligations under such
Purchase Contract and such Holder shall acquire no right, title or interest in
such payments.
Upon registration of transfer of a Certificate, the transferee shall be
bound (without the necessity of any other action on the part of such transferee)
by the terms of this Agreement, the Purchase Contracts underlying such
Certificate and the Pledge Agreement and the transferor shall be released from
the obligations under this Agreement, the Purchase Contracts underlying the
Certificates so transferred and the Pledge Agreement. The Company covenants and
agrees, and each Holder of a Certificate, by its acceptance thereof, likewise
covenants and agrees, to be bound by the provisions of this paragraph.
Section 5.2. Contract Adjustment Payments.
The Company shall pay, on each Payment Date, the Contract Adjustment
Payments payable in respect of each Purchase Contract to the Person in whose
name a Certificate (or one or more Predecessor Certificates) is registered at
the close of business on the Record Date next preceding such Payment Date. The
Contract Adjustment Payments will be payable at the office of the Agent in The
City of New York maintained for that purpose or, at the option of the Company,
by check mailed to the address of the Person entitled thereto at such Person's
address as it appears on the Corporate PIES Register or Treasury PIES Register.
If any date on which Contract Adjustment Payments are to be made on the Purchase
Contracts related to the PIES is not a Business Day, then payment of the
Contract Adjustment Payments payable on such date will be made on the next day
that is a Business Day (and without any interest in respect of any such delay),
except that, if such Business Day is in the next calendar year, such payment
will be made on the preceding Business Day.
Upon the occurrence of a Termination Event, the Company's obligation to
pay Contract Adjustment Payments (including any accrued Contract Adjustment
Payments) shall cease.
Each Certificate delivered under this Agreement upon registration of
transfer of or in exchange for or in lieu of (including as a result of a
Collateral Substitution or the re-establishment of a Corporate PIES) any other
Certificate shall carry the rights to Contract Adjustment Payments accrued and
unpaid, and to accrue Contract Adjustment Payments, which were carried by the
Purchase Contracts underlying such other Certificates.
Subject to Section 5.9, in the case of any Security with respect to which
Early Settlement of the underlying Purchase Contract is effected on an Early
Settlement Date that is after any Record Date and on or prior to the next
succeeding Payment Date, Contract Adjustment Payments, if any, otherwise payable
on such Payment Date shall be payable on such Payment Date notwithstanding such
Early Settlement, and such Contract Adjustment Payments shall be paid to the
Person in whose name the Certificate evidencing such Security (or one or more
Predecessor Certificates) is registered at the close of business on such Record
Date. Except as otherwise expressly provided in the immediately preceding
sentence, in the case of any Security with respect to which Early Settlement of
the underlying Purchase Contract is effected on an
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Early Settlement Date, Contract Adjustment Payments that would otherwise be
payable after the Early Settlement Date with respect to such Purchase Contract
shall not be payable.
Section 5.3. [Intentionally omitted].
Section 5.4. Payment of Purchase Price.
(a) (i) Unless a Tax Event Redemption has occurred or a Holder settles the
underlying Purchase Contract through the early delivery of cash to the Purchase
Contract Agent in the manner described in Section 5.9, each Holder of a
Corporate PIES who intends to pay in cash shall notify the Agent by use of a
notice in substantially the form of Exhibit E hereto of its intention to pay in
cash ("Cash Settlement") the Purchase Price for the shares of Common Stock to be
purchased pursuant to a Purchase Contract. Such notice shall be given prior to
5:00 p.m., New York City time, on the seventh Business Day immediately preceding
the Purchase Contract Settlement Date. Prior to 11:00 a.m., New York City time,
on the next succeeding Business Day, the Agent shall notify the Collateral Agent
and the Indenture Trustee of the receipt of such notices from Holders intending
to make a Cash Settlement.
(ii) A Holder of a Corporate PIES who has so notified the Agent of its
intention to make a Cash Settlement shall pay the Purchase Price to the
Securities Intermediary for deposit in the Collateral Account prior to 11:00
a.m., New York City time, on the fifth Business Day immediately preceding the
Purchase Contract Settlement Date in lawful money of the United States by
certified or cashiers' check or wire transfer, in each case in immediately
available funds payable to or upon the order of the Securities Intermediary. Any
cash received by the Collateral Agent shall be invested promptly by the
Securities Intermediary in Permitted Investments and paid to the Company on the
Purchase Contract Settlement Date in settlement of the Purchase Contract in
accordance with the terms of this Agreement and the Pledge Agreement. Any funds
received by the Securities Intermediary in respect of the investment earnings
from the investment in such Permitted Investments, shall be distributed to the
Agent when received for payment to the Holder of the related Corporate PIES.
(iii) If a Holder of a Corporate PIES fails to notify the Agent of its
intention to make a Cash Settlement in accordance with paragraph (a)(i) above,
or does notify the Agent as provided in paragraph (a)(i) above of its intention
to pay the Purchase Price in cash, but fails to make such payment as required by
paragraph (a)(ii) above, such Holder shall be deemed to have consented to the
disposition of the Pledged Preferred Securities or the Pledged Debentures
pursuant to the Remarketing as described in paragraph (b) below.
(iv) Promptly after 11:00 a.m., New York City time, on the fifth Business
Day preceding the Purchase Contract Settlement Date, the Agent, based on notices
received by the Agent pursuant to Section 5.4(a) hereof and notice from the
Securities Intermediary regarding cash received by it prior to such time, shall
notify the Collateral Agent and the Indenture Trustee of the number of Preferred
Securities or Debentures to be tendered for purchase in the Remarketing in a
notice substantially in the form of Exhibit F hereto.
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(b) In order to dispose of the Preferred Securities or Debentures, as the
case may be, of Corporate PIES Holders who have not notified the Agent of their
intention to effect a Cash Settlement as provided in paragraph (a)(i) above, or
who have so notified the Agent but fail to make such payment as required by
paragraph (a)(ii) above, the Company shall Lehman Brothers, Inc. (the
"Remarketing Agent") pursuant to the Remarketing Agreement to sell such
Preferred Securities or Debentures. In order to facilitate the remarketing, the
Agent, based on the notices specified in Section 5.4(a)(iv), shall notify the
Remarketing Agent, promptly after 11:00 a.m., New York City time, on the fifth
Business Day immediately preceding the Purchase Contract Settlement Date, of the
aggregate number of Preferred Securities or Debentures that are a component of
Corporate PIES to be remarketed. Concurrently, the Collateral Agent, pursuant to
the terms of the Pledge Agreement, shall cause such Preferred Securities or
Debentures to be presented to the Remarketing Agent for remarketing. Upon
receipt of such notice from the Agent and such Preferred Securities or
Debentures, the Remarketing Agent shall, on the third Business Day immediately
preceding the Purchase Contract Settlement Date, use commercially reasonable
efforts to remarket such Preferred Securities or Debentures on such date at a
price of 100% of the aggregate stated liquidation amount of such Preferred
Securities or principal amount at maturity of such Debentures. The proceeds
equal thereto shall automatically be applied by the Collateral Agent, in
accordance with the Pledge Agreement, to satisfy in full such Corporate PIES
Holders' obligations to pay the Purchase Price for the Common Stock under the
related Purchase Contracts on the Purchase Contract Settlement Date. Corporate
PIES Holders whose Preferred Securities or Debentures are so remarketed shall
not be responsible for the payment of any remarketing fee in connection
therewith. If, in spite of using their reasonable efforts, the Remarketing Agent
cannot remarket the related Preferred Securities or Debentures of such Holders
of Corporate PIES at a price of 100% of the aggregate stated liquidation amount
of such Preferred Securities or principal amount at maturity of such Debentures,
the remarketing shall be deemed to have failed (a "Failed Remarketing") and in
accordance with the terms of the Pledge Agreement the Collateral Agent, for the
benefit of the Company, shall exercise its rights as a secured party with
respect to such Preferred Securities or Debentures, including those actions
specified in paragraph (c) below; provided, that if upon a Failed Remarketing
the Collateral Agent exercises such rights for the benefit of the Company with
respect to such Preferred Securities or Debentures, any accrued and unpaid
distributions on such Preferred Securities or Debentures shall become payable by
the Company to the Agent for payment to the Beneficial Owner of the Corporate
PIES to which such Preferred Securities or Debentures relate. The Company shall
cause a notice of such Failed Remarketing to be published on the second Business
Day immediately preceding the Purchase Contract Settlement Date in a daily
newspaper in the English language of general circulation in The City of New
York, which is expected to be The Wall Street Journal.
(c) With respect to any Preferred Securities or Debentures which are
subject to a Failed Remarketing, the Collateral Agent for the benefit of the
Company reserves all of its rights as a secured party with respect thereto and,
subject to applicable law and paragraph (g) below, may, among other things, (i)
retain the Preferred Securities or Debentures in full satisfaction of the
Holders' obligations under the Purchase Contracts or (ii) sell the Preferred
Securities or Debentures in one or more public or private sales.
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(d) (i) Unless a Holder of Treasury PIES or Corporate PIES (if a Tax Event
Redemption has occurred) settles the underlying Purchase Contract through the
early delivery of cash to the Purchase Contract Agent in the manner described in
Section 5.9, each Holder of a Treasury PIES or Corporate PIES (if a Tax Event
Redemption has occurred) who intends to pay in cash shall notify the Agent by
use of a notice in substantially the form of Exhibit E hereto of its intention
to pay in cash the Purchase Price for the shares of Common Stock to be purchased
pursuant to a Purchase Contract. Such notice shall be given on or prior to 5:00
p.m., New York City time, on the second Business Day immediately preceding the
Purchase Contract Settlement Date.
(ii) A Holder of a Treasury PIES or Corporate PIES (if a Tax Event
Redemption has occurred) who has so notified the Agent of its intention to make
a Cash Settlement in accordance with paragraph (d)(i) above shall pay the
Purchase Price to the Securities Intermediary for deposit in the Collateral
Account prior to 11:00 a.m., New York City time, on the Business Day immediately
preceding the Purchase Contract Settlement Date in lawful money of the United
States by certified or cashiers' check or wire transfer, in each case in
immediately available funds payable to or upon the order of the Securities
Intermediary. Any cash received by the Collateral Agent shall be invested
promptly by the Securities Intermediary in Permitted Investments and paid to the
Company on the Purchase Contract Settlement Date in settlement of the Purchase
Contract in accordance with the terms of this Agreement and the Pledge
Agreement. Any funds received by the Securities Intermediary in respect of the
investment earnings from the investment in such Permitted Investments shall be
distributed to the Agent when received for payment to the Holder.
(iii) If a Holder of a Treasury PIES or a Holder of a Corporate PIES (if a
Tax Event Redemption has occurred) fails to notify the Agent of its intention to
make a Cash Settlement in accordance with paragraph (d)(i) above, or does notify
the Agent as provided in paragraph (d)(i) above of its intention to pay the
Purchase Price in cash, but fails to make such payment as required by paragraph
(d)(ii) above, then upon the maturity of the Pledged Treasury Securities or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be, held by
the Securities Intermediary on the Business Day immediately prior to the
Purchase Contract Settlement Date, the principal amount of the Treasury
Securities or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, as the
case may be, received by the Securities Intermediary shall be invested promptly
in Permitted Investments. On the Purchase Contract Settlement Date an amount
equal to the Purchase Price shall be remitted to the Company as payment thereof
without receiving any instructions from the Holder. In the event the sum of the
proceeds from the related Pledged Treasury Securities or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio, as the case may be, and the investment
earnings earned from such investments is in excess of the aggregate Purchase
Price of the Purchase Contracts being settled thereby, the Collateral Agent
shall cause the Securities Intermediary to distribute such excess to the Agent
for the benefit of the Holder of the related Treasury PIES or Corporate PIES
when received.
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(e) Any distribution to Holders of excess funds and interest described
above shall be payable at the office of the Agent in The City of New York
maintained for that purpose or, at the option of the Holder, by check mailed to
the address of the Person entitled thereto at such address as it appears on the
Register.
(f) Upon Cash Settlement of any Purchase Contract, (i) the Collateral
Agent will in accordance with the terms of the Pledge Agreement cause the
Pledged Preferred Securities, the Pledged Debentures, the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio or the Pledged Treasury Securities, as the case may
be, underlying the relevant Security to be released from the Pledge free and
clear of any security interest of the Company and transferred to the Agent for
delivery to the Holder thereof or its designee as soon as practicable and (ii)
subject to the receipt thereof, the Agent shall, by book-entry transfer, or
other appropriate procedures, in accordance with written instructions provided
by the Holder thereof, transfer such Preferred Securities or Debentures, the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio or such Treasury Securities,
as the case may be (or, if no such instructions are given to the Agent by the
Holder, the Agent shall hold such Preferred Securities or Debentures or the
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio or such Treasury Securities, as the case
may be, and any distribution thereon, in the name of the Agent or its nominee in
trust for the benefit of such Holder until the expiration of the time period
specified in the abandoned property laws of the relevant State).
(g) The obligations of the Holders to pay the Purchase Price are
non-recourse obligations and, except to the extent paid by Early Settlement or
Cash Settlement, are payable solely out of the proceeds of any Collateral
pledged to secure the obligations of the Holders and in no event will Holders be
liable for any deficiency between the proceeds of the disposition of Collateral
and the Purchase Price.
Section 5.5. Issuance of Shares of Common Stock.
Unless a Termination Event or an Early Settlement shall have occurred,
subject to Section 5.6(b), the Company shall issue and deposit with the Agent,
for the benefit of the Holders of the Outstanding Securities, one or more
certificates representing the newly issued shares of Common Stock registered in
the name of the Agent (or its nominee) as custodian for the Holders (such
certificates for shares of Common Stock, together with any dividends or
distributions for which a record date and payment date for such dividend or
distribution has occurred after the Purchase Contract Settlement Date, being
hereinafter referred to as the "Purchase Contract Settlement Fund") to which the
Holders are entitled hereunder. Subject to the foregoing, upon surrender of a
Certificate to the Agent on or after the Purchase Contract Settlement Date,
together with settlement instructions thereon duly completed and executed, the
Holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Common Stock which such
Holder is entitled to receive pursuant to the provisions of this Article Five
(after taking into account all Securities then held by such Holder), together
with cash in lieu of fractional shares as provided in Section 5.10 and any
dividends or distributions with respect to such shares constituting part of the
Purchase Contract Settlement Fund, but without
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any interest thereon, and the Certificate so surrendered shall forthwith be
cancelled. Such shares shall be registered in the name of the Holder or the
Holder's designee as specified in the settlement instructions provided by the
Holder to the Agent. If any shares of Common Stock issued in respect of a
Purchase Contract are to be registered to a Person other than the Person in
whose name the Certificate evidencing such Purchase Contract is registered, no
such registration shall be made unless the Person requesting such registration
has paid any transfer and other taxes required by reason of such registration in
a name other than that of the registered Holder of the Certificate evidencing
such Purchase Contract or has established to the satisfaction of the Company
that such tax either has been paid or is not payable.
Section 5.6. Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) In case the Company shall pay or make a dividend or other
distribution on the Common Stock in Common Stock, the Settlement Rate in effect
at the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be increased by dividing such Settlement Rate by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such increase to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this paragraph (1), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include any shares issuable
in respect of any scrip certificates issued in lieu of fractions of shares of
Common Stock. The Company will not pay any dividend or make any distribution on
shares of Common Stock held in the treasury of the Company.
(2) In case the Company shall issue rights, options or warrants to
all holders of its Common Stock (not being available on an equivalent basis to
Holders of the Securities upon settlement of the Purchase Contracts underlying
such Securities) entitling them, for a period expiring within 45 days after the
record date for the determination of stockholders entitled to receive such
rights, options or warrants, to subscribe for or purchase shares of Common Stock
at a price per share less than the Current Market Price per share of the Common
Stock on the date fixed for the determination of stockholders entitled to
receive such rights, options or warrants (other than pursuant to a dividend
reinvestment plan), the Settlement Rate in effect at the opening of business on
the day following the date fixed for such determination shall be increased by
dividing such Settlement Rate by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such
Current Market Price and the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such increase to become effective immediately after
the opening of business on the day following the date fixed for such
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determination. For the purposes of this paragraph (2), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include any shares issuable in respect of any
scrip certificates issued in lieu of fractions of shares of Common Stock. The
Company shall not issue any such rights, options or warrants in respect of
shares of Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided
or split into a greater number of shares of Common Stock, the Settlement Rate in
effect at the opening of business on the day following the day upon which such
subdivision or split becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Settlement Rate in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision, split or
combination becomes effective.
(4) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock evidences of its indebtedness or assets
(including securities, but excluding any rights or warrants referred to in
paragraph (2) of this Section, any dividend or distribution paid exclusively in
cash and any dividend or distribution referred to in paragraph (1) of this
Section), the Settlement Rate shall be adjusted so that the same shall equal the
rate determined by dividing the Settlement Rate in effect immediately prior to
the close of business on the date fixed for the determination of stockholders
entitled to receive such distribution by a fraction of which the numerator shall
be the Current Market Price per share of the Common Stock on the date fixed for
such determination less the then fair market value (as determined by the Board
of Directors, whose determination shall be conclusive and described in a Board
Resolution) of the portion of the assets or evidences of indebtedness so
distributed applicable to one share of Common Stock and the denominator shall be
such Current Market Price per share of the Common Stock, such adjustment to
become effective immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such distribution. In any case in which this paragraph (4) is
applicable, paragraph (2) of this Section shall not be applicable.
(5) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock (I) cash (excluding any cash that is
distributed in a Reorganization Event to which Section 5.6(b) applies or as part
of a distribution referred to in paragraph (4) of this Section) in an aggregate
amount that, combined together with the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in cash (other
than in connection with a Reorganization Event) within the 12 months preceding
the date of payment of such distribution and in respect of which no adjustment
pursuant to this paragraph (5) or paragraph (6) of this Section has been made
and (II) the aggregate of any cash plus the fair market value (as determined by
the Board of Directors, whose determination shall be conclusive and described in
a Board Resolution) of consideration payable in respect of any tender or
exchange offer by the Company or any of its subsidiaries for all or any portion
of the Common Stock concluded within the 12 months preceding the date of payment
of the distribution
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described in Clause (I) above and in respect of which no adjustment pursuant to
this paragraph (5) or paragraph (4) or paragraph (6) of this Section has been
made, exceeds 15% of the product of the Current Market Price per share of the
Common Stock on the date for the determination of holders of shares of Common
Stock entitled to receive such distribution times the number of shares of Common
Stock outstanding on such date, then, and in each such case, immediately after
the close of business on such date for determination, the Settlement Rate shall
be increased so that the same shall equal the rate determined by dividing the
Settlement Rate in effect immediately prior to the close of business on the date
fixed for determination of the stockholders entitled to receive such
distribution by a fraction (i) the numerator of which shall be equal to the
Current Market Price per share of the Common Stock on the date fixed for such
determination less an amount equal to the quotient of (x) the combined amount
distributed or payable in the transactions described in clauses (I) and (II)
above and (y) the number of shares of Common Stock outstanding on such date for
determination and (ii) the denominator of which shall be equal to the Current
Market Price per share of the Common Stock on such date for determination.
(6) In case a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders (based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of
Purchased Shares) of (I) an aggregate consideration having a fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) that combined together with the
aggregate of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of such tender or exchange offer, of
consideration payable in respect of any other tender or exchange offer, by the
Company or any subsidiary of the Company for all or any portion of the Common
Stock expiring within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to paragraph (5)
of this Section or this paragraph (6) has been made and (II) the aggregate
amount of any distributions to all holders of the Company's Common Stock made
exclusively in cash within the 12 months preceding the expiration of such tender
or exchange offer and in respect of which no adjustment pursuant to paragraph
(5) of this Section or this paragraph (6) has been made, exceeds 15% of the
product of the Current Market Price per share of the Common Stock as of the last
time (the "Expiration Time") tenders could have been made pursuant to such
tender or exchange offer (as it may be amended) times the number of shares of
Common Stock outstanding (including any tendered shares) on the Expiration Time,
then, and in each such case, immediately prior to the opening of business on the
day after the date of the Expiration Time, the Settlement Rate shall be adjusted
so that the same shall equal the rate determined by dividing the Settlement Rate
immediately prior to the close of business on the date of the Expiration Time by
a fraction (i) the numerator of which shall be equal to (A) the product of (I)
the Current Market Price per share of the Common Stock on the date of the
Expiration Time and (II) the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time less (B) the amount of
cash plus the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the transactions described in
clauses (I) and (II) above (assuming in the case of clause (I) the
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acceptance, up to any maximum specified in the terms of the tender or exchange
offer, of Purchased Shares), and (ii) the denominator of which shall be equal to
the product of (A) the Current Market Price per share of the Common Stock as of
the Expiration Time and (B) the number of shares of Common Stock outstanding
(including any tendered shares) as of the Expiration Time less the number of all
shares validly tendered and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the "Purchased
Shares").
(7) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
Reorganization Event to which Section 5.6(b) applies) shall be deemed to involve
(a) a distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be deemed to
be "the date fixed for the determination of stockholders entitled to receive
such distribution" and the "date fixed for such determination" within the
meaning of paragraph (4) of this Section), and (b) a subdivision, split or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of shares
of Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such subdivision
or split becomes effective" or "the day upon which such combination becomes
effective", as the case may be, and "the day upon which such subdivision, split
or combination becomes effective" within the meaning of paragraph (3) of this
Section).
(8) The "Current Market Price" per share of Common Stock on any day
means the average of the daily Closing Prices for the five consecutive Trading
Days selected by the Company commencing not more than 30 Trading Days before,
and ending not later than, the earlier of the day in question and the day before
the "ex date" with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "ex date", when used with
respect to any issuance or distribution, shall mean the first date on which the
Common Stock trades regular way on such exchange or in such market without the
right to receive such issuance or distribution.
(9) All adjustments to the Settlement Rate shall be calculated to
the nearest 1/10,000th of a share of Common Stock (or if there is not a nearest
1/10,000th of a share, to the next lower 1/10,000th of a share). No adjustment
in the Settlement Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent thereof; provided, however, that
any adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. If
an adjustment is made to the Settlement Rate pursuant to paragraph (1), (2),
(3), (4), (5), (6), (7) or (10) of this Section 5.6(a), an adjustment shall also
be made to the Applicable Market Value solely to determine which of clauses (a),
(b) or (c) of the definition of Settlement Rate in Section 5.1 will apply on the
Purchase Contract Settlement Date. Such adjustment shall be made by multiplying
the Applicable Market Value by a fraction of which the numerator shall be the
Settlement Rate immediately after such adjustment pursuant to paragraph (1),
(2), (3), (4), (5), (6), (7) or (10) of this Section 5.6(a) and the denominator
shall be the Settlement Rate immediately before such adjustment; provided,
however, that if such adjustment to the Settlement Rate is required to be
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made pursuant to the occurrence of any of the events contemplated by paragraph
(1), (2), (3), (4), (5), (7) or (10) of this Section 5.6(a) during the period
taken into consideration for determining the Applicable Market Value,
appropriate and customary adjustments shall be made to the Settlement Rate.
(10) The Company may make such increases in the Settlement Rate, in
addition to those required by this Section, as it considers to be advisable in
order to avoid or diminish any income tax to any holders of shares of Common
Stock resulting from any dividend or distribution of stock or issuance of rights
or warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes or for any other reason.
(b) Adjustment for Consolidation, Merger or Other Reorganization Event.
In the event of (i) any consolidation or merger of the Company with
or into another Person (other than a merger or consolidation in which the
Company is the continuing corporation and in which the Common Stock outstanding
immediately prior to the merger or consolidation is not exchanged for cash,
securities or other property of the Company or another corporation), (ii) any
sale, transfer, lease or conveyance to another Person of the property of the
Company as an entirety or substantially as an entirety, (iii) any statutory
exchange of securities of the Company with another Person (other than in
connection with a merger or acquisition) or (iv) any liquidation, dissolution or
winding up of the Company other than as a result of or after the occurrence of a
Termination Event (any such event, a "Reorganization Event"), the Settlement
Rate will be adjusted to provide that each Holder of Securities will receive on
the Purchase Contract Settlement Date with respect to each Purchase Contract
forming a part thereof, the kind and amount of securities, cash and other
property receivable upon such Reorganization Event (without any interest
thereon, and without any right to dividends or distribution thereon which have a
record date that is prior to the Purchase Contract Settlement Date) by a Holder
of the number of shares of Common Stock issuable on account of each Purchase
Contract if the Purchase Contract Settlement Date had occurred immediately prior
to such Reorganization Event assuming such Holder of Common Stock is not a
Person with which the Company consolidated or into which the Company merged or
which merged into the Company or to which such sale or transfer was made, as the
case may be (any such Person, a "Constituent Person"), or an Affiliate of a
Constituent Person to the extent such Reorganization Event provides for
different treatment of Common Stock held by Affiliates of the Company and
non-affiliates and such Holder failed to exercise his rights of election, if
any, as to the kind or amount of securities, cash and other property receivable
upon such Reorganization Event (provided that if the kind or amount of
securities, cash and other property receivable upon such Reorganization Event is
not the same for each share of Common Stock held immediately prior to such
Reorganization Event by other than a Constituent Person or an Affiliate thereof
and in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this Section the kind and amount
of securities, cash and other property receivable upon such Reorganization Event
by each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). In the event of
such a Reorganization Event, the Person formed by such consolidation, merger or
exchange or the Person which acquires the assets of the Company or, in the event
of a liquidation or dissolution of the Company, the Company or a
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liquidating trust created in connection therewith, shall execute and deliver to
the Agent an agreement supplemental hereto providing that the Holders of each
Outstanding Security shall have the rights provided by this Section 5.6(b). Such
supplemental agreement shall provide for adjustments which, for events
subsequent to the effective date of such supplemental agreement, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section. The above provisions of this Section shall similarly apply to
successive Reorganization Events.
Section 5.7. Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided, the
Company shall:
(i) forthwith compute the adjusted Settlement Rate in accordance
with Section 5.6 and prepare and transmit to the Agent an Officers'
Certificate setting forth the Settlement Rate, the method of calculation
thereof in reasonable detail, and the facts requiring such adjustment and
upon which such adjustment is based; and
(ii) within 10 Business Days following the occurrence of an event
that requires an adjustment to the Settlement Rate pursuant to Section 5.6
(or if the Company is not aware of such occurrence, as soon as practicable
after becoming so aware), provide a written notice to the Holders of the
Securities of the occurrence of such event and a statement in reasonable
detail setting forth the method by which the adjustment to the Settlement
Rate was determined and setting forth the adjusted Settlement Rate.
(b) The Agent shall not at any time be under any duty or responsibility to
any Holder of Securities to determine whether any facts exist which may require
any adjustment of the Settlement Rate, or with respect to the nature or extent
or calculation of any such adjustment when made, or with respect to the method
employed in making the same. The Agent shall not be accountable with respect to
the validity or value (or the kind or amount) of any shares of Common Stock, or
of any securities or property, which may at the time be issued or delivered with
respect to any Purchase Contract; and the Agent makes no representation with
respect thereto. The Agent shall not be responsible for any failure of the
Company to issue, transfer or deliver any shares of Common Stock pursuant to a
Purchase Contract or to comply with any of the duties, responsibilities or
covenants of the Company contained in this Article.
Section 5.8. Termination Event; Notice.
The Purchase Contracts and all obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the Holders
to receive and the obligation of the Company to pay any Contract Adjustment
Payments, if the Company shall have such obligation, and the rights and
obligations of Holders to purchase Common Stock, shall immediately and
automatically terminate, without the necessity of any notice or action by any
Holder, the Agent or the Company, if, on or prior to the Purchase Contract
Settlement Date, a Termination Event shall have occurred. Upon and after the
occurrence of a Termination Event, the Securities shall thereafter represent the
right to receive the Preferred Securities or the
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Debentures or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, forming a part of such Securities in the case of
Corporate PIES, or Treasury Securities in the case of Treasury PIES, in
accordance with the provisions of Section 5.4 of the Pledge Agreement. Upon the
occurrence of a Termination Event, the Company shall promptly but in no event
later than two Business Days thereafter give written notice to the Agent, the
Collateral Agent and the Holders, at their addresses as they appear in the
Register.
Section 5.9. Early Settlement.
(a) Subject to and upon compliance with the provisions of this Section
5.9, at the option of the Holder thereof, Purchase Contracts underlying
Securities may be settled early ("Early Settlement") in the case of Corporate
PIES (unless a Tax Event Redemption has occurred) on or prior to the seventh
Business Day immediately preceding the Purchase Contract Settlement Date and in
the case of Treasury PIES on or prior to the second Business Day immediately
preceding the Purchase Contract Settlement Date, in each case, as provided
herein; and that if a Tax Event Redemption has occurred and the Treasury
Portfolio has become a component of the Corporate PIES, Purchase Contracts,
underlying Corporate PIES may be settled early, on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement Date, but
only in an aggregate amount of $8,000,000 or in an integral multiple thereof. In
order to exercise the right to effect Early Settlement with respect to any
Purchase Contracts, the Holder of the Certificate evidencing Securities shall
deliver such Certificate to the Agent at the Corporate Trust Office duly
endorsed for transfer to the Company or in blank with the form of Election to
Settle Early on the reverse thereof duly completed and accompanied by payment
(payable to the Company in immediately available funds) in an amount (the "Early
Settlement Amount") equal to (i) the product of (A) the Stated Amount times (B)
the number of Purchase Contracts with respect to which the Holder has elected to
effect Early Settlement plus (ii) if such delivery is made with respect to any
Purchase Contracts during the period from the close of business on any Record
Date next preceding any Payment Date to the opening of business on such Payment
Date, an amount equal to the sum of (x) the Contract Adjustment Payments payable
on such Payment Date with respect to such Purchase Contracts plus (y) in the
case of a Corporate PIES Certificate, the distributions on the related Preferred
Securities or Debentures payable on such Payment Date. Except as provided in the
immediately preceding sentence and subject to the second to last paragraph of
Section 5.2, no payment or adjustment shall be made upon Early Settlement of any
Purchase Contract on account of any Contract Adjustment Payments accrued on such
Purchase Contract or on account of any dividends on the Common Stock issued upon
such Early Settlement. If the foregoing requirements are first satisfied with
respect to Purchase Contracts underlying any Securities at or prior to 5:00
p.m., New York City time, on a Business Day, such day shall be the "Early
Settlement Date" with respect to such Securities and if such requirements are
first satisfied after 5:00 p.m., New York City time, on a Business Day or on a
day that is not a Business Day, the "Early Settlement Date" with respect to such
Securities shall be the next succeeding Business Day.
(b) Upon Early Settlement of Purchase Contracts by a Holder of the related
Securities, the Company shall issue, and the Holder shall be entitled to
receive, 1.6103 shares of
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Common Stock on account of each Purchase Contract as to which Early Settlement
is effected (the "Early Settlement Rate"). The Early Settlement Rate shall be
adjusted in the same manner and at the same time as the Settlement Rate is
adjusted.
(c) No later than the third Business Day after the applicable Early
Settlement Date the Company shall cause (i) the shares of Common Stock issuable
upon Early Settlement of Purchase Contracts to be issued and delivered, together
with payment in lieu of any fraction of a share, as provided in Section 5.10,
and (ii) the related Preferred Securities or Debentures or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio, in the case of Corporate PIES, or the
related Treasury Securities, in the case of Treasury PIES, to be released from
the Pledge by the Collateral Agent and transferred, in each case, to the Agent
for delivery to the Holder thereof or its designee.
(d) Upon Early Settlement of any Purchase Contracts, and subject to
receipt of shares of Common Stock from the Company and the Preferred Securities,
the Debentures, the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio or Treasury
Securities, as the case may be, from the Securities Intermediary, as applicable,
the Agent shall, in accordance with the instructions provided by the Holder
thereof on the applicable form of Election to Settle Early on the reverse of the
Certificate evidencing the related Securities, (i) transfer to the Holder the
Preferred Securities, the Debentures, the Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio or Treasury Securities, as the case may be, forming a part of such
Securities, and (ii) deliver to the Holder a certificate or certificates for the
full number of shares of Common Stock issuable upon such Early Settlement,
together with payment in lieu of any fraction of a share, as provided in Section
5.10.
(e) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than all the Securities evidenced by a
Certificate, upon such Early Settlement the Company shall execute and the Agent
shall authenticate, countersign and deliver to the Holder thereof, at the
expense of the Company, a Certificate evidencing the Securities as to which
Early Settlement was not effected.
Section 5.10. No Fractional Shares.
No fractional shares or scrip representing fractional shares of Common
Stock shall be issued or delivered upon settlement on the Purchase Contract
Settlement Date or upon Early Settlement of any Purchase Contracts. If
Certificates evidencing more than one Purchase Contract shall be surrendered for
settlement at one time by the same Holder, the number of full shares of Common
Stock which shall be delivered upon settlement shall be computed on the basis of
the aggregate number of Purchase Contracts evidenced by the Certificates so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be deliverable upon settlement of any Purchase Contracts on the
Purchase Contract Settlement Date or upon Early Settlement, the Company, through
the Agent, shall make a cash payment in respect of such fractional interest in
an amount equal to the value of such fractional shares times the Applicable
Market Value. The Company shall provide the Agent from time to time with
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sufficient funds to permit the Agent to make all cash payments required by this
Section 5.10 in a timely manner.
Section 5.11. Charges and Taxes.
The Company will pay all stock transfer and similar taxes attributable to
the initial issuance and delivery of the shares of Common Stock pursuant to the
Purchase Contracts; provided, however, that the Company shall not be required to
pay any such tax or taxes which may be payable in respect of any exchange of or
substitution for a Certificate evidencing a Security or any issuance of a share
of Common Stock in a name other than that of the registered Holder of a
Certificate surrendered in respect of the Securities evidenced thereby, other
than in the name of the Agent, as custodian for such Holder, and the Company
shall not be required to issue or deliver such share certificates or
Certificates unless or until the Person or Persons requesting the transfer or
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
ARTICLE VI
Remedies
Section 6.1. Unconditional Right of Holders to Receive Contract
Adjustment Payments and to Purchase Common Stock.
In the event that Contract Adjustment Payments shall constitute a
component of Corporate PIES or Treasury PIES, the Holder of any Corporate PIES
or Treasury PIES shall have the right, which is absolute and unconditional
(subject to the payment by a holder of Contract Adjustment Payments pursuant to
Section 5.9(a)), to receive payment of each installment of the Contract
Adjustment Payments with respect to the Purchase Contract constituting a part of
such Security on the respective Payment Date for such Security and to purchase
Common Stock pursuant to such Purchase Contract and, in each such case, to
institute suit for the enforcement of any such payment and right to purchase
Common Stock, and such rights shall not be impaired without the consent of such
Holder.
Section 6.2. Restoration of Rights and Remedies.
If any Holder has instituted any proceeding to enforce any right or remedy
under this Agreement and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to such Holder, then and in every
such case, subject to any determination in such proceeding, the Company and such
Holder shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of such Holder shall continue
as though no such proceeding had been instituted.
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Section 6.3. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Certificates in the last paragraph of
Section 3.10, no right or remedy herein conferred upon or reserved to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.4. Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right or remedy upon a
default shall impair any such right or remedy or constitute a waiver of any such
right. Every right and remedy given by this Article or by law to the Holders may
be exercised from time to time, and as often as may be deemed expedient, by such
Holders.
Section 6.5. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of Corporate PIES or
Treasury PIES, by its acceptance of such Corporate PIES or Treasury PIES shall
be deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Agreement, or in any
suit against the Agent for any action taken, suffered or omitted by it as Agent,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; provided that the provisions of this Section shall not
apply to any suit instituted by the Company, to any suit instituted by the
Agent, to any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% of the Outstanding Securities, or to any suit instituted
by any Holder for the enforcement of distributions on any Preferred Securities
or Contract Adjustment Payments, if any, on any Purchase Contract on or after
the respective Payment Date therefor in respect of any Security held by such
Holder, or for enforcement of the right to purchase shares of Common Stock under
the Purchase Contracts constituting part of any Security held by such Holder.
Section 6.6. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to
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the Agent or the Holders, but will suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE VII
The Agent
Section 7.1. Certain Duties and Responsibilities.
(a) (1) The Agent undertakes to perform, with respect to the Securities,
such duties and only such duties as are specifically set forth in this Agreement
and the Pledge Agreement, and no implied covenants or obligations shall be read
into this Agreement against the Agent; and
(2) in the absence of bad faith or negligence on its part, the Agent
may, with respect to the Securities, conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Agent and conforming to the
requirements of this Agreement, but in the case of any certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Agent, the Agent shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement.
(b) No provision of this Agreement shall be construed to relieve the Agent
from liability for its own negligent action, its own negligent failure to act,
or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Agent shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Agent was negligent in ascertaining the pertinent facts; and
(3) no provision of this Agreement shall require the Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if adequate indemnity is not provided to it.
(c) Whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Agent shall be subject to the provisions of this Section.
(d) The Agent is authorized to execute and deliver the Pledge Agreement in
its capacity as Agent.
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Section 7.2. Notice of Default.
Within 30 days after the occurrence of any default by the Company
hereunder of which a Responsible Officer of the Agent has actual knowledge, the
Agent shall transmit by mail to the Company and the Holders of Securities, as
their names and addresses appear in the Register, notice of such default
hereunder, unless such default shall have been cured or waived.
Section 7.3. Certain Rights of Agent.
Subject to the provisions of Section 7.1:
(a) the Agent may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the Agent shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Agent (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate of the Company;
(d) the Agent may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Agent shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the Agent,
in its discretion, may make reasonable further inquiry or investigation into
such facts or matters related to the execution, delivery and performance of the
Purchase Contracts as it may see fit, and, if the Agent shall determine to make
such further inquiry or investigation, it shall be given a reasonable
opportunity to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(f) the Agent may execute any of the powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys or an
Affiliate and the Agent shall not be responsible for any misconduct or
negligence on the part of any agent or attorney or an Affiliate appointed with
due care by it hereunder.
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Section 7.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Certificates shall be taken as
the statements of the Company, and the Agent assumes no responsibility for their
accuracy. The Agent makes no representations as to the validity or sufficiency
of either this Agreement or of the Securities, or of the Pledge Agreement or the
Pledge. The Agent shall not be accountable for the use or application by the
Company of the proceeds in respect of the Purchase Contracts.
Section 7.5. May Hold Securities.
Any Registrar or any other agent of the Company, or the Agent and its
Affiliates, in their individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with the Company, the Collateral
Agent or any other Person with the same rights it would have if it were not
Registrar or such other agent, or the Agent.
Section 7.6. Money Held in Custody.
Money held by the Agent in custody hereunder need not be segregated from
the other funds except to the extent required by law or provided herein. The
Agent shall be under no obligation to invest or pay interest on any money
received by it hereunder except as otherwise agreed in writing with the Company.
Section 7.7. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Agent from time to time reasonable compensation
for all services rendered by it hereunder;
(2) except as otherwise expressly provided for herein, to reimburse
the Agent upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Agent in accordance with any provision of
this Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Agent and any predecessor Agent for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with
the acceptance or administration of its duties hereunder, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
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Section 7.8. Corporate Agent Required; Eligibility.
There shall at all times be an Agent hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having (or being a member of a bank
holding company having) a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority and having a
Corporate Trust Office in the Borough of Manhattan, The City of New York, if
there be such a corporation in the Borough of Manhattan, The City of New York,
qualified and eligible under this Article and willing to act on reasonable
terms. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Agent shall cease to be eligible in accordance with the provisions
of this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 7.9. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Agent and no appointment of a
successor Agent pursuant to this Article shall become effective until the
acceptance of appointment by the successor Agent in accordance with the
applicable requirements of Section 7.10.
(b) The Agent may resign at any time by giving written notice thereof to
the Company 60 days prior to the effective date of such resignation. If the
instrument of acceptance by a successor Agent required by Section 7.10 shall not
have been delivered to the Agent within 30 days after the giving of such notice
of resignation, the resigning Agent may petition any court of competent
jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of a
majority in number of the Outstanding Securities delivered to the Agent and the
Company.
(d) If at any time
(1) the Agent fails to comply with Section 310(b) of the TIA, as if
the Agent were an indenture trustee under an indenture qualified under the
TIA, after written request therefor by the Company or by any Holder who
has been a bona fide Holder of a Security for at least six months, or
(2) the Agent shall cease to be eligible under Section 7.8 and shall
fail to resign after written request therefor by the Company or by any
such Holder, or
(3) the Agent shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Agent or of its property
shall be appointed or
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<PAGE>
any public officer shall take charge or control of the Agent or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Agent, or (ii) any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Agent and
the appointment of a successor Agent.
(e) If the Agent shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Agent for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Agent and shall comply
with the applicable requirements of Section 7.10. If no successor Agent shall
have been so appointed by the Company and accepted appointment in the manner
required by Section 7.10, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of itself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Agent.
(f) The Company shall give, or shall cause such successor Agent to give,
notice of each resignation and each removal of the Agent and each appointment of
a successor Agent by mailing written notice of such event by first-class mail,
postage prepaid, to all Holders as their names and addresses appear in the
applicable Register. Each notice shall include the name of the successor Agent
and the address of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Agent, every such
successor Agent so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Agent an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Agent shall become
effective and such successor Agent, without any further act, deed or conveyance,
shall become vested with all the rights, powers, agencies and duties of the
retiring Agent; but, on the request of the Company or the successor Agent, such
retiring Agent shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Agent all the rights, powers and
trusts of the retiring Agent and shall duly assign, transfer and deliver to such
successor Agent all property and money held by such retiring Agent hereunder.
(b) Upon request of any such successor Agent, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Agent all such rights, powers and agencies referred to in
paragraph (a) of this Section.
(c) No successor Agent shall accept its appointment unless at the time of
such acceptance such successor Agent shall be qualified and eligible under this
Article.
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Section 7.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Agent shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Agent, shall be the successor of the Agent hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article, with
the execution or filing of any paper or any further act on the part of any of
the parties hereto. In case any Certificates shall have been authenticated and
executed on behalf of the Holders, but not delivered, by the Agent then in
office, any successor by merger, conversion or consolidation to such Agent may
adopt such authentication and execution and deliver the Certificates so
authenticated and executed with the same effect as if such successor Agent had
itself authenticated and executed such Securities.
Section 7.12. Preservation of Information; Communications to Holders.
(a) The Agent shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders received by the Agent in its
capacity as Registrar.
(b) If three or more Holders (herein referred to as "applicants") apply in
writing to the Agent, and furnish to the Agent reasonable proof that each such
applicant has owned a Security for a period of at least six months preceding the
date of such application, and such application states that the applicants desire
to communicate with other Holders with respect to their rights under this
Agreement or under the Securities and is accompanied by a copy of the form of
proxy or other communication which such applicants propose to transmit, then the
Agent shall mail to all the Holders copies of the form of proxy or other
communication which is specified in such request, with reasonable promptness
after a tender to the Agent of the materials to be mailed and of payment, or
provision for the payment, of the reasonable expenses of such mailing.
Section 7.13. No Obligations of Agent.
Except to the extent otherwise expressly provided in this Agreement, the
Agent assumes no obligations and shall not be subject to any liability under
this Agreement, the Pledge Agreement or any Purchase Contract in respect of the
obligations of the Holder of any Security thereunder. The Company agrees, and
each Holder of a Certificate, by his acceptance thereof, shall be deemed to have
agreed, that the Agent's execution of the Certificates on behalf of the Holders
shall be solely as agent and attorney-in-fact for the Holders, and that the
Agent shall have no obligation to perform such Purchase Contracts on behalf of
the Holders, except to the extent expressly provided in Article Five hereof.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Agent or its officers, employees or agents be liable under this Agreement to
any third party for indirect, special, punitive, or consequential loss or damage
of any kind whatsoever, including lost profits, whether or not the likelihood of
such loss or damage was known to the Agent, incurred without any act or deed
that is found to be attributable to gross negligence or willful misconduct on
the part of the Agent.
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Section 7.14. Tax Compliance.
(a) The Company will comply with all applicable certification, information
reporting and withholding (including "backup" withholding) requirements imposed
by applicable tax laws, regulations or administrative practice with respect to
(i) any payments made with respect to the Securities or (ii) the issuance,
delivery, holding, transfer, redemption or exercise of rights under the
Securities. Such compliance shall include, without limitation, the preparation
and timely filing of required returns and the timely payment of all amounts
required to be withheld to the appropriate taxing authority or its designated
agent.
(b) The Agent shall comply with any written direction received from the
Company with respect to the execution or certification of any required
documentation and the application of such requirements to particular payments or
Holders or in other particular circumstances, and may for purposes of this
Agreement rely on any such direction in accordance with the provisions of
Section 7.1(a)(2) hereof.
(c) The Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available, on
written request, to the Company or its authorized representative within a
reasonable period of time after receipt of such request.
ARTICLE VIII
Supplemental Agreements
Section 8.1. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders, the Company and the Agent, at any time
and from time to time, may enter into one or more agreements supplemental
hereto, in form satisfactory to the Company and the Agent, for any of the
following purposes:
(1) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company
herein and in the Certificates; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Agent; or
(4) to make provision with respect to the rights of Holders pursuant
to the requirements of Section 5.6(b); or
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<PAGE>
(5) except as provided for in Section 5.6, to cure any ambiguity, to
correct or supplement any provisions herein which may be inconsistent with
any other provisions herein, or to make any other provisions with respect
to such matters or questions arising under this Agreement, provided such
action shall not adversely affect the interests of the Holders.
Section 8.2. Supplemental Agreements With Consent of Holders.
With the consent of the Holders of not less than a majority of the
outstanding Purchase Contracts voting together as one class, by Act of said
Holders delivered to the Company and the Agent, the Company, when authorized by
a Board Resolution, and the Agent may enter into an agreement or agreements
supplemental hereto for the purpose of modifying in any manner the terms of the
Purchase Contracts, or the provisions of this Agreement or the rights of the
Holders in respect of the Securities; provided, however, that, except as
contemplated herein, no such supplemental agreement shall, without the unanimous
consent of the Holders of each outstanding Purchase Contract affected thereby,
(1) change any Payment Date;
(2) change the amount or the type of Collateral required to be
Pledged to secure a Holder's obligations under the Purchase Contract,
impair the right of the Holder of any Purchase Contract to receive
distributions on the related Collateral (except for the rights of Holders
of Corporate PIES to substitute the Treasury Securities for the Pledged
Preferred Securities or Pledged Debentures or the Applicable Ownership
Interest of the Treasury Portfolio or the rights of holders of Treasury
PIES to substitute Preferred Securities, Debentures or the Applicable
Ownership Interest of the Treasury Portfolio for the Pledged Treasury
Securities) or otherwise adversely affect the Holder's rights in or to
such Collateral or adversely alter the rights in or to such Collateral;
(3) reduce any Contract Adjustment Payments or change any place
where, or the coin or currency in which, any Contract Adjustment Payment
is payable;
(4) impair the right to institute suit for the enforcement of any
Purchase Contract;
(5) reduce the number of shares of Common Stock to be purchased
pursuant to any Purchase Contract, increase the price to purchase shares
of Common Stock upon settlement of any Purchase Contract, change the
Purchase Contract Settlement Date or otherwise adversely affect the
Holder's rights under any Purchase Contract; or
(6) reduce the percentage of the outstanding Purchase Contracts the
consent of whose Holders is required for any such supplemental agreement;
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<PAGE>
provided that if any amendment or proposal referred to above would adversely
affect only the Corporate PIES or the Treasury PIES, then only the affected
class of Holder as of the record date for the Holders entitled to vote thereon
will be entitled to vote on such amendment or proposal, and such amendment or
proposal shall not be effective except with the consent of Holders of not less
than a majority of such class; provided that the unanimous consent of the
Holders of each outstanding Purchase Contract of such class affected thereby
shall be required to approve any amendment or proposal specified in clauses
(1) - (6) above.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 8.3. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this Agreement, the Agent shall be entitled to receive,
and (subject to Section 7.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental agreement is
authorized or permitted by this Agreement. The Agent may, but shall not be
obligated to, enter into any such supplemental agreement which affects the
Agent's own rights, duties or immunities under this Agreement or otherwise.
Section 8.4. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every Holder
of Certificates theretofore or thereafter authenticated, executed on behalf of
the Holders and delivered hereunder, shall be bound thereby.
Section 8.5. Reference to Supplemental Agreements.
Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Agent, bear a notation in form
approved by the Agent as to any matter provided for in such supplemental
agreement. If the Company shall so determine, new Certificates so modified as to
conform, in the opinion of the Agent and the Company, to any such supplemental
agreement may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Agent in exchange for
Outstanding Certificates.
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<PAGE>
ARTICLE IX
Consolidation, Merger, Sale or Conveyance
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions.
The Company covenants that it will not merge or consolidate with any other
Person or sell, assign, transfer, lease or convey all or substantially all of
its properties and assets to any Person or group of affiliated Persons in one
transaction or a series of related transactions, unless (i) either the Company
shall be the continuing corporation, or the successor (if other than the
Company) shall be a corporation organized and existing under the laws of the
United States of America or a State thereof or the District of Columbia and such
corporation shall expressly assume all the obligations of the Company under the
Purchase Contracts, this Agreement and the Pledge Agreement by one or more
supplemental agreements in form reasonably satisfactory to the Agent and the
Collateral Agent, executed and delivered to the Agent and the Collateral Agent
by such corporation, and (ii) the Company or such successor corporation, as the
case may be, shall not, immediately after such merger or consolidation, or such
sale, assignment, transfer, lease or conveyance, be in default in the
performance of any covenant or condition hereunder, under any of the Securities
or under the Pledge Agreement.
Section 9.2. Rights and Duties of Successor Corporation.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance and upon any such assumption by a successor corporation in
accordance with Section 9.1, such successor corporation shall succeed to and be
substituted for the Company with the same effect as if it had been named herein
as the Company. Such successor corporation thereupon may cause to be signed, and
may issue either in its own name or in the name of NIPSCO Industries, Inc., any
or all of the Certificates evidencing Securities issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Agent; and, upon the order of such successor corporation, instead of the
Company, and subject to all the terms, conditions and limitations in this
Agreement prescribed, the Agent shall authenticate and execute on behalf of the
Holders and deliver any Certificates which previously shall have been signed and
delivered by the officers of the Company to the Agent for authentication and
execution, and any Certificate evidencing Securities which such successor
corporation thereafter shall cause to be signed and delivered to the Agent for
that purpose. All the Certificates issued shall in all respects have the same
legal rank and benefit under this Agreement as the Certificates theretofore or
thereafter issued in accordance with the terms of this Agreement as though all
of such Certificates had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance such change in phraseology and form (but not in substance)
may be made in the Certificates evidencing Securities thereafter to be issued as
may be appropriate.
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Section 9.3. Opinion of Counsel Given to Agent.
The Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale,
assignment, transfer, lease or conveyance, and any such assumption, complies
with the provisions of this Article and that all conditions precedent to the
consummation of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance have been met.
ARTICLE X
Covenants
Section 10.1. Performance Under Purchase Contracts.
The Company covenants and agrees for the benefit of the Holders from time
to time of the Securities that it will duly and punctually perform its
obligations under the Purchase Contracts in accordance with the terms of the
Purchase Contracts and this Agreement.
Section 10.2. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City of New
York an office or agency where Certificates may be presented or surrendered for
acquisition of shares of Common Stock upon settlement of the Purchase Contracts
on the Purchase Contract Settlement Date or Early Settlement and for transfer of
Collateral upon occurrence of a Termination Event, where Certificates may be
surrendered for registration of transfer or exchange, for a Collateral
Substitution or re-establishment of a Corporate PIES and where notices and
demands to or upon the Company in respect of the Securities and this Agreement
may be served. The Company will give prompt written notice to the Agent of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Agent with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and the Company hereby appoints the Agent as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where Certificates may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company will give prompt
written notice to the Agent of any such designation or rescission and of any
change in the location of any such other office or agency. The Company hereby
designates as the place of payment for the Securities the Corporate Trust Office
and appoints the Agent at its Corporate Trust Office as paying agent in such
city.
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<PAGE>
Section 10.3. Company to Reserve Common Stock.
The Company shall at all times prior to the Purchase Contract Settlement
Date reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock the full number of shares of Common Stock
issuable against tender of payment in respect of all Purchase Contracts
constituting a part of the Securities evidenced by Outstanding Certificates.
Section 10.4. Covenants as to Common Stock.
The Company covenants that all shares of Common Stock which may be issued
against tender of payment in respect of any Purchase Contract constituting a
part of the Outstanding Securities will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable.
Section 10.5. Statements of Officers of the Company as to Default.
The Company will deliver to the Agent, within 120 days after the end of
each fiscal year of the Company (which as of the date hereof is December 31)
ending after the date hereof, an Officers' Certificate (one of the signers of
which shall be the principal executive officer, principal financial officer or
principal accounting officer of the Company), stating whether or not to the best
knowledge of the signers thereof the Company is in default in the performance
and observance of any of the terms, provisions and conditions hereof, and if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
Section 10.6. ERISA.
Each Holder from time to time of the Securities which is a Plan hereby
represents that its acquisition of the Corporate PIES and the holding of the
same satisfies the applicable fiduciary requirements of ERISA and that it is
entitled to exemption relief from the prohibited transaction provisions of ERISA
and the Code in accordance with one or more prohibited transaction exemptions or
otherwise will not result in a nonexempt prohibited transaction.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
NIPSCO INDUSTRIES, INC.
By:
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Purchase Contract Agent
By:
------------------------------------
Name:
Title:
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EXHIBIT A
FACE OF CORPORATE PIES CERTIFICATE
"THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT 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 CERTIFICATE IS EXCHANGEABLE FOR
CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT
AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A TRANSFER OF THIS
CERTIFICATE 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 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), 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."
No. _______ Cusip No.______
Number of Corporate PIES ________
NIPSCO INDUSTRIES, INC.
NIPSCO CAPITAL TRUST I
Corporate PIES
This Corporate PIES Certificate certifies that Cede & Co. is the
registered Holder of the number of Corporate PIES set forth above. Each
Corporate PIES consists of (i) either (a) beneficial ownership by the Holder of
one Preferred Security (the "Preferred Security") of NIPSCO Capital Trust I, a
Delaware statutory business trust (the "Trust"), having a stated liquidation
amount of $50, subject to the Pledge of such Preferred Security by such Holder
pursuant to the Pledge Agreement or (b) upon the occurrence of a Tax Event
Redemption prior to the Purchase Contract Settlement Date, the appropriate
Applicable Ownership Interest of the Treasury Portfolio, subject to the Pledge
of such Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio by such Holder pursuant to
the Pledge Agreement, and (ii) the rights and obligations of the Holder under
one Purchase Contract with NIPSCO Industries, Inc., an Indiana corporation (the
"Company"). All capitalized
<PAGE>
terms used herein which are defined in the Purchase Contract Agreement (as
defined on the reverse hereof) have the meaning set forth therein.
Pursuant to the Pledge Agreement, the Preferred Securities or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be,
constituting part of each Corporate PIES evidenced hereby have been pledged to
the Collateral Agent, for the benefit of the Company, to secure the obligations
of the Holder under the Purchase Contract comprising a portion of such Corporate
PIES.
The Pledge Agreement provides that all payments of the liquidation amount
with respect to any of the Pledged Preferred Securities or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio, as the case may be, or cash distributions
on any Pledged Preferred Securities (as defined in the Pledge Agreement) or the
appropriate Applicable Ownership Interest (as specified in clause (B) of the
definition of such term) of the Treasury Portfolio, as the case may be,
constituting part of the Corporate PIES received by the Securities Intermediary
shall be paid by wire transfer in same day funds (i) in the case of (A) cash
distributions with respect to Pledged Preferred Securities or the appropriate
Applicable Ownership Interest (as specified in clause (B) of the definition of
such term) of the Treasury Portfolio, as the case may be, and (B) any payments
of the liquidation amount with respect to any Preferred Securities or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be, that
have been released from the Pledge pursuant to the Pledge Agreement, to the
Agent to the account designated by the Agent, no later than 2:00 p.m., New York
City time, on the Business Day such payment is received by the Securities
Intermediary (provided that in the event such payment is received by the
Securities Intermediary on a day that is not a Business Day or after 12:30 p.m.,
New York City time, on a Business Day, then such payment shall be made no later
than 10:30 a.m., New York City time, on the next succeeding Business Day) and
(ii) in the case of payments of the liquidation amount with respect to any of
the Pledged Preferred Securities or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, to the Company on the Purchase Contract Settlement Date (as
described herein) in accordance with the terms of the Pledge Agreement, in full
satisfaction of the respective obligations of the Holders of the Corporate PIES
of which such Pledged Preferred Securities or the Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, are a part under the Purchase Contracts forming a
part of such Corporate PIES. Distributions on any Preferred Security or the
appropriate Applicable Ownership Interest (as specified in clause (B) of the
definition of such term) of the Treasury Portfolio, as the case may be, forming
part of a Corporate PIES evidenced hereby, which are payable quarterly in
arrears on February 19, May 19, August 19 and November 19 of each year,
commencing May 19, 1999 (a "Payment Date"), shall, subject to receipt thereof by
the Agent from the Securities Intermediary, be paid to the Person in whose name
this Corporate PIES Certificate (or a Predecessor Corporate PIES Certificate) is
registered at the close of business on the Record Date for such Payment Date.
Each Purchase Contract evidenced hereby obligates the Holder of this
Corporate PIES Certificate to purchase, and the Company to sell, on February 19,
2003 (the "Purchase Contract
A-2
<PAGE>
Settlement Date"), at a price equal to $50 (the "Stated Amount"), a number of
Common Shares, without par value ("Common Stock"), of the Company, equal to the
Settlement Rate, unless on or prior to the Purchase Contract Settlement Date
there shall have occurred a Termination Event or an Early Settlement with
respect to the Corporate PIES of which such Purchase Contract is a part, all as
provided in the Purchase Contract Agreement and more fully described on the
reverse hereof. The purchase price (the "Purchase Price") for the shares of
Common Stock purchased pursuant to each Purchase Contract evidenced hereby, if
not paid earlier, shall be paid on the Purchase Contract Settlement Date by
separate cash or by application of payment received in respect of the
liquidation amount with respect to any Pledged Preferred Securities pursuant to
the Remarketing or the appropriate Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) of the Treasury Portfolio, as the
case may be, pledged to secure the obligations under such Purchase Contract of
the Holder of the Corporate PIES of which such Purchase Contract is a part.
The Company shall pay, on each Payment Date, in respect of each Purchase
Contract forming part of a Corporate PIES evidenced hereby an amount (the
"Contract Adjustment Payments") equal to (a) if a Reset Transaction has not
occurred, 1.85% per annum of the Stated Amount or (b) following the occurrence
of a Reset Transaction, the Adjusted Contract Adjustment Payment Rate related to
such Reset Transaction until any such succeeding Reset Transaction shall occur
(computed on the basis of (i) for any full quarterly period, a 360-day year of
twelve 30-day months and (ii) for any period shorter than a full quarterly
period, a 30-day month and for periods less than a month, the actual number of
days elapsed per 30-day period). Such Contract Adjustment Payments shall be
payable to the Person in whose name this Corporate PIES Certificate (or a
Predecessor Corporate PIES Certificate) is registered at the close of business
on the Record Date for such Payment Date.
Distributions on the Preferred Securities or the appropriate Applicable
Ownership Interest (as specified in clause (B) of the definition of such term)
of the Treasury Portfolio, as the case may be, and Contract Adjustment Payments
will be payable at the office of the Agent in The City of New York or, at the
option of the Company, by check mailed to the address of the Person entitled
thereto as such address appears on the Corporate PIES Register.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Agent by manual signature, this Corporate PIES Certificate shall not be entitled
to any benefit under the Pledge Agreement or the Purchase Contract Agreement or
be valid or obligatory for any purpose.
A-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
NIPSCO INDUSTRIES, INC.
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: THE CHASE MANHATTAN BANK, not
individually but solely as
Attorney-in-Fact of such Holder
By:
------------------------------------
Name:
Title:
Dated:
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Corporate PIES Certificates referred to in the within
mentioned Purchase Contract Agreement.
By: THE CHASE MANHATTAN BANK, as
Purchase Contract Agent
By:
------------------------------------
Authorized Officer
A-4
<PAGE>
(FORM OF REVERSE OF CORPORATE PIES CERTIFICATE)
Each Purchase Contract evidenced hereby is governed by a Purchase Contract
Agreement, dated as of February 16, 1999 (as may be supplemented from time to
time, the "Purchase Contract Agreement"), between the Company and The Chase
Manhattan Bank, as Purchase Contract Agent (including its successors hereunder,
the "Agent"), to which Purchase Contract Agreement and supplemental agreements
thereto reference is hereby made for a description of the respective rights,
limitations of rights, obligations, duties and immunities thereunder of the
Agent, the Company, and the Holders and of the terms upon which the Corporate
PIES Certificates are, and are to be, executed and delivered.
Each Purchase Contract evidenced hereby obligates the Holder of this
Corporate PIES Certificate to purchase, and the Company to sell, on the Purchase
Contract Settlement Date at a price equal to the Stated Amount (the "Purchase
Price"), a number of shares of Common Stock of the Company equal to the
Settlement Rate, unless, on or prior to the Purchase Contract Settlement Date,
there shall have occurred a Termination Event with respect to the Security of
which such Purchase Contract is a part or an Early Settlement shall have
occurred. The "Settlement Rate" is equal to (a) if the Applicable Market Value
(as defined below) is equal to or greater than $31.0500 (the "Threshold
Appreciation Price"), 1.6103 shares of Common Stock per Purchase Contract, (b)
if the Applicable Market Value is less than the Threshold Appreciation Price but
is greater than $26.3125, the number of shares of Common Stock per Purchase
Contract equal to the Stated Amount divided by the Applicable Market Value and
(c) if the Applicable Market Amount is less than or equal to $26.3125, 1.9002
shares of Common Stock per Purchase Contract, in each case subject to adjustment
as provided in the Purchase Contract Agreement. No fractional shares of Common
Stock will be issued upon settlement of Purchase Contracts, as provided in the
Purchase Contract Agreement.
Each Purchase Contract evidenced hereby, which is settled either through
Early Settlement or Cash Settlement, shall obligate the Holder of the related
Corporate PIES to purchase at the Purchase Price, and the Company to sell, a
number of newly issued shares of Common Stock equal to the Early Settlement Rate
or the Settlement Rate, as applicable.
The "Applicable Market Value" means the average of the Closing Price per
share of Common Stock on each of the 20 Trading Days ending on the third Trading
Day immediately preceding the Purchase Contract Settlement Date or any
applicable Early Settlement Date. The "Closing Price" of the Common Stock on any
date of determination means (i) the closing sale price (or, if no closing price
is reported, the last reported sale price) of the Common Stock on the New York
Stock Exchange (the "NYSE") on such date, (ii) if the Common Stock is not listed
for trading on the NYSE on any such date, the closing sale price as reported in
the composite transactions for the principal United States securities exchange
on which the Common Stock is so listed, (iii) if the Common Stock is not so
listed on a United States national or regional securities exchange, the closing
sale price as reported by The Nasdaq Stock Market, (iv) if the Common Stock is
not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or
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<PAGE>
(v) if such bid price is not available, the average of the mid-point of the last
bid and ask prices of the Common Stock on such date from at least three
nationally recognized independent investment banking firms retained for this
purpose by the Company. A "Trading Day" means a day on which the Common Stock
(A) is not suspended from trading on any national or regional securities
exchange or association or over-the-counter market at the close of business and
(B) has traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.
In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Corporate PIES Certificate may pay the Purchase Price for the
shares of Common Stock purchased pursuant to each Purchase Contract evidenced
hereby by effecting a Cash Settlement or an Early Settlement or from the
proceeds of the Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio or a remarketing of the
related Pledged Preferred Securities. A Holder of Corporate PIES who does not
effect, on or prior to 11:00 a.m. New York City time on the fifth Business Day
immediately preceding the Purchase Contract Settlement Date (or in the event a
Tax Event Redemption has occurred, the Business Day prior to the Purchase
Contract Settlement Date), an effective Cash Settlement or an Early Settlement,
shall pay the Purchase Price for the shares of Common Stock to be issued under
the related Purchase Contract from the proceeds of the Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio or the sale of the related Pledged Preferred Securities held
by the Collateral Agent. Such sale will be made by the Remarketing Agent
pursuant to the terms of the Remarketing Agreement on the third Business Day
prior to the Purchase Contract Settlement Date. If, as provided in the Purchase
Contract Agreement, upon the occurrence of a Failed Remarketing the Collateral
Agent, for the benefit of the Company, exercises its rights as a secured
creditor with respect to the Pledged Preferred related to this Corporate PIES
certificate, any accrued and unpaid distributions on such Pledged Preferred
Securities will become payable by the Company to the holder of this Corporate
PIES Certificate in the manner provided for in the Purchase Contract Agreement.
The Company shall not be obligated to issue any shares of Common Stock in
respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment of the aggregate purchase price for
the shares of Common Stock to be purchased thereunder in the manner herein set
forth.
Each Purchase Contract evidenced hereby and all obligations and rights of
the Company and the Holder thereunder shall terminate if a Termination Event
shall occur. Upon the occurrence of a Termination Event, the Company shall give
written notice to the Agent and to the Holders, at their addresses as they
appear in the Corporate PIES Register. Upon and after the occurrence of a
Termination Event, the Collateral Agent shall release the Pledged Preferred
Security or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio forming a
part of each Corporate PIES from the Pledge. A Corporate PIES shall thereafter
represent the right to receive the Preferred Security or the appropriate
Applicable Ownership Interest of the Treasury Portfolio forming a part of such
Corporate PIES in accordance with the terms of the Purchase Contract Agreement
and the Pledge Agreement.
A-6
<PAGE>
Under the terms of the Pledge Agreement, the Agent will be entitled to
exercise the voting and any other consensual rights pertaining to the Pledged
Preferred Securities. Upon receipt of notice of any meeting at which holders of
Preferred Securities are entitled to vote or upon the solicitation of consents,
waivers or proxies of holders of Preferred Securities, the Agent shall, as soon
as practicable thereafter, mail to the Corporate PIES Holders a notice (a)
containing such information as is contained in the notice or solicitation, (b)
stating that each Corporate PIES Holder on the record date set by the Agent
therefor (which, to the extent possible, shall be the same date as the record
date for determining the holders of Preferred Securities entitled to vote) shall
be entitled to instruct the Agent as to the exercise of the voting rights
pertaining to the Preferred Securities constituting a part of such Holder's
Corporate PIES and (c) stating the manner in which such instructions may be
given. Upon the written request of the Corporate PIES Holders on such record
date, the Agent shall endeavor insofar as practicable to vote or cause to be
voted, in accordance with the instructions set forth in such requests, the
maximum number of Preferred Securities as to which any particular voting
instructions are received. In the absence of specific instructions from the
Holder of a Corporate PIES, the Agent shall abstain from voting the Preferred
Security evidenced by such Corporate PIES.
Upon the liquidation of the Trust, a principal amount of the Debentures
constituting the assets of the Trust and underlying the Preferred Securities
equal to the aggregate liquidation amount of the Pledged Preferred Securities
shall be delivered to the Securities Intermediary in exchange for the Pledged
Preferred Securities. Thereafter, the Debentures shall be held by the Securities
Intermediary to secure the obligations of each Holder of Corporate PIES to
purchase shares of Common Stock under the Purchase Contracts constituting a part
of such Corporate PIES. Following the liquidation of the Trust, the Holders and
the Collateral Agent shall have such security interests, rights and obligations
with respect to the Debentures as the Holders and the Collateral Agent had in
respect of the Pledged Preferred Securities, any reference herein to the
Preferred Securities shall be deemed to be a reference to the Debentures and any
reference herein to the liquidation amount of the Preferred Securities shall be
deemed to be a reference to the principal amount of the Debentures.
Upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, the Redemption Price payable on the Tax Event
Redemption Date with respect to the Applicable Principal Amount of Debentures
shall be delivered to the Securities Intermediary in exchange for the Pledged
Preferred Securities. Thereafter, pursuant to the terms of the Pledge Agreement,
the Securities Intermediary will apply an amount equal to the Redemption Amount
of such Redemption Price to purchase, the Treasury Portfolio and promptly (a)
transfer the Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio to the Collateral Account to
secure the obligations of each Holder of Corporate PIES to purchase shares of
Common Stock under the Purchase Contracts constituting a part of such Corporate
PIES, (b) transfer the Applicable Ownership Interest (as specified in clause (B)
of the definition of such term) of the Treasury Portfolio to the Agent for the
benefit of the Holders of such Corporate PIES and (iii) remit the remaining
portion of such Redemption Price to the Agent for payment to the Holders of such
Corporate PIES.
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<PAGE>
Following the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, the Holders of Corporate PIES and the Collateral Agent
shall have such security interest rights and obligations with respect to the
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio as the Holder of Corporate PIES and the
Collateral Agent had in respect of the Preferred Securities or Debentures, as
the case may be, subject to the Pledge thereof as provided in Articles II, III,
IV, V and VI, of the Pledge Agreement and any reference herein to the Preferred
Securities shall be deemed to be a reference to such Treasury Portfolio.
The Corporate PIES Certificates are issuable only in registered form and
only in denominations of a single Corporate PIES and any integral multiple
thereof. The transfer of any Corporate PIES Certificate will be registered and
Corporate PIES Certificates may be exchanged as provided in the Purchase
Contract Agreement. The Corporate PIES Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents
permitted by the Purchase Contract Agreement. No service charge shall be
required for any such registration of transfer or exchange, but the Company and
the Agent may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. A holder who elects to
substitute a Treasury Security for Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, thereby creating
Treasury PIES, shall be responsible for any fees or expenses payable in
connection therewith. Except as provided in the Purchase Contract Agreement, for
so long as the Purchase Contract underlying a Corporate PIES remains in effect,
such Corporate PIES shall not be separable into its constituent parts, and the
rights and obligations of the Holder of such Corporate PIES in respect of the
Preferred Security or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, and Purchase Contract constituting such
Corporate PIES may be transferred and exchanged only as a Corporate PIES. The
holder of a Corporate PIES may substitute for the Pledged Preferred Securities
or the appropriate Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio securing its obligation
under the related Purchase Contract Treasury Securities in an aggregate
principal amount equal to the aggregate liquidation amount of the Pledged
Preferred Securities or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio in accordance with the terms of the Purchase Contract Agreement and
the Pledge Agreement. From and after such Collateral Substitution, the Security
for which such Pledged Treasury Securities secures the holder's obligation under
the Purchase Contract shall be referred to as a "Treasury PIES." A Holder may
make such Collateral Substitution only in integral multiples of 20 Corporate
PIES for 20 Treasury PIES; provided, however, that if a Tax Event Redemption has
occurred and the Treasury Portfolio has become a component of the Corporate
PIES, a Holder may make such Collateral Substitution only in integral multiples
of 160,000 Corporate PIES for 160,000 Treasury PIES. Such Collateral
Substitution may cause the equivalent aggregate principal amount of this
Certificate to be increased or decreased; provided, however, this Corporate PIES
Certificate shall not represent more than ____ Corporate PIES. All such
adjustments to the equivalent aggregate principal amount of this Corporate PIES
Certificate shall be duly recorded by placing an appropriate notation on the
Schedule attached hereto.
A-8
<PAGE>
A Holder of Treasury PIES may recreate Corporate PIES by delivering to the
Securities Intermediary Preferred Securities or the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, with an aggregate liquidation amount, in the case of
such Preferred Securities, or with the appropriate Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio, in the case of such appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, equal to the aggregate principal amount of the Pledged Treasury
Securities in exchange for the release of such Pledged Treasury Securities in
accordance with the terms of the Purchase Contract Agreement and the Pledge
Agreement.
The Company shall pay, on each Payment Date, the Contract Adjustment
Payments payable in respect of each Purchase Contract to the Person in whose
name the Corporate PIES Certificate evidencing such Purchase Contract is
registered at the close of business on the Record Date for such Payment Date.
Contract Adjustment Payments will be payable at the office of the Agent in The
City of New York or, at the option of the Company, by check mailed to the
address of the Person entitled thereto at such address as it appears on the
Corporate PIES Register.
The Purchase Contracts and all obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the Holders
to receive and the obligation of the Company to pay any Contract Adjustment
Payments, shall immediately and automatically terminate, without the necessity
of any notice or action by any Holder, the Agent or the Company, if, on or prior
to the Purchase Contract Settlement Date, a Termination Event shall have
occurred. Upon the occurrence of a Termination Event, the Company shall promptly
but in no event later than two Business Days thereafter give written notice to
the Agent, the Collateral Agent and the Holders, at their addresses as they
appear in the Corporate PIES Register. Upon and after the occurrence of a
Termination Event, the Collateral Agent shall release the Preferred Securities
or the appropriate Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio, as the case may be, from
the Pledge in accordance with the provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holder thereof, Purchase Contracts
underlying Securities may be settled early ("Early Settlement") as provided in
the Purchase Contract Agreement; provided, however, that if a Tax Event
Redemption has occurred and the Treasury Portfolio has become a component of the
Corporate PIES, Holders may settle early Corporate PIES only in integral
multiples of 160,000 Corporate PIES. In order to exercise the right to effect
Early Settlement with respect to any Purchase Contracts evidenced by this
Corporate PIES Certificate, the Holder of this Corporate PIES Certificate shall
deliver this Corporate PIES Certificate to the Agent at the Corporate Trust
Office duly endorsed for transfer to the Company or in blank with the form of
Election to Settle Early set forth below duly completed and accompanied by
payment in the form of immediately available funds payable to the order of the
Company in an amount (the "Early Settlement Amount") equal to (i) the product of
(A) the Stated Amount times (B) the number of Purchase Contracts with respect to
which the Holder has elected to effect Early Settlement, plus (ii) if such
delivery is made with respect to any Purchase Contracts during the period from
the close of
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<PAGE>
business on any Record Date for any Payment Date to the opening of business on
such Payment Date, an amount equal to the Contract Adjustment Payments payable
on such Payment Date with respect to such Purchase Contracts. Upon Early
Settlement of Purchase Contracts by a Holder of the related Securities, the
Pledged Preferred Securities or the appropriate Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio underlying such Securities shall be released from the Pledge as
provided in the Pledge Agreement and the Holder shall be entitled to receive a
number of shares of Common Stock on account of each Purchase Contract forming
part of a Corporate PIES as to which Early Settlement is effected equal to the
Early Settlement Rate. The Early Settlement Rate shall initially be equal to
1.6103 shares of Common Stock and shall be adjusted in the same manner and at
the same time as the Settlement Rate is adjusted as provided in the Purchase
Contract Agreement.
Upon registration of transfer of this Corporate PIES Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Agent pursuant to the
Purchase Contract Agreement), under the terms of the Purchase Contract Agreement
and the Purchase Contracts evidenced hereby and the transferor shall be released
from the obligations under the Purchase Contracts evidenced by this Corporate
PIES Certificate. The Company covenants and agrees, and the Holder, by its
acceptance hereof, likewise covenants and agrees, to be bound by the provisions
of this paragraph.
The Holder of this Corporate PIES Certificate, by its acceptance hereof,
authorizes the Agent to enter into and perform the related Purchase Contracts
forming part of the Corporate PIES evidenced hereby on its behalf as its
attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the Bankruptcy Code, agrees
to be bound by the terms and provisions thereof, covenants and agrees to perform
his obligations under such Purchase Contracts, consents to the provisions of the
Purchase Contract Agreement, authorizes the Agent to enter into and perform the
Purchase Contract Agreement and the Pledge Agreement on its behalf as its
attorney-in-fact, and consents to the Pledge of the Preferred Securities or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be,
underlying this Corporate PIES Certificate pursuant to the Pledge Agreement. The
Holder further covenants and agrees that, to the extent and in the manner
provided in the Purchase Contract Agreement and the Pledge Agreement, but
subject to the terms thereof, payments in respect to the aggregate liquidation
amount of the Pledged Preferred Securities or the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, on the Purchase Contract Settlement Date shall be
paid by the Collateral Agent to the Company in satisfaction of such Holder's
obligations under such Purchase Contract and such Holder shall acquire no right,
title or interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.
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<PAGE>
The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
The Company, the Agent and its Affiliates and any agent of the Company or
the Agent may treat the Person in whose name this Corporate PIES Certificate is
registered as the owner of the Corporate PIES evidenced hereby for the purpose
of receiving payments of distributions payable quarterly on the Preferred
Securities, receiving payments of Contract Adjustment Payments, performance of
the Purchase Contracts and for all other purposes whatsoever, whether or not any
payments in respect thereof be overdue and notwithstanding any notice to the
contrary, and neither the Company, the Agent nor any such agent shall be
affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof, entitle
the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection at
the offices of the Agent.
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<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ---------------Custodian---------------
(cust) (minor)
Under Uniform Gifts to Minors Act of ______________
___________________________________________________
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants in common
Additional abbreviations may also be used though not in the above list.
-------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please insert Social Security or Taxpayer I.D.
or other Identifying Number of Assignee)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Treasury PIES Certificates and all rights thereunder, hereby
irrevocably constituting and appointing ________________________________________
attorney to transfer said Treasury PIES Certificates on the books of [Name of
Company] with full power of substitution in the premises.
Dated:
--------------------- ------------------------------------------------
Signature
NOTICE: The signature to this assignment must
correspond with the name as it appears upon
the face of the within Corporate PIES
Certificates in every particular, without
alteration or enlargement or any change
whatsoever.
Signature Guarantee:
---------------------------------------
A-12
<PAGE>
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Corporate PIES evidenced
by this Corporate PIES Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned at
the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable incident
thereto.
Dated:
------------------------- ----------------------------------------
Signature
Signature Guarantee:
--------------------
(if assigned to another person)
If shares are to be registered
in the name of and delivered to a REGISTERED HOLDER
Person other than the Holder,
please (i) print such Person's name
and address and (ii) provide a
guarantee of your signature:
Please print name and address of
Registered Holder:
- ------------------------------------- ----------------------------------------
Name Name
- ------------------------------------- ----------------------------------------
Address Address
- ------------------------------------- ----------------------------------------
- ------------------------------------- ----------------------------------------
- ------------------------------------- ----------------------------------------
Social Security or other
Taxpayer Identification ----------------------------------------
Number, if any
A-13
<PAGE>
ELECTION TO SETTLE EARLY
The undersigned Holder of this Corporate PIES Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of Corporate PIES evidenced by this Corporate
PIES Certificate specified below. The undersigned Holder directs that a
certificate for shares of Common Stock deliverable upon such Early Settlement be
registered in the name of, and delivered, together with a check in payment for
any fractional share and any Corporate PIES Certificate representing any
Corporate PIES evidenced hereby as to which Early Settlement of the related
Purchase Contracts is not effected, to the undersigned at the address indicated
below unless a different name and address have been indicated below. Pledged
Preferred Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, deliverable upon such Early Settlement
will be transferred in accordance with the transfer instructions set forth
below. If shares are to be registered in the name of a Person other than the
undersigned, the undersigned will pay any transfer tax payable incident thereto.
Dated:
--------------------- ------------------------------------------------
Signature
Signature Guarantee:
---------------------------------------
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<PAGE>
Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected:
If shares of Common Stock or REGISTERED HOLDER
Corporate PIES Certificates are to
be registered in the name of and
delivered to and Pledged Preferred
Securities, or the Applicable
Ownership Interest of the Treasury
Portfolio, as the case may be, are
to be transferred to a Person other
than the Holder, please print such
Person's name and address:
Please print name and address of
Registered Holder:
- ------------------------------------- ----------------------------------------
Name Name
- ------------------------------------- ----------------------------------------
Address Address
- ------------------------------------- ----------------------------------------
- ------------------------------------- ----------------------------------------
- ------------------------------------- ----------------------------------------
Social Security or other
Taxpayer Identification ----------------------------------------
Number, if any
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<PAGE>
Transfer Instructions for Pledged Preferred Securities or the Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, Transferable
Upon Early Settlement or a Termination Event:
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<PAGE>
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate have been made:
================================================================================
Number of
Amount of Amount of PIES
decrease in increase in evidenced by
Number of Number of this Signature of
PIES PIES Global authorized
evidenced by evidenced by Certificate officer of
the the following such Trustee or
Global Global decrease or Securities
Date Certificate Certificate increase Custodian
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<PAGE>
EXHIBIT B
FACE OF TREASURY PIES CERTIFICATE
"THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT 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 CERTIFICATE IS EXCHANGEABLE FOR
CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT
AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A TRANSFER OF THIS
CERTIFICATE 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 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), 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."
No. _____ Cusip No. ________
Number of Treasury PIES _________
NIPSCO INDUSTRIES, INC.
NIPSCO CAPITAL TRUST I
Treasury PIES
This Treasury PIES Certificate certifies that Cede & Co. is the registered
Holder of the number of Treasury PIES set forth above. Each Treasury PIES
consists of (i) a 1/20 undivided beneficial ownership interest of a Treasury
Security having a principal amount at maturity equal to $1,000, subject to the
Pledge of such Treasury Security by such Holder pursuant to the Pledge
Agreement, and (ii) the rights and obligations of the Holder under one Purchase
Contract with NIPSCO Industries, Inc., an Indiana corporation (the "Company").
All capitalized terms used herein which are defined in the Purchase Contract
Agreement (as defined on the reverse hereof) have the meaning set forth therein.
<PAGE>
Pursuant to the Pledge Agreement, the Treasury Securities constituting
part of each Treasury PIES evidenced hereby have been pledged to the Collateral
Agent, for the benefit of the Company, to secure the obligations of the Holder
under the Purchase Contract comprising a portion of such Treasury PIES.
Each Purchase Contract evidenced hereby obligates the Holder of this
Treasury PIES Certificate to purchase, and the Company, to sell, on February 19,
2003 (the "Purchase Contract Settlement Date"), at a price equal to $50 (the
"Stated Amount"), a number of Common Shares, without par value ("Common Stock"),
of the Company equal to the Settlement Rate, unless on or prior to the Purchase
Contract Settlement Date there shall have occurred a Termination Event or an
Early Settlement with respect to the Treasury PIES of which such Purchase
Contract is a part, all as provided in the Purchase Contract Agreement and more
fully described on the reverse hereof. The purchase price for the shares of
Common Stock purchased pursuant to each Purchase Contract evidenced hereby, if
not paid earlier, shall be paid on the Purchase Contract Settlement Date by
application of the Proceeds from the Treasury Securities pledged to secure the
obligations under such Purchase Contract in accordance with the terms of the
Pledge Agreement.
The Company shall pay on each Payment Date in respect of each Purchase
Contract evidenced hereby an amount (the "Contract Adjustment Payments") equal
to (a) if a Reset Transaction has not occurred, 1.85% per annum of the Stated
Amount or (b) following the occurrence of a Reset Transaction, the Adjusted
Contract Adjustment Payment Rate related to such Reset Transaction until any
such succeeding Reset Transaction shall occur (computed on the basis of (i) for
any full quarterly period, a 360-day year of twelve 30-day months and (ii) for
any period shorter than a full quarterly period, a 30-day month and for periods
less than a month, the actual number of days elapsed per 30-day period), as the
case may be. Such Contract Adjustment Payments shall be payable to the Person in
whose name this Treasury PIES Certificate (or a Predecessor Treasury PIES
Certificate) is registered at the close of business on the Record Date for such
Payment Date.
Contract Adjustment Payments will be payable at the office of the Agent in
The City of New York or, at the option of the Company, by check mailed to the
address of the Person entitled thereto as such address appears on the Treasury
PIES Register.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Agent by manual signature, this Treasury PIES Certificate shall not be entitled
to any benefit under the Pledge Agreement or the Purchase Contract Agreement or
be valid or obligatory for any purpose.
B-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
NIPSCO INDUSTRIES, INC.
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts)
By: THE CHASE MANHATTAN BANK, not
individually but solely as
Attorney-in-Fact of such Holder
By:
------------------------------------
Name:
Title:
Dated:
B-3
<PAGE>
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Treasury PIES referred to in the within-mentioned
Purchase Contract Agreement.
By: THE CHASE MANHATTAN BANK, as
Purchase Contract Agent
By:
------------------------------------
Authorized Officer
B-4
<PAGE>
(REVERSE OF TREASURY PIES CERTIFICATE)
Each Purchase Contract evidenced hereby is governed by a Purchase Contract
Agreement, dated as of February 16, 1999 (as may be supplemented from time to
time, the "Purchase Contract Agreement") between the Company and The Chase
Manhattan Bank, as Purchase Contract Agent (including its successors thereunder,
herein called the "Agent"), to which the Purchase Contract Agreement and
supplemental agreements thereto reference is hereby made for a description of
the respective rights, limitations of rights, obligations, duties and immunities
thereunder of the Agent, the Company and the Holders and of the terms upon which
the Treasury PIES Certificates are, and are to be, executed and delivered.
Each Purchase Contract evidenced hereby obligates the Holder of this
Treasury PIES Certificate to purchase, and the Company to sell, on the Purchase
Contract Settlement Date at a price equal to the Stated Amount (the "Purchase
Price") a number of shares of Common Stock of the Company equal to the
Settlement Rate, unless on or prior to the Purchase Contract Settlement Date,
there shall have occurred a Termination Event with respect to the Security of
which such Purchase Contract is a part or an Early Settlement shall have
occurred. The "Settlement Rate" is equal to (a) if the Applicable Market Value
(as defined below) is equal to or greater than $31.0500 (the "Threshold
Appreciation Price"), 1.6103 shares of Common Stock per Purchase Contract, (b)
if the Applicable Market Value is less than the Threshold Appreciation Price but
is greater than $26.3125, the number of shares of Common Stock per Purchase
Contract equal to the Stated Amount divided by the Applicable Market Value and
(c) if the Applicable Market Amount is less than or equal to $26.3125, then
1.9002 shares of Common Stock per Purchase Contract, in each case subject to
adjustment as provided in the Purchase Contract Agreement. No fractional shares
of Common Stock will be issued upon settlement of Purchase Contracts, as
provided in the Purchase Contract Agreement.
Each Purchase Contract evidenced hereby, which is settled either through
Early Settlement or Cash Settlement, shall obligate the Holder of the related
Treasury PIES to purchase at the Purchase Price for cash, and the Company to
sell, a number of newly issued shares of Common Stock equal to the Early
Settlement Rate or the Settlement Rate, as applicable.
The "Applicable Market Value" means the average of the Closing Prices per
share of Common Stock on each of the 20 Trading Days ending on the third Trading
Day immediately preceding the Purchase Contract Settlement Date or any
applicable Early Settlement Date. The "Closing Price" of the Common Stock on any
date of determination means the (i) closing sale price (or, if no closing price
is reported, the last reported sale price) of the Common Stock on the New York
Stock Exchange (the "NYSE") on such date, (ii) if the Common Stock is not listed
for trading on the NYSE on any such date, the closing sale price as reported in
the composite transactions for the principal United States securities exchange
on which the Common Stock is so listed, (iii) if the Common Stock is not so
listed on a United States national or regional securities exchange, the closing
sale price as reported by The Nasdaq Stock Market, (iv) if the Common Stock is
not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or (v) if such bid price is not available, the average of the
mid-point of the last bid and ask prices of the Common Stock on such date from
at least three nationally recognized independent
B-5
<PAGE>
investment banking firms retained for this purpose by the Company. A "Trading
Day" means a day on which the Common Stock (A) is not suspended from trading on
any national or regional securities exchange or association or over-the-counter
market at the close of business and (B) has traded at least once on the national
or regional securities exchange or association or over-the-counter market that
is the primary market for the trading of the Common Stock.
In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Treasury PIES shall pay the Purchase Price for the shares of
Common Stock purchased pursuant to each Purchase Contract evidenced hereby
either by effecting a Cash Settlement or an Early Settlement of each such
Purchase Contract or by applying a principal amount of the Pledged Treasury
Securities underlying such Holder's Treasury PIES equal to the Stated Amount of
such Purchase Contract to the purchase of the Common Stock. A Holder of Treasury
PIES who does not effect, on or prior to 11:00 a.m. New York City time on the
Business Day immediately preceding the Purchase Contract Settlement Date, an
effective Cash Settlement or an Early Settlement, shall pay the Purchase Price
for the shares of Common Stock to be issued under the related Purchase Contract
from the proceeds of the Pledged Treasury Securities.
The Company shall not be obligated to issue any shares of Common Stock in
respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment of the aggregate purchase price for
the shares of Common Stock to be purchased thereunder in the manner herein set
forth.
Each Purchase Contract evidenced hereby and all obligations and rights of
the Company and the Holder thereunder shall terminate if a Termination Event
shall occur. Upon the occurrence of a Termination Event, the Company shall give
written notice to the Agent and to the Holders, at their addresses as they
appear in the Treasury PIES Register. Upon and after the occurrence of a
Termination Event, the Collateral Agent shall release the Pledged Treasury
Securities (as defined in the Pledge Agreement) forming a part of each Treasury
PIES. A Treasury PIES shall thereafter represent the right to receive the
interest in the Treasury Security forming a part of such Treasury PIES, in
accordance with the terms of the Purchase Contract Agreement and the Pledge
Agreement.
The Treasury PIES Certificates are issuable only in registered form and
only in denominations of a single Treasury PIES and any integral multiple
thereof. The transfer of any Treasury PIES Certificate will be registered and
Treasury PIES Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Treasury PIES Registrar may require a Holder, among other things,
to furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Agent may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. A Holder who elects to substitute Preferred
Securities, Debentures or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, for Treasury Securities, thereby
recreating Corporate PIES, shall be responsible for any fees or expenses
associated therewith. Except as provided in the Purchase Contract Agreement, for
so long as the Purchase Contract underlying a Treasury PIES remains in effect,
such Treasury PIES shall not be separable into its constituent parts, and the
rights and obligations of the Holder of such Treasury PIES in respect of
B-6
<PAGE>
the Treasury Security and the Purchase Contract constituting such Treasury PIES
may be transferred and exchanged only as a Treasury PIES. A Holder of Treasury
PIES may recreate Corporate PIES by delivering to the Collateral Agent Preferred
Securities or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, with a
liquidation amount, in the case of such Preferred Securities, with a principal
amount in the case of such Debentures, or with the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, in the case of such appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, equal to the aggregate principal amount at maturity of the
Pledged Treasury Securities in exchange for the release of such Pledged Treasury
Securities in accordance with the terms of the Purchase Contract Agreement and
the Pledge Agreement. From and after such substitution, the Holder's Security
shall be referred to as an "Corporate PIES." Such substitution may cause the
equivalent aggregate principal amount of this Certificate to be increased or
decreased; provided, however, this Treasury PIES Certificate shall not represent
more than ____ Treasury PIES. All such adjustments to the equivalent aggregate
principal amount of this Treasury PIES Certificate shall be duly recorded by
placing an appropriate notation on the Schedule attached hereto.
A Holder of a Corporate PIES may recreate a Treasury PIES by delivering to
the Collateral Agent Treasury Securities in an aggregate principal amount equal
to the aggregate liquidation amount of the Pledged Preferred Securities, the
aggregate principal amount at maturity of the Pledged Debentures or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be, in
exchange for the release of such Pledged Preferred Securities, Pledged
Debentures or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, as the
case may be, in accordance with the terms of the Purchase Contract Agreement and
the Pledge Agreement. Any such recreation of a Treasury PIES may be effected
only in multiples of 20 Corporate PIES for 20 Treasury PIES; provided, however,
if a Tax Event Redemption has occurred and the Treasury Portfolio has become a
component of the Corporate PIES, a Holder may recreate Corporate PIES in
integral multiples of 160,000 Corporate PIES for 160,000 Treasury PIES.
The Company shall pay, on each Payment Date, the Contact Adjustment
Payments payable in respect of each Purchase Contract to the Person in whose
name the Treasury PIES Certificate evidencing such Purchase Contract is
registered at the close of business on the Record Date for such Payment Date.
Contract Adjustment Payments will be payable at the office of the Agent in The
City of New York or, at the option of the Company, by check mailed to the
address of the Person entitled thereto at such address as it appears on the
Treasury PIES Register.
The Purchase Contracts and all obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the Holders
to receive and the obligation of the Company to pay Contract Adjustment
Payments, shall immediately and automatically terminate, without the necessity
of any notice or action by any Holder, the Agent or the Company, if, on or prior
to the Purchase Contract Settlement Date, a Termination Event shall have
occurred. Upon the occurrence of a Termination Event, the Company shall promptly
but in no event later than two Business Days thereafter give written notice to
the Agent, the Collateral
B-7
<PAGE>
Agent and the Holders, at their addresses as they appear in the Treasury PIES
Register. Upon the occurrence of a Termination Event, the Collateral Agent shall
release the Treasury Securities from the Pledge in accordance with the
provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holder thereof, Purchase Contracts
underlying Securities may be settled early ("Early Settlement") as provided in
the Purchase Contract Agreement. In order to exercise the right to effect Early
Settlement with respect to any Purchase Contracts evidenced by this Treasury
PIES the Holder of this Treasury PIES Certificate shall deliver this Treasury
PIES Certificate to the Agent at the Corporate Trust Office duly endorsed for
transfer to the Company or in blank with the form of Election to Settle Early
set forth below duly completed and accompanied by payment in the form of
immediately available funds payable to the order of the Company in an amount
(the "Early Settlement Amount") equal to (i) the product of (A) $50 times (B)
the number of Purchase Contracts with respect to which the Holder has elected to
effect Early Settlement, plus (ii) if such delivery is made with respect to any
Purchase Contracts during the period from the close of business on any Record
Date for any Payment Date to the opening of business on such Payment Date, an
amount equal to the Contract Adjustment Payments payable, if any, on such
Payment Date with respect to such Purchase Contracts. Upon Early Settlement of
Purchase Contracts by a Holder of the related Securities, the Pledged Treasury
Securities underlying such Securities shall be released from the Pledge as
provided in the Pledge Agreement and the Holder shall be entitled to receive a
number of shares of Common Stock on account of each Purchase Contract forming
part of a Treasury PIES as to which Early Settlement is effected equal to 1.6103
shares of Common Stock per Purchase Contract (the "Early Settlement Rate"). The
Early Settlement Rate shall be adjusted in the same manner and at the same time
as the Settlement Rate is adjusted as provided in the Purchase Contract
Agreement.
Upon registration of transfer of this Treasury PIES Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Agent pursuant to the
Purchase Contract Agreement), under the terms of the Purchase Contract Agreement
and the Purchase Contracts evidenced hereby and the transferor shall be released
from the obligations under the Purchase Contracts evidenced by this Treasury
PIES Certificate. The Company covenants and agrees, and the Holder, by its
acceptance hereof, likewise covenants and agrees, to be bound by the provisions
of this paragraph.
The Holder of this Treasury PIES Certificate, by its acceptance hereof,
authorizes the Agent to enter into and perform the related Purchase Contracts
forming part of the Treasury PIES evidenced hereby on its behalf as its
attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the Bankruptcy Code, agrees
to be bound by the terms and provisions thereof, covenants and agrees to perform
its obligations under such Purchase Contracts, consents to the provisions of the
Purchase Contract Agreement, authorizes the Agent to enter into and perform the
Purchase Contract Agreement and the Pledge Agreement on its behalf as its
attorney-in-fact, and consents to the Pledge of the Treasury Securities
underlying this Treasury PIES Certificate pursuant to the Pledge Agreement. The
Holder further covenants and agrees, that, to the extent and in the manner
provided in the Purchase Contract
B-8
<PAGE>
Agreement and the Pledge Agreement, but subject to the terms thereof, payments
in respect to the aggregate principal amount of the Pledged Treasury Securities
on the Purchase Contract Settlement Date shall be paid by the Collateral Agent
to the Company in satisfaction of such Holder's obligations under such Purchase
Contract and such Holder shall acquire no right, title or interest in such
payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.
The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
The Company, the Agent and its Affiliates and any agent of the Company or
the Agent may treat the Person in whose name this Treasury PIES Certificate is
registered as the owner of the Treasury PIES evidenced hereby for the purpose of
receiving payments of interest on the Treasury Securities, receiving payments of
Contract Adjustment Payments, performance of the Purchase Contracts and for all
other purposes whatsoever, whether or not any payments in respect thereof be
overdue and notwithstanding any notice to the contrary, and neither the Company,
the Agent nor any such agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof, entitle
the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection at
the offices of the Agent.
B-9
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ---------------Custodian---------------
(cust) (minor)
Under Uniform Gifts to Minors Act of ______________
___________________________________________________
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and
not as tenants in common
Additional abbreviations may also be used though not in the above list.
-------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
(Please insert Social Security or Taxpayer I.D.
or other Identifying Number of Assignee)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Treasury PIES Certificates and all rights thereunder, hereby
irrevocably constituting and appointing ________________________________________
attorney to transfer said Treasury PIES Certificates on the books of [Name of
Company] with full power of substitution in the premises.
Dated:
--------------------- ------------------------------------------------
Signature
NOTICE: The signature to this assignment must
correspond with the name as it appears upon
the face of the within Treasury PIES
Certificates in every particular, without
alteration or enlargement or any change
whatsoever.
Signature Guarantee:
---------------------------------------
B-10
<PAGE>
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Treasury PIES evidenced
by this Treasury PIES Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned at
the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable incident
thereto.
Dated:
------------------------- ----------------------------------------
Signature
Signature Guarantee:
--------------------
(if assigned to another person)
If shares are to be registered
in the name of and delivered to a REGISTERED HOLDER
Person other than the Holder,
please (i) print such Person's name
and address and (ii) provide a
guarantee of your signature:
Please print name and address of
Registered Holder:
- ------------------------------------- ----------------------------------------
Name Name
- ------------------------------------- ----------------------------------------
Address Address
- ------------------------------------- ----------------------------------------
- ------------------------------------- ----------------------------------------
- ------------------------------------- ----------------------------------------
Social Security or other
Taxpayer Identification ----------------------------------------
Number, if any
B-11
<PAGE>
ELECTION TO SETTLE EARLY
The undersigned Holder of this Treasury PIES Certificate irrevocably
exercises the option to effect Early Settlement in accordance with the terms of
the Purchase Contract Agreement with respect to the Purchase Contracts
underlying the number of Treasury PIES evidenced by this Treasury PIES
Certificate specified below. The option to effect Early Settlement may be
exercised only with respect to Purchase Contracts underlying Treasury PIES with
an aggregate Stated Amount equal to $1,000 or an integral multiple thereof. The
undersigned Holder directs that a certificate for shares of Common Stock
deliverable upon such Early Settlement be registered in the name of, and
delivered, together with a check in payment for any fractional share and any
Treasury PIES Certificate representing any Treasury PIES evidenced hereby as to
which Early Settlement of the related Purchase Contracts is not effected, to the
undersigned at the address indicated below unless a different name and address
have been indicated below. Pledged Treasury Securities deliverable upon such
Early Settlement will be transferred in accordance with the transfer
instructions set forth below. If shares are to be registered in the name of a
Person other than the undersigned, the undersigned will pay any transfer tax
payable incident thereto.
Dated:
--------------------- ------------------------------------------------
Signature
Signature Guarantee:
---------------------------------------
B-12
<PAGE>
Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected:
If shares of Common Stock or REGISTERED HOLDER
Treasury PIES Certificates are to
be registered in the name of and
delivered to and Pledged Treasury
Securities are to be transferred
to a Person other than the Holder,
please print such Person's name
and address:
Please print name and address of
Registered Holder:
- ------------------------------------- ----------------------------------------
Name Name
- ------------------------------------- ----------------------------------------
Address Address
- ------------------------------------- ----------------------------------------
- ------------------------------------- ----------------------------------------
- ------------------------------------- ----------------------------------------
Social Security or other
Taxpayer Identification ----------------------------------------
Number, if any
Transfer Instructions for Pledged Treasury Securities Transferable Upon Early
Settlement or a Termination Event:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-13
<PAGE>
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate have been made:
================================================================================
Number of
Amount of Amount of PIES
decrease in increase in evidenced by
Number of Number of this Signature of
PIES PIES Global authorized
evidenced by evidenced by Certificate officer of
the the following such Trustee or
Global Global decrease or Securities
Date Certificate Certificate increase Custodian
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
EXHIBIT C
INSTRUCTION TO PURCHASE CONTRACT AGENT
THE CHASE MANHATTAN BANK
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trust Group
Re: ________ PIES of NIPSCO Industries, Inc. (the
"Company") and NIPSCO Capital Trust I
The undersigned Holder hereby notifies you that it has delivered to The
First National Bank of Chicago, as Securities Intermediary, for credit to the
Collateral Account, $______ aggregate [principal] [liquidation] amount of
[Preferred Securities, Debentures or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may be,] [Treasury Securities] in exchange for
the [Pledged Preferred Securities, Pledged Debentures or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio, as the case may be,] [Pledged Treasury
Securities] held in the Collateral Account, in accordance with the Pledge
Agreement, dated as of February 16, 1999 (the "Pledge Agreement"; unless
otherwise defined herein, terms defined in the Pledge Agreement are used herein
as defined therein), between you, the Company, the Collateral Agent and the
Securities Intermediary. The undersigned Holder has paid all applicable fees
relating to such exchange. The undersigned Holder hereby instructs you to
instruct the Collateral Agent to release to you on behalf of the undersigned
Holder the [Pledged Preferred Securities, Pledged Debentures or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio, as the case may be,] [Pledged Treasury
Securities] related to such [Corporate PIES] [Treasury PIES].
Date:
--------------------- ------------------------------------------------
Signature
Signature Guarantee:
-------------------
Please print name and address of Registered Holder:
<PAGE>
- ------------------------------------ ------------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address
- ------------------------------------
- ------------------------------------
- ------------------------------------
C-2
<PAGE>
EXHIBIT D
NOTICE FROM PURCHASE CONTRACT AGENT
TO HOLDERS
(Transfer of Collateral upon Occurrence of a Termination Event)
[HOLDER]
- ---------------------------
- ---------------------------
Attention:
Telecopy:
------------
Re: PIES of NIPSCO Industries, Inc. (the
"Company") and NIPSCO Capital Trust I
Please refer to the Purchase Contract Agreement, dated as of February 16,
1999 (the "Purchase Contract Agreement"; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
among the Company and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the holders of PIES from time to time.
We hereby notify you that a Termination Event has occurred and that [the
Preferred Securities] [the Debentures] [the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio] [the Treasury Securities] underlying your ownership interest
in _____ [Corporate PIES] [Treasury PIES] have been released and are being held
by us for your account pending receipt of transfer instructions with respect to
such [Preferred Securities] [Debentures] [appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio] [Treasury Securities] (the "Released Securities").
Pursuant to Section 3.15 of the Purchase Contract Agreement, we hereby
request written transfer instructions with respect to the Released Securities.
Upon receipt of your instructions and upon transfer to us of your [Corporate
PIES] [Treasury PIES] effected through book-entry or by delivery to us of your
[Corporate PIES Certificate] [Treasury PIES Certificate], we shall transfer the
Released Securities by book-entry transfer, or other appropriate procedures, in
accordance with your instructions. In the event you fail to effect such transfer
or delivery, the Released Securities and any distributions thereon, shall be
held in our name, or a nominee in trust for your benefit, until such time as
such [Corporate PIES] [Treasury PIES] are transferred or your [Corporate PIES
Certificate] [Treasury PIES Certificate] is surrendered or satisfactory evidence
is provided that such your [Corporate PIES Certificate] [Treasury PIES
Certificate] has been destroyed, lost or stolen, together with any
indemnification that we or the Company may require.
D-1
<PAGE>
Date: By: THE CHASE MANHATTAN BANK
----------------------
----------------------------------------
Name:
Title:
D-2
<PAGE>
EXHIBIT E
NOTICE TO SETTLE BY SEPARATE CASH
THE CHASE MANHATTAN BANK
450 West 33rd Street
New York, N.Y. 10001
Attention: Corporate Trust Group
Re: ________ PIES of NIPSCO Industries, Inc. (the
"Company") and NIPSCO Capital Trust I
The undersigned Holder hereby irrevocably notifies you in accordance with
Section 5.4 of the Purchase Contract Agreement, dated as of February 16, 1999
(the "Purchase Contract Agreement"; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and yourselves, as Purchase Contract Agent and as
Attorney-in-Fact for the Holders of the Purchase Contracts, that such Holder has
elected to pay to the Securities Intermediary for deposit in the Collateral
Account, on or prior to 11:00 a.m. New York City time, on the [fifth Business
Day] [Business Day] immediately preceding the Purchase Contract Settlement Date
(in lawful money of the United States by certified or cashiers' check or wire
transfer, in immediately available funds), $______ as the Purchase Price for the
shares of Common Stock issuable to such Holder by the Company under the related
Purchase Contract on the Purchase Contract Settlement Date. The undersigned
Holder hereby instructs you to notify promptly the Collateral Agent of the
undersigned Holders election to make such cash settlement with respect to the
Purchase Contracts related to such Holder's [Corporate PIES] [Treasury PIES].
Date:
--------------------- ------------------------------------------------
Signature
Signature Guarantee:
-------------------
Please print name and address of Registered Holder:
<PAGE>
EXHIBIT F
NOTICE FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT AND INDENTURE TRUSTEE
(Payment of Purchase Contract Settlement Price)
The First National Bank of Chicago
1 North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Corporate Trust Administration Department
Telecopy: 312-407-1708
The Chase Manhattan Bank
450 West 33rd Street
New York, NY 10001
Attention: Corporate Trust Group
Telecopy: 212-946-8159
Re: PIES of NIPSCO Industries, Inc. (the
"Company") and NIPSCO Capital Trust I
Please refer to the Purchase Contract Agreement dated as of February 16,
1999 (the "Purchase Contract Agreement"; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the holders of PIES from time to time.
In accordance with Section 5.4 of the Purchase Contract Agreement and,
based on instructions and Cash Settlements received from Holders of Corporate
PIES as of 11:00 a.m, [DATE (fifth Business Day immediately preceding the
Purchase Contract Settlement Date)], we hereby notify you that [_____ Preferred
Securities][____ Debentures] are to be tendered for purchase in the Remarketing.
Date: By: THE CHASE MANHATTAN BANK
--------------------
--------------------------------
Name:
Title:
F-1
<PAGE>
EXHIBIT 4.4
NIPSCO INDUSTRIES, INC.
NIPSCO CAPITAL MARKETS, INC.
NIPSCO CAPITAL TRUST I
6,000,000 PREMIUM INCOME EQUITY SECURITIES(SM) ("PIES(SM)")*
Consisting of 6,000,000 Corporate PIES
UNDERWRITING AGREEMENT
February 9, 1999
LEHMAN BROTHERS INC.
GOLDMAN, SACHS & CO. AND
MORGAN STANLEY & CO. INCORPORATED,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
NIPSCO Industries, Inc., an Indiana corporation (the "Company"), and
NIPSCO Capital Trust I, a Delaware statutory business trust (the "Trust" and,
together with the Company, the "PIES Issuers") propose to sell to you (the
"Underwriters") 6,000,000 Premium Income Equity Securities ("PIES") (the "Firm
PIES"). In addition, the PIES Issuers propose to grant to the Underwriters an
option to purchase up to an additional 900,000 PIES on the terms and for the
purposes set forth in Section 3 (the "Option PIES"). The Firm PIES and the
Option PIES, if purchased, are hereinafter collectively called the "PIES."
Capitalized terms used herein without definition shall be used as defined in the
Final Prospectus (as hereinafter defined).
Each PIES will initially consist of a unit (a "Corporate PIES")
comprised of (a) a stock purchase contract (a "Purchase Contract") under which
(i) the holder will purchase from the Company on February 16, 2003, for $50, a
number of common shares, without par value, of the Company (the "Common Stock"),
equal to the Settlement Rate as set forth in the Purchase Contract Agreement (as
hereinafter defined) and (ii) the Company will pay to the holder contract
adjustment payments and (b) a Trust Preferred Security (a "Trust Preferred
Security"), having a stated liquidation amount of $50 per Trust Preferred
Security, representing an undivided beneficial ownership interest in the assets
of the Trust. In accordance with the terms of a Purchase Contract Agreement (the
"Purchase Contract Agreement") to be entered into between the Company and The
- --------
* "Premium Income Equity Securities" and "PIES" are service marks owned
by Lehman Brothers Inc.
<PAGE>
2
Chase Manhattan Bank, as Purchase Contract Agent (the "Purchase Contract
Agent"), the holders of the PIES will pledge the Trust Preferred Securities to
The First National Bank of Chicago, as Collateral Agent (the "Collateral
Agent"), pursuant to a Pledge Agreement (the "Pledge Agreement") to be entered
into among the Company, the Purchase Contract Agent, The First National Bank of
Chicago, as Securities Intermediary (the "Securities Intermediary"), and the
Collateral Agent, to secure the holders' obligations to purchase Common Stock
under the Purchase Contracts.
NIPSCO Capital Markets, Inc., an Indiana corporation and a
wholly-owned subsidiary of the Company ("Capital Markets" and, together with the
Company and the Trust, the "Issuers") will own all of the beneficial ownership
interests represented by the common securities (the "Common Securities" and,
together with the Trust Preferred Securities, the "Trust Securities") of the
Trust. Concurrently with the issuance of the Trust Preferred Securities and
Capital Markets' purchase of all of the Common Securities, the Trust will invest
the proceeds of each thereof in Capital Markets' Debentures due 2005 (the
"Debentures") to be issued pursuant to an Indenture, dated as of February 14,
1997 (the "Indenture"), between Capital Markets, the Company and The Chase
Manhattan Bank, as trustee (the "Indenture Trustee"). Capital Markets will
guarantee (the "Guarantee") the Trust Securities to the extent set forth in a
Guarantee Agreement (the "Guarantee Agreement") to be entered into between
Capital Markets and The Chase Manhattan Bank, as trustee (the "Guarantee
Trustee"), for the benefit of the holders from time to time of the Trust
Securities. The Trust Securities will be issued pursuant to the amended and
restated declaration of trust of the Trust (the "Amended Declaration"), among
Capital Markets, as Sponsor, Stephen P. Adik, Francis P. Girot, Jr. and Arthur
A. Paquin, as trustees (the "Regular Trustees"), The Chase Manhattan Bank, as
property trustee (the "Property Trustee"), Chase Manhattan Bank Delaware as the
Delaware trustee (the "Delaware Trustee" and, together with the Property Trustee
and the Regular Trustees, the "Trustees"), and the holders from time to time of
undivided beneficial ownership interests in the assets of the Trust.
This is to confirm the agreement concerning the purchase of the PIES
by the Underwriters.
1. Representations, Warranties and Agreements of the Company and
Capital Markets. The Company and Capital Markets jointly represent, warrant and
agree that:
(a) A registration statement on Form S-3 (File No. 333-69279)
and an amendment or amendments thereto with respect to the PIES have
(i) been prepared by the Issuers in conformity with the requirements
of the Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder,
(ii) been filed with the Commission under the Securities Act and
(iii) become effective under the Securities Act. The registration
statement, as amended at the date of this Agreement, meets the
requirements set forth in Rule 415(a)(1)(x) under the Securities Act
and complies in all other material respects with such Rule. The
Issuers propose to file with the Commission pursuant to Rule 424(b)
under the Securities Act ("Rule 424(b)") a supplement to the form of
prospectus included in the
<PAGE>
3
registration statement relating to the initial offering of the PIES
and the plan of distribution thereof and has previously advised you
of all further information (financial and other) with respect to the
Issuers to be set forth therein. The term "Registration Statement"
means the registration statement, as amended at the date of this
Agreement and as amended from time to time hereafter, including the
exhibits thereto, and all documents incorporated therein by
reference pursuant to Item 12 of Form S-3 (the "Incorporated
Documents"), and such prospectus as then amended, including the
Incorporated Documents, is hereinafter referred to as the "Basic
Prospectus"; and such supplemented form of prospectus, in the form
in which it shall be filed with the Commission pursuant to Rule
424(b) (including the Basic Prospectus as so supplemented), is
hereinafter called the "Final Prospectus". The Basic Prospectus, as
the same may be amended or supplemented from time to time,
including, without limitation, by any preliminary form of prospectus
supplement relating to the Corporate PIES, which has heretofore been
filed pursuant to Rule 424(b) is hereinafter called the "Interim
Prospectus". Any reference herein to the Registration Statement, any
Interim Prospectus or the Final Prospectus shall be deemed to refer
to and include the Incorporated Documents which were filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), on
or before the date of this Agreement, the issue date of any Interim
Prospectus or the issue date of the Final Prospectus, as the case
may be; and any reference herein to the terms "amend", "amendment"
or "supplement" with respect to the Registration Statement, any
Interim Prospectus or the Final Prospectus shall be deemed to refer
to and include the filing of any Incorporated Documents under the
Exchange Act after the date of this Agreement or the issue date of
the Basic Prospectus, any Interim Prospectus or the Final
Prospectus, as the case may be, and deemed to be incorporated
therein by reference. Copies of the Registration Statement and the
amendment or amendments to such Registration Statement have been
delivered by Issuers to the Underwriters.
(b) Giving effect to the interpretations of the requirements
of the Securities Act reflected in the Company's letter requesting
"no-action" submitted to the staff of the Commission (the "Staff"),
dated April 27, 1992, as supplemented by letters dated July 9, 1992
and September 21, 1992 (the "No-Action Request") and the Staff's
response thereto dated September 25, 1992 (the "Staff Response"),
(i) each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Interim Prospectus
or Final Prospectus complied or will comply when so filed in all
material respects with the Exchange Act and the applicable rules and
regulations of the Commission thereunder, (ii) each part of the
Registration Statement, when such part became effective, did not
contain and each such part, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (iii) any
Interim Prospectus complied and the Registration Statement and the
Final Prospectus comply, and, as amended or supplemented, if
applicable, will comply in all material respects with the Securities
<PAGE>
4
Act and the Rules and Regulations and (iv) any Interim Prospectus
did not contain and the Final Prospectus does not contain and, as it
may be amended or supplemented, will not contain an untrue statement
of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they are made, not misleading; provided
that no representation and warranty is made as to the statement of
eligibility and qualification on Form T-1 of the Indenture Trustee,
the Property Trustee or the Guarantee Trustee under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), or as
to information contained in or omitted from the Registration
Statement or the Final Prospectus in reliance upon and in conformity
with written information furnished to the Issuers by any Underwriter
specifically for inclusion therein; the Indenture, the Guarantee
Agreement and the Amended Declaration shall have been qualified
under and will comply in all material respects with the Trust
Indenture Act and the applicable rules and regulations thereunder;
and the Commission has not issued an order preventing or suspending
the use of the Registration Statement, any Interim Prospectus or the
Final Prospectus.
(c) Each of the Company and Capital Markets, Northern Indiana
Public Service Company ("Northern Indiana"), Bay State Gas Company
("Bay State") and IWC Resources Corporation ("IWCR" and, together
with Northern Indiana and Bay State, the "Significant Subsidiaries")
has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its
incorporation, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Final
Prospectus, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, or is
subject to no material liability or disability by reason of the
failure to be so qualified in any such jurisdiction; and each other
subsidiary (as defined in Section 16) of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation.
(d) The Company has an authorized capitalization as set forth
in the Final Prospectus; all of the issued capital shares of the
Company and each wholly-owned subsidiary of the Company have been
duly and validly authorized and issued and are fully paid and
non-assessable; and except as set forth in Exhibit 21 to the most
recent Form 10-K of the Company, all of the issued common shares of
Northern Indiana and Indianapolis Water Company ("IWC") and all the
issued capital shares of each other subsidiary of the Company
(except for directors' qualifying shares and except as set forth or
incorporated by reference in the Registration Statement) are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
<PAGE>
5
(e) Northern Indiana and IWCR constitute the only "significant
subsidiaries" (as such term is defined in Rule 1-02 of Regulation
S-X) of the Company.
(f) The unissued shares of Common Stock to be issued and sold
by the Company pursuant to the Purchase Contracts have been duly and
validly authorized and reserved for issuance and, when issued and
delivered in accordance with the provisions of the Purchase
Contracts, will be duly and validly issued, fully paid and
non-assessable.
(g) The Corporate PIES have been duly authorized by the
Company, and when duly executed by the Company (assuming due
execution by the Purchase Contract Agent as attorney-in-fact for the
holders thereof and due authentication by the Purchase Contract
Agent) and delivered by the Company and upon payment therefor as set
forth herein, will be duly and validly issued and outstanding, and
will constitute valid and binding obligations of the Company
entitled to the benefits of the Purchase Contract Agreement and
enforceable against the Company in accordance with their terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors rights generally, general
equitable principles (whether considered in a proceeding in equity
or at law) and an implied covenant of good faith and fair dealing.
(h) The Indenture has been duly authorized by Capital Markets
and the Company and (assuming due execution and delivery by the
Indenture Trustee) constitutes a valid and binding agreement of each
of Capital Markets and the Company enforceable against Capital
Markets and the Company in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing; and the Debentures
have been duly authorized by Capital Markets and, when duly
executed, authenticated, issued and delivered as contemplated by the
Indenture against payment of the agreed consideration therefor, will
be duly and validly issued and outstanding, and will constitute
valid and binding obligations of Capital Markets entitled to the
benefits of the Indenture and the Support Agreement, dated April 4,
1989, as amended as of May 15, 1989, December 10, 1990 and February
14, 1991 (the "Support Agreement"), between the Company and Capital
Markets, and enforceable in accordance with their terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
<PAGE>
6
(i) The Amended Declaration has been duly authorized by
Capital Markets, and when duly executed by the proper officers of
Capital Markets and the Regular Trustees (assuming due execution and
delivery by the Property Trustee and the Delaware Trustee) and
delivered by Capital Markets, will constitute a valid and binding
agreement of Capital Markets, enforceable against Capital Markets in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
(j) The Guarantee Agreement has been duly authorized by
Capital Markets and, when duly executed by the proper officers of
Capital Markets (assuming due execution and delivery by the
Guarantee Trustee) and delivered by Capital Markets, will constitute
a valid and binding agreement of Capital Markets enforceable against
Capital Markets in accordance with its terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
(k) The Purchase Contract Agreement has been duly authorized
by the Company and, when duly executed by the proper officers of the
Company (assuming due execution and delivery by the Purchase
Contract Agent) and delivered by the Company, will constitute a
valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
(l) The Pledge Agreement has been duly authorized by the
Company and, when duly executed by the proper officers of the
Company (assuming due execution and delivery by the Purchase
Contract Agent, the Securities Intermediary and the Collateral
Agent) and delivered by the Company, will constitute a valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
(m) This Agreement has been duly authorized, executed and
delivered by each of the Company and Capital Markets; and the
Remarketing Agreement (the "Remarketing Agreement") to be entered
into by the Company, the Trust, Capital
<PAGE>
7
Markets and Lehman Brothers Inc., as Remarketing Agent, has been
duly authorized by the Company and Capital Markets and will be, when
executed and delivered by the Company and Capital Markets, duly
executed and delivered by the Company and Capital Markets.
(n) The Corporate PIES, the Indenture, the Debentures, the
Trust Preferred Securities, the Common Stock to be issued and sold
pursuant to the Purchase Contracts, the Purchase Contract Agreement,
the Amended Declaration, the Guarantee Agreement, the Support
Agreement, the Pledge Agreement and the Remarketing Agreement, when
the Corporate PIES are delivered pursuant to this Agreement, will
conform to the descriptions thereof contained in the Final
Prospectus.
(o) The execution, delivery and performance of this Agreement,
the Indenture, the Amended Declaration, the Guarantee Agreement, the
Support Agreement, the Purchase Contract Agreement, the Pledge
Agreement and the Remarketing Agreement by the Company and Capital
Markets, as applicable, and the consummation by the Company and
Capital Markets of the transactions contemplated hereby and thereby
and the issuance and delivery of the Corporate PIES, the Debentures
and the Common Stock to be issued and sold pursuant to the Purchase
Contracts (the "Transactions") will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the properties or
assets of the Company or any of its subsidiaries is subject, nor
will such actions result in any violation of the provisions of the
charter or by-laws of the Company or any of its subsidiaries or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their respective properties or
assets; and except for the registration of the Debentures, the
Guarantees, the Purchase Contracts, the Common Stock to be issued
and sold pursuant to the Purchase Contracts, the PIES and the
obligations of the Company pursuant to the Support Agreement under
the Securities Act, the qualification of the Indenture, the Amended
Declaration and the Guarantee Agreement under the Trust Indenture
Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the purchase of
the Corporate PIES by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the
Transactions.
(p) There are no contracts, agreements or understandings
between (i) the Company or Capital Markets and (ii) any person
granting such person the right to require the Company or Capital
Markets to file a registration statement under the
<PAGE>
8
Securities Act with respect to any securities of the Company or
Capital Markets owned or to be owned by such person or to require
the Company or Capital Markets to include such securities in the
securities registered pursuant to the Registration Statement or in
any securities being registered pursuant to any other registration
statement filed by the Company or Capital Markets under the
Securities Act.
(q) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included or incorporated by reference in the Final Prospectus, any
loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
which could, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the general affairs,
management, financial position, shareholders' equity or results of
operations of the Company and its subsidiaries taken as a whole or
upon the ability of the Company or Capital Markets to perform their
obligations under this Agreement (a "Material Adverse Effect"),
otherwise than as set forth or contemplated in the Final Prospectus;
and, since the respective dates as of which information is given in
the Final Prospectus, there has not been any material change in the
consolidated share capital or long-term debt of the Company and its
subsidiaries or the consolidated share capital or long-term debt of
any Significant Subsidiary or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries (taken as a whole), otherwise than as set forth or
contemplated in the Final Prospectus.
(r) The financial statements filed as part of the Registration
Statement or incorporated by reference in the Final Prospectus
present fairly the financial condition and results of operations of
the entities purported to be shown thereby, at the dates and for the
periods indicated, and have been prepared in conformity with
generally accepted accounting principles applied on a consistent
basis throughout the periods involved and, with respect to financial
statements included in periodic reports filed by the Company
pursuant to Section 13 or 15(d) of the Exchange Act with the
Commission on and after September 25, 1992, contain the information
requested by the Staff in the Staff Response to be so included; and
the supporting schedules included or incorporated by reference in
the Final Prospectus present fairly the information required to be
stated therein.
(s) Arthur Andersen LLP, who have certified certain financial
statements of the Company, whose report appears in the Final
Prospectus or is incorporated by reference therein and who have
delivered the initial letter referred to in Section 8(i) hereof, are
independent public accountants as required by the Securities Act and
the Rules and Regulations, and KPMG Peat Marwick, LLP, who have
certified certain financial statements of Bay State, whose report
appears in the Final Prospectus or is
<PAGE>
9
incorporated by reference therein and who have delivered the initial
KPMG letter referred to in Section 8(j) hereof, are independent
public accountants as required by the Securities Act and the Rules
and Regulations.
(t) Each of the Company and each Significant Subsidiary has
good and marketable title in fee simple to such of its fixed assets
as are real property and good and marketable title to its other
assets reflected in the most recent consolidated balance sheet
incorporated by reference in the Final Prospectus, except properties
and assets that are leased or that are sold or otherwise disposed of
in the ordinary course of business after the date of said balance
sheet, subject to no mortgages, liens, charges or encumbrances of
any kind whatsoever ("Liens") other than Liens permitted under the
Indenture.
(u) Other than as set forth or incorporated by reference in
the Final Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party
or to which any property or asset of the Company or any of its
subsidiaries is the subject which could reasonably be expected
individually or in the aggregate to have a Material Adverse Effect;
and to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened
by others.
(v) The conditions for use of Form S-3, as set forth in the
General Instructions thereto, have been satisfied.
(w) There are no contracts or other documents which are
required to be described in the Final Prospectus or filed as
exhibits to the Registration Statement by the Securities Act or by
the Rules and Regulations which have not been described in the Final
Prospectus or filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules and
Regulations.
(x) None of the Company nor any Significant Subsidiary has any
material contingent liability which is not disclosed in the Final
Prospectus.
(y) None of the Company nor any Significant Subsidiary (i) is
in violation of its charter or by-laws or similar constitutive
documents, (ii) is in default in any respect, and no event has
occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of
any term, covenant or condition contained in any material indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to
which any of its properties or assets is subject, except where such
defaults, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, or (iii) is in violation
in any material respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its properties or assets
may be subject or has failed to obtain any material license, permit,
<PAGE>
10
certificate, franchise or other governmental authorization or permit
necessary to the ownership of its properties or assets or to the
conduct of its business, except where such violations or failures,
individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
(z) Neither the Company nor any subsidiary of the Company is
an "investment company" within the meaning of such term under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the
rules and regulations of the Commission thereunder; the Commission
has issued an order (the "Order") exempting Capital Markets from all
of the provisions of the 1940 Act; the Order is in full force and
effect; Capital Markets will continue to comply with the terms and
conditions of the Order, or otherwise remain exempt from all of the
provisions of the 1940 Act, so long as any PIES or Debentures are
outstanding; and Capital Markets will apply the proceeds of the sale
of the Debentures in the manner described in the Final Prospectus
and in accordance with the provisions of Rule 3a-5 under the 1940
Act.
(aa) The Support Agreement has been duly authorized by Capital
Markets and the Company and constitutes a valid and binding
agreement of each of Capital Markets and the Company enforceable
against Capital Markets and the Company in accordance with its
terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity
or at law) and an implied covenant of good faith and fair dealing;
the Company's obligations under the Support Agreement will rank
prior to the equity securities of the Company and equal with all
other unsecured and unsubordinated indebtedness of the Company,
whether now or hereafter outstanding; and the Debentures and the
Guarantee will be entitled to the benefits of the Support Agreement,
the obligations of Capital Markets under the Debentures and the
Guarantees will be deemed to be "Debt" (as defined in the Support
Agreement) for purposes of the Support Agreement and the holders of
the Debentures and the Guarantee will be entitled to the rights of
"Lenders" (as defined in the Support Agreement) under the Support
Agreement.
(bb) Each of the Company and each Significant Subsidiary has
statutory authority, franchises and consents free from burdensome
restrictions and adequate for the conduct of the business in which
it is engaged.
(cc) Except for the Company's ownership of the voting
securities of the Northern Indiana and IWCR, as and to the extent
described in the Final Prospectus, no person or corporation which is
a "holding company" or a "subsidiary company" of a "holding company"
(as such terms are defined in the Public Utility Holding Company Act
of 1935, as amended (the "1935 Act")), directly or indirectly owns,
controls or holds with power to vote 10% or more of the outstanding
voting securities
<PAGE>
11
of the Company or any Significant Subsidiary; the Company is a
"holding company" (as such term is defined in the 1935 Act) but is
exempt from all provisions of the 1935 Act pursuant to Section
3(a)(1) thereof except Section 9(a)(2) thereof; neither Northern
Indiana nor IWCR is a "holding company" as defined in the 1935 Act;
and Bay State is a "holding company" but is exempt from all
provisions of the 1935 Act pursuant to Section 3(a)(2) thereof
except Section 9(a)(2) thereof.
(dd) The Final Prospectus accurately describes the most
restrictive of the existing limitations on the payment of dividends
by Northern Indiana on its common shares held by the Company.
2. Representations, Warranties and Agreements of the Company,
Capital Markets and the Trust. The Company, Capital Markets and the Trust,
jointly and severally, represent, warrant and agree that:
(a) The Trust has been duly created and is validly existing as a
statutory business trust in good standing under the Business Trust Act of
the State of Delaware (the "Delaware Trust Act") with the trust power and
authority to own property and conduct its business as described in the
Final Prospectus, and has conducted and will conduct no business other
than the transactions contemplated by this Agreement as described in the
Final Prospectus; the Trust is not a party to or bound by any agreement or
instrument and after the Trust executes the Amended Declaration, the Trust
will not be a party to or bound by any agreement or instrument other than
this Agreement, the Remarketing Agreement, the Amended Declaration and the
other agreements entered into in connection with the transactions
contemplated hereby; the Trust has no liabilities or obligations other
than those arising out of the transactions contemplated by this Agreement,
the Remarketing Agreement and the Amended Declaration and described in the
Final Prospectus; and the Trust is not a party to or subject to any
action, suit or proceeding of any nature.
(b) The Amended Declaration has been duly authorized by Capital
Markets, as Sponsor, and, when duly executed and delivered by Capital
Markets, as Sponsor, and the Regular Trustees (assuming due authorization,
execution and delivery by the Property Trustee and the Delaware Trustee),
will constitute a valid and binding obligation of the Trust, enforceable
against the Trust in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing, and will conform to the description thereof contained in the
Final Prospectus.
(c) The Trust Securities, upon issuance and delivery and payment
therefor in the manner described herein, will be duly authorized, validly
issued, fully paid and, in the case of the Preferred Securities,
non-assessable and will conform to the descriptions contained in the Final
Prospectus.
<PAGE>
12
(d) This Agreement has been duly authorized, executed and delivered
by the Trust; and the Remarketing Agreement has been duly authorized by
the Trust and will be, when delivered by the Trust, duly executed and
delivered by the Trust.
(e) The execution, delivery and performance of this Agreement, the
Amended Declaration, the Remarketing Agreement and the Trust Securities by
the Trust, the purchase of the Debentures by the Trust from Capital
Markets, the distribution of the Debentures upon the liquidation of the
Trust in the circumstances contemplated by the Amended Declaration, and
the consummation by the Trust of the transactions contemplated herein and
in the Amended Declaration and the Remarketing Agreement (the "Trust
Transactions"), will not result in a violation of any statute or order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Trust or any of its assets; and except for the
registration of the Trust Preferred Securities under the Securities Act,
the qualification of the Amended Declaration under the Trust Indenture
Act, and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act or under
applicable state securities laws in connection with the purchase and
distribution of the Trust Preferred Securities by the Underwriters, no
consent, approval, authorization or order of or filing or registration
with, any such court or governmental agency or body is required for the
Trust Transactions.
(f) The Trust is not an "investment company" within the meaning of
such term under the Investment Company Act and the rules and regulations
of the Commission thereunder.
3. Purchase of the PIES by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the PIES Issuers agree to sell 6,000,000 Firm
PIES to the several Underwriters and each of the Underwriters, severally and not
jointly, agrees to purchase the number of the Firm PIES set forth opposite such
Underwriter's name in Schedule 1 hereto.
In addition, the PIES Issuers grant to the Underwriters an option to
purchase up to 900,000 Option PIES. Such option is granted solely for the
purpose of covering over-allotments in the sale of the Firm PIES and is
exercisable as provided in Section 5 hereof. Option PIES shall be purchased
severally for the account of the Underwriters in proportion to the number of
Firm PIES set forth opposite the name of such Underwriter in Schedule 1 hereto.
The respective obligations of each Underwriter with respect to the Option PIES
shall be adjusted by Lehman Brothers Inc. so that no Underwriter should be
obligated to purchase Option PIES other than in 100 unit amounts.
The price of both the Firm PIES and any Option PIES shall be $50 per
PIES.
The Issuers shall not be obligated to deliver any of the PIES to be
delivered on the First Delivery Date (as hereinafter defined) or the Second
Delivery Date (as hereinafter defined), as the case may be, except upon payment
for all the PIES to be purchased on such Delivery Date as provided herein.
<PAGE>
13
As compensation to the Underwriters for arranging the purchase of
the Debentures with the proceeds from the sale of the PIES, Capital Markets
will, on the applicable Delivery Date (as such term is defined in Section 5),
pay to Lehman Brothers Inc., for the accounts of the several Underwriters, an
amount equal to $1.50 per PIES to be delivered hereunder on such Delivery Date.
4. Offering of PIES by the Underwriters. Upon authorization by
Lehman Brothers Inc. of the release of the Firm PIES, the several Underwriters
propose to offer the Firm PIES for sale upon the terms and conditions set forth
in the Final Prospectus.
5. Delivery of and Payment for the PIES. Delivery of and payment for
the PIES shall be made at the office of Schiff Hardin & Waite, 6600 Sears Tower,
Chicago, Illinois 60606, at 8:30 A.M., Chicago time, on the fourth full business
day following the date of this Agreement or at such other date or place as shall
be determined by agreement between the Underwriters and the Company. This date
and time are sometimes referred to as the "First Delivery Date." On the First
Delivery Date, the Company, through the facilities of The Depository Trust
Company ("DTC"), shall deliver or cause to be delivered a securities entitlement
with respect to the Firm PIES to the Lehman Brothers Inc. for the account of
each Underwriter against payment to or upon the order of the Trust of the
purchase price by wire transfer of same-day funds to a bank account designated
by the Company. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
each Underwriter hereunder. Upon delivery, the Firm PIES shall be registered in
the name of Cede & Co., as nominee for DTC.
At any time on or before the thirtieth day after the date of this
Agreement the option granted in Section 3 may be exercised by written notice
being given to the Company by the Underwriters. Such notice shall set forth the
aggregate number of Option PIES as to which the option is being exercised, the
names in which the Option PIES are to be registered, the denominations in which
the Option PIES are to be issued and the date and time, as determined by the
Underwriters, when the Option PIES are to be delivered; provided, however, that
this date and time shall not be earlier than the First Delivery Date nor earlier
than the second business day after the date on which the option shall have been
exercised nor later than the fifth business day after the date on which the
option shall have been exercised. The date and time the Option PIES are
delivered are sometimes referred to as the "Second Delivery Date" and the First
Delivery Date and the Second Delivery Date are sometimes each referred to as a
"Delivery Date".
Delivery of and payment for the Option PIES shall be made at the
place specified in the first sentence of the first paragraph of this Section 5
(or at such other place as shall be determined by agreement between the
Underwriters and the Company) at 8:30 A.M., Chicago time, on the Second Delivery
Date. On the Second Delivery Date, the Company, through the facilities of DTC,
shall deliver or cause to be delivered a securities entitlement with respect to
the Option PIES to Lehman Brothers Inc. for the account of each Underwriter
against payment to or upon the order of the Trust of the purchase price by wire
transfer of same-day funds to a bank account designated by the Company. Time
shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Option PIES shall be registered in the name of
Cede & Co., as nominee of DTC.
<PAGE>
14
The Trust Preferred Securities underlying the PIES will be pledged
with the Collateral Agent to secure the holders' obligations to purchase Common
Stock under the Purchase Contracts. Such pledge shall be effected by the
transfer to the Securities Intermediary of the Trust Preferred Securities to be
pledged to the Collateral Agent in accordance with the Pledge Agreement.
6. Further Agreements of the Issuers. The Issuers agree:
(a) To prepare the Final Prospectus in a form approved by the
Underwriters and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than 10:00 A.M., New York City
time, on the second business day following the execution and
delivery of this Agreement; to make no further amendment or any
supplement to the Registration Statement, the Final Prospectus or
any Interim Prospectus except as permitted herein; to advise the
Underwriters, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Final Prospectus or any
amended Final Prospectus has been filed and to furnish the
Underwriters with copies thereof; to file promptly all reports and
any definitive proxy or information statements required to be filed
by the Issuers with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the Final
Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the PIES; to
advise the Underwriters, promptly after it receives notice thereof,
of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of the Final Prospectus or any
Interim Prospectus, of the suspension of the qualification of the
PIES for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the
Registration Statement or the Final Prospectus or for additional
information; and, in the event of the issuance of any stop order or
of any order preventing or suspending the use of the Final
Prospectus or suspending any such qualification, to use promptly
their best efforts to obtain its withdrawal.
(b) To furnish promptly to the Underwriters and to counsel for
the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto
filed with the Commission, including all consents and exhibits filed
therewith.
(c) To deliver promptly to the Underwriters in New York City
such number of the following documents as the Underwriters shall
request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto (in
each case excluding exhibits other than this Agreement, the
Indenture, the Amended Declaration, the Guarantee Agreement, the
Purchase Contract Agreement, the Pledge Agreement, the Support
Agreement and the Remarketing Agreement) and, (ii) the Final
Prospectus (not later than 10:00 A.M., New York City time, of the
day following the execution and delivery of this
<PAGE>
15
Agreement) and any amended or supplemented Final Prospectus (not
later than 10:00 A.M., New York City time, on the day following the
date of such amendment or supplement) and (iii) any document
incorporated by reference in any Interim Prospectus or Final
Prospectus (excluding exhibits thereto); and, if the delivery of a
prospectus is required at any time after the date hereof in
connection with the offering or sale of the PIES (or any other
securities relating thereto) and if at such time any event shall
have occurred as a result of which the Final Prospectus as then
amended or supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made when the Final Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary
during such same period to amend or supplement the Final Prospectus
or to file under the Exchange Act any document incorporated by
reference in the Final Prospectus in order to comply with the
Securities Act, the Exchange Act or the Trust Indenture Act, to
notify the Underwriters and to prepare and to file such amendment,
supplement or document, to cause any amendment of the Registration
Statement containing an amended Final Prospectus to be made
effective as soon as possible and to prepare and, at any time prior
to the expiration of nine months after the date hereof, furnish,
without charge (and at any time thereafter furnish at the expense of
the Underwriters), to each Underwriter and to any dealer in
securities as many copies as the Underwriters may from time to time
request of an amended or supplemented Final Prospectus which will
correct such statement or omission or effect such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Final Prospectus or any supplement to
the Final Prospectus that may, in the judgment of the Company or the
Underwriters, be required by the Securities Act or requested by the
Commission.
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Final Prospectus or any
document incorporated by reference in the Final Prospectus, to
furnish a copy thereof to the Underwriters and counsel for the
Underwriters; and not to file any such amendment or supplement which
shall be disapproved by the Underwriters promptly after reasonable
notice.
(f) As soon as practicable to make generally available to the
Company's security holders and to deliver to the Underwriters an
earnings statement of the Company and its subsidiaries (which need
not be audited) complying with Section 11(a) of the Securities Act
and the Rules and Regulations (including, at the option of the
Company, Rule 158).
(g) During a period of five years following the effective date
of the Registration Statement, to deliver to the Underwriters copies
of all reports or other communications (financial or other)
furnished to shareholders of the Company, and
<PAGE>
16
deliver to the Underwriters (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed
by the Company or Capital Markets with the Commission or any
national securities exchange on which the PIES or any class of
securities of the Company or Capital Markets is listed; and (ii)
such additional information concerning the business and financial
condition of the Company or Capital Markets as the Underwriters may
from time to time reasonably request (such financial statements to
be on a consolidated basis to the extent the accounts of the Company
and its subsidiaries are consolidated in reports furnished to the
Company's shareholders generally or to the Commission).
(h) Promptly from time to time to take such action as the
Underwriters may reasonably request to qualify the Debentures, the
Trust Preferred Securities, the Guarantees, the Purchase Contracts,
the Common Stock, the Corporate PIES and the obligations of the
Company pursuant to the Support Agreement for offering and sale
under the securities laws of such jurisdictions as the Underwriters
may request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distribution of the
Debentures, the Trust Preferred Securities, the Guarantees, the
Purchase Contracts, the Common Stock, the Corporate PIES and the
obligations of the Company pursuant to the Support Agreement;
provided that in connection therewith, neither the Company nor
Capital Markets nor the Trust, shall be required to qualify as a
foreign corporation or to file a general consent to service of
process in any jurisdiction.
(i) The Company, Capital Markets and the Trust shall not (i)
directly or indirectly, offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any PIES, Common Stock, Purchase Contracts,
Trust Preferred Securities or Debentures, as the case may be, or any
securities of the Company, Capital Markets or the Trust similar to
the PIES, Common Stock, Purchase Contracts, Trust Preferred
Securities or Debentures, or any security convertible into or
exercisable or exchangeable for PIES, Common Stock, Purchase
Contracts, Trust Preferred Securities or Debentures, or file any
registration statement under the Securities Act with respect to any
of the foregoing or (ii) enter into any swap or any other agreement
or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the PIES,
Common Stock, Purchase Contracts, Trust Preferred Securities or
Debentures, or any securities convertible into or exercisable or
exchangeable for PIES, Common Stock, Purchase Contracts, Trust
Preferred Securities or Debentures, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled
by delivery of PIES, Common Stock, Purchase Contracts, Trust
Preferred Securities, Debentures or such other securities, in cash
or otherwise, for a period of 90 days from the date hereof without
the prior written consent of Lehman Brothers Inc., other than (i)
pursuant to this Agreement, (ii) Treasury PIES or Corporate PIES to
be created or recreated upon
<PAGE>
17
substitution of pledged securities or shares of Common Stock
issuable upon early settlement of the Corporate PIES or Treasury
PIES, (iii) any shares of Common Stock issued by the Company upon
exercise of an option, warrant, or the conversion of a security
described herein, (iv) any shares of Common Stock issued, or options
to purchase such shares granted, pursuant to existing employee
benefit plans described in the Final Prospectus, (v) any shares of
Common Stock issued pursuant to any non-employee director stock plan
or dividend reinvestment plan or (vi) any medium-term notes
registered under the Registration Statement as of the date hereof..
(j) To use their best efforts to complete the listing of the
Corporate PIES and the Common Stock to be issued and sold pursuant
to the Purchase Contracts on the New York Stock Exchange, Inc.,
subject only to official notice of issuance and evidence of
satisfactory distribution.
(k) To use the net proceeds received by it from the sale of
the PIES pursuant to this Agreement in the manner specified in the
Final Prospectus under the caption "Use of Proceeds."
7. Expenses. The Company and Capital Markets, jointly and severally,
agree to pay (a) the fees, disbursements and expenses of the Issuers' counsel
and accountants in connection with the registration of the PIES under the
Securities Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Interim Prospectus and
the Final Prospectus and amendments and supplements thereto; (b) the costs
incident to the authorization, issuance, sale and delivery of the Debentures,
Trust Securities, Guarantees, Purchase Contracts, Common Stock to be issued and
sold pursuant to the Purchase Contracts and PIES and any taxes payable in
connection therewith; (c) the costs incident to the preparation, printing and
filing under the Securities Act of the Registration Statement and any amendments
and exhibits thereto; (d) the costs of distributing the Registration Statement
as originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Interim Prospectus, the Final
Prospectus and any amendment or supplement to any such prospectus or any
document incorporated by reference therein, all as provided in this Agreement;
(e) the costs of reproducing and distributing this Agreement; (f) the costs of
distributing the terms of any agreement relating to the organization of the
underwriting syndicate and selling group to the members thereof by mail, telex
or other means of communication; (g) any applicable listing or other fees; (h)
the fees and expenses of qualifying the Debentures, Trust Preferred Securities,
Guarantees, Purchase Contracts, Common Stock, Corporate PIES and the obligations
of the Company pursuant to the Support Agreement under the securities laws of
the several jurisdictions as provided in Section 6(h) and of preparing, printing
and distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Underwriters); (i) the filing fees and any expenses of legal
counsel incident to any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the PIES; (j) any fees
charged by securities rating services for rating the PIES (or any related
security); (k) the fees and expenses of the Purchase Contract Agent, the
Collateral Agent, the Securities Intermediary, the Indenture Trustee, the
Property Trustee, the Delaware Trustee and the Guarantee Trustee and their
respective counsel; (l) any transfer taxes payable in connection with the sale
of the PIES to the
<PAGE>
18
Underwriters; and (m) all other costs and expenses incident to the performance
of the obligations of the Issuers under this Agreement; provided that, except as
provided in this Section 7 and in Section 12, the Underwriters shall pay their
own costs and expenses, including the costs and expenses of their counsel, any
transfer taxes on the PIES which they may sell and the expenses of advertising
any offering of the PIES made by the Underwriters.
8. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Issuers
contained herein, to the performance by the Issuers of their respective
obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Final Prospectus shall have been timely filed with the
Commission in accordance with Section 6(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof or
suspending the qualification of the Indenture, the Guarantee Agreement or
the Amended Declaration shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission; and any
request of the Commission for inclusion of additional information in the
Registration Statement or the Final Prospectus or otherwise shall have
been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to such Delivery Date that the Registration Statement
or the Final Prospectus or any amendment or supplement thereto contains
any untrue statement of a fact which, in the opinion of Simpson Thacher &
Bartlett, counsel for the Underwriters, is material or omits to state any
fact which, in the opinion of such counsel, is material and is required to
be stated therein or is necessary to make the statements therein not
misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Indenture, the
Amended Declaration, the Guarantee Agreement, the Purchase Contract
Agreement, the Pledge Agreement, the Remarketing Agreement, the
Debentures, the Trust Securities, the Guarantees, the Purchase Contracts,
the Common Stock to be issued and sold pursuant to the Purchase Contracts,
the Support Agreement, the Registration Statement, any Interim Prospectus
and the Final Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and
the Issuers shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass upon
such matters.
(d) Schiff Hardin & Waite shall have furnished to the Underwriters
its written opinion, as counsel to the Company and Capital Markets,
addressed to the Underwriters and dated such Delivery Date, in form and
substance satisfactory to the Underwriters, to the effect that:
(i) The Company and each Significant Subsidiary have
been duly incorporated and are validly existing as
corporations in good standing under
<PAGE>
19
the laws of their respective jurisdictions of incorporation,
with respective power and authority (corporate and other) to
own their respective properties and conduct their businesses
as described in the Final Prospectus.
(ii) The Company has an authorized capitalization as set
forth in the Final Prospectus, all of the issued capital
shares of the Company and each Significant Subsidiary have
been duly and validly authorized and issued and are fully paid
and non-assessable; and all of the issued common shares of
Northern Indiana and all of the issued capital shares of IWCR
(except for directors' qualifying shares and as set forth or
incorporated by reference in the Registration Statement) are
owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims.
(iii) The Company and each Significant Subsidiary has
been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any
such jurisdiction.
(iv) There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the
voting or transfer of, (A) any shares of Common Stock issuable
pursuant to the Purchase Contracts or (B) the Debentures
pursuant to the Company's or Capital Markets' charter or
by-laws or any agreement or other instrument known to such
counsel.
(v) To the best of such counsel's knowledge and other
than as set forth in the Final Prospectus, there are no legal
or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or to which any property or
asset of the Company or any of its subsidiaries is subject
which could reasonably be expected individually or in the
aggregate to have a material adverse effect on the
consolidated financial position, shareholders' equity or
results of operations of the Company and its subsidiaries;
and, to the best of such counsel's knowledge and other than as
set forth in the Final Prospectus, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others.
(vi) The Registration Statement was declared effective
under the Securities Act, and the Indenture, the Amended
Declaration and the Guarantee Agreement were qualified under
the Trust Indenture Act, as of the date and time specified in
such opinion, the Final Prospectus was filed with the
Commission pursuant to the subparagraph of Rule 424(b) of the
Rules and Regulations specified in such opinion on the date
specified therein and, to the knowledge of such counsel, no
stop order suspending the effectiveness
<PAGE>
20
of the Registration Statement has been issued and no
proceeding for that purpose is pending or threatened by the
Commission.
(vii) Giving effect to the interpretations of the
requirements of the Securities Act reflected in the No-Action
Request and the Staff Response, the Registration Statement, as
of its effective date, and the Final Prospectus, as of its
date, and any further amendments or supplements thereto, as of
their respective dates, made by the Issuers prior to such
Delivery Date (other than the financial statements, related
schedules and other financial data contained therein, as to
which such counsel need express no opinion) complied as to
form in all material respects with the requirements of the
Securities Act and the Rules and Regulations and the Trust
Indenture Act; and the documents incorporated by reference in
the Final Prospectus and any further amendment or supplement
to any such incorporated document made by any of the Issuers
prior to such Delivery Date (other than the financial
statements, related schedules and other financial data
contained therein, as to which such counsel need express no
opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all
material respects with the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder; and the Indenture,
the Amended Declaration and the Guarantee Agreement conform in
all material respects to the requirements of the Trust
Indenture Act and the applicable rules and regulations
thereunder.
(viii) The statements contained in the Final Prospectus
under the captions (A) "Description of the Debentures,"
"Description of the Preferred Securities," "Description of the
Guarantee," "Relationship Among the Preferred Securities, the
Debentures and the Guarantee," "Description of the Common
Shares," "Description of the Stock Purchase Contracts and
Stock Purchase Units" and "Description of the Support
Agreement" in the Basic Prospectus and (B) "Prospectus
Supplement SummaryyThe Offering," "Description of the PIES,"
"Description of the Purchase Contracts," "Certain Provisions
of the Purchase Contracts, the Purchase Contract Agreement and
the Pledge Agreement," "Description of the Preferred
Securities," "Description of the Debentures" and "Description
of the Guarantee" in the Prospectus Supplement insofar as they
purport to constitute summaries of certain terms of documents
referred to therein, constitute accurate summaries of the
terms of such documents in all material respects.
(ix) The unissued shares of Common Stock to be issued
and sold by the Company pursuant to the Purchase Contracts
have been duly and validly authorized and reserved for
issuance and when issued and delivered in accordance with the
provisions of the Purchase Contracts, will be duly and validly
issued, fully paid and non-assessable.
<PAGE>
21
(x) The Corporate PIES have been duly authorized,
executed and delivered by the Company and (assuming due
execution by the Purchase Contract Agent as attorney-in-fact
of the holders thereof and due authentication by the Purchase
Contract Agent) upon payment therefor as set forth herein,
will be duly and validly issued and outstanding, and will
constitute valid and binding obligations of the Company
entitled to the benefits of the Purchase Contract Agreement
and enforceable against the Company in accordance with their
terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors rights
generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing.
(xi) The Indenture has been duly authorized, executed
and delivered by the Company and Capital Markets and (assuming
due authentication, execution and delivery by the Indenture
Trustee) constitutes a valid and binding agreement of each of
the Company and Capital Markets enforceable against the
Company and Capital Markets in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and
fair dealing.
(xii) The Debentures have been duly authorized, executed
and delivered by Capital Markets and (assuming due
authentication by the Indenture Trustee) upon payment therefor
as set forth herein, will constitute valid and binding
obligations of Capital Markets entitled to the benefits of the
Indenture and enforceable in accordance with their terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and
fair dealing.
(xiii) The Amended Declaration has been duly authorized,
executed and delivered by Capital Markets.
(xiv) The Guarantee Agreement has been duly authorized,
executed and delivered by Capital Markets and (assuming due
execution and delivery by the Guarantee Trustee) constitutes a
valid and binding agreement of Capital Markets enforceable
against Capital Markets in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (whether
<PAGE>
22
considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
(xv) The Purchase Contract Agreement and the Pledge
Agreement have been duly authorized, executed and delivered by
the Company and (assuming due execution and delivery by the
Purchase Contract Agent and, in the case of the Pledge
Agreement, the Securities Intermediary and the Collateral
Agent) constitute valid and binding agreements of the Company
enforceable against the Company in accordance with their
respective terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing provided, however,
that based on a review of applicable case law, upon the
occurrence of a Termination Event, Section 365(e)(1) of the
Bankruptcy Code (11 U.S.C. ss.ss. 101-1330, as amended) should
not substantively limit the provisions of Sections 3.15 and
5.8 of the Purchase Contract Agreement and Section 5.4 of the
Pledge Agreement that require termination of the Purchase
Contracts and release of the Collateral Agent's security
interest in the Trust Preferred Securities, the Debentures,
the Applicable Ownership Interest (as specified in clause (A)
of the definition thereof in the Amended Declaration) of the
Treasury Portfolio or the Treasury Securities.
(xvi) This Agreement and the Remarketing Agreement have
been duly authorized, executed and delivered by the Company
and Capital Markets.
(xvii) The Support Agreement has been duly authorized,
executed and delivered by the Company and Capital Markets and
constitutes a valid and binding agreement of the Company and
Capital Markets enforceable in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and
fair dealing; the Debentures and the Guarantee will be
entitled to the benefits of the Support Agreement, the
obligations of Capital Markets under the Debentures and the
Guarantees will be deemed to be "Debt" for purposes of the
Support Agreement and the holders of the Debentures and the
Guarantee will be entitled to the rights of "Lenders" under
the Support Agreement.
(xviii) The Transactions will not conflict with or
result in a breach or violation of any of the terms or
provisions of, or constitute a default under,
<PAGE>
23
any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel to which
the Trust, the Company or any of the Significant Subsidiaries
is a party or by which the Trust, the Company or any of the
Significant Subsidiaries is bound or to which any of the
properties or assets of the Trust, the Company or any of the
Significant Subsidiaries is subject, nor will such actions
result in any violation of the provisions of the charter or
by-laws of the Company or any of the Significant Subsidiaries
or the Amended Declaration or Certificate of Trust of the
Trust or any statute, rule or regulation or any order known to
such counsel of any court or governmental agency or body
having jurisdiction over the Trust, the Company or any of the
Significant Subsidiaries or any of their properties or assets;
and, except for the registration of the Debentures, the Trust
Preferred Securities, the Guarantees, the Purchase Contracts,
the Common Stock to be issued and sold pursuant to the
Purchase Contracts, the Company's obligations under the
Support Agreement and the PIES under the Securities Act, the
qualification of the Indenture, the Amended Declaration and
the Guarantee Agreement under the Trust Indenture Act, and
such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the
purchase of the PIES by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is
required for the Transactions.
(xix) The provisions of the Pledge Agreement are
effective to create, in favor of the Collateral Agent for the
benefit of the Company, a valid and perfected security
interest under the Uniform Commercial Code as in effect on the
date of such opinion in the State of New York (the "New York
UCC") in the Pledged Preferred Securities, Pledged Debentures,
Applicable Ownership Interests (as specified in clause (A) of
the definition thereof in the Amended Declaration) of the
Treasury Portfolio and Pledged Treasury Securities from time
to time credited to the Collateral Account in accordance with
the Pledge Agreement. For purposes of such counsel's opinion,
capitalized terms used in this clause (xix) shall have the
meanings ascribed to such terms in the Pledge Agreement.
(xx) The issuance and sale of the PIES do not contravene
the Commodity Exchange Act or the regulations of the Commodity
Futures Trading Commission.
(xxi) None of the Trust nor the Company or any of its
subsidiaries is, and upon the issuance and sale of the PIES as
herein contemplated and the application of the net proceeds
therefrom as described in the Final Prospectus will not be, an
"investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the 1940
Act.
<PAGE>
24
(xxii) Based upon current law and the assumptions stated
or referred to therein: (i) the Trust will be classified as a
grantor trust for United States federal income tax purposes
and not as an association taxable as a corporation; (ii) the
Debentures will be classified as indebtedness of Capital
Markets and (iii) the statements set forth in the Final
Prospectus under the caption "Certain United States Federal
Income Tax Consequences" insofar as they purport to constitute
summaries of matters of United States federal tax laws and
regulations or legal conclusions with respect thereto,
constitute accurate summaries of the matters described therein
in all material respects.
In rendering such opinion, such counsel may (i) state that its
opinion is limited to matters governed by the Federal laws of the
United States of America and the laws of the State of Indiana and
New York (with respect to clause (xi)) and (ii) rely (to the extent
such counsel deems proper and specifies in its opinion), as to
matters involving the application of the laws of the State of
Massachusetts upon the opinion of William D. MacGillivray, Esq. Such
counsel shall also advise the Underwriters that although such
counsel is not passing upon and assumes no responsibility or
liability for the accuracy, completeness or fairness of the
statements contained in the documents incorporated by reference in
the Final Prospectus or any further amendment or supplement thereto
made by the Company or Capital Markets prior to such Delivery Date,
they have no reason to believe that any of such documents (other
than the financial statements and related schedules therein, as to
which such counsel need express no opinion), when such documents
became effective or were filed with the Commission, as the case may
be, contained, in the case of a registration statement which became
effective under the Securities Act, an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein necessary to make the statements therein not
misleading, or, in the case of other documents which were filed
under the Securities Act or the Exchange Act with the Commission, an
untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in light of
the circumstances under which they were made when such documents
were so filed, not misleading. Such counsel shall also advise the
Underwriters that although such counsel is not passing upon and,
except as set forth in clauses (viii) and (xxii) above, assumes no
responsibility or liability for the accuracy, completeness or
fairness of the statements contained in the Registration Statement
and the Final Prospectus and any further amendments and supplements
thereto made by the Company or Capital Markets prior to such
Delivery Date, they have no reason to believe that, as of its
effective date, the Registration Statement or any further amendment
thereto made by the Company or Capital Markets prior to such
Delivery Date (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading or that, as of its date, the
Final Prospectus or any further amendment or supplement thereto made
by the Company or Capital Markets prior to such Delivery
<PAGE>
25
Date (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading or
that, as of such Delivery Date, either the Registration Statement or
the Final Prospectus or any further amendment or supplement thereto
made by the Company or Capital Markets prior to such Delivery Date
(other than the financial statements and related schedules therein,
as to which such counsel need express no opinion) contains an untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and they
do not know of any amendment to the Registration Statement required
to be filed or of any contracts or other documents of a character
required to be filed as an exhibit to the Registration Statement or
required to be incorporated by reference into the Final Prospectus
or required to be described in the Registration Statement or the
Final Prospectus which were not filed or incorporated by reference
or described as required.
(e) Richards, Layton & Finger, P.A. shall have furnished to
the Underwriters its written opinion, as special Delaware counsel to
the Issuers, addressed to the Underwriters and dated such Delivery
Date, in form and substance satisfactory to the Underwriters, to the
effect that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the
Delaware Trust Act. Under the Delaware Trust Act and the
Amended Declaration, the Trust has the business trust power
and authority to own property and to conduct its business as
described in the Final Prospectus and to enter into and
perform its obligations under this Agreement and the Trust
Securities.
(ii) The Common Securities have been duly authorized by
the Amended Declaration and, when issued and delivered by the
Trust to Capital Markets against payment therefor in
accordance with the terms of the Amended Declaration and as
described in the Final Prospectus, will be validly issued and
(subject to the terms in this paragraph) fully paid undivided
beneficial interests in the assets of the Trust (such counsel
may note that the holders of Common Securities will be subject
to the withholding provisions of Section 10.4 of the Amended
Declaration, will be required to make payment or provide
indemnity or security as set forth in the Amended Declaration
and will be liable for the debts and obligations of the Trust
to the extent provided in Section 9.1(b) of the Amended
Declaration); under the Delaware Trust Act and the Amended
Declaration, the issuance of the Common Securities is not
subject to preemptive rights.
<PAGE>
26
(iii) The Trust Preferred Securities have been duly
authorized by the Amended Declaration and, when issued and
delivered in accordance with the terms of the Amended
Declaration against payment therefor as set forth herein, the
Trust Preferred Securities will be validly issued and (subject
to the terms in this paragraph) fully paid and non-assessable
undivided beneficial interests in the assets of the Trust, the
Holders of the Trust Preferred Securities will be entitled to
the benefits of the Amended Declaration (subject to the
limitations set forth in clause (v) below) and 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
(such counsel may note that the holders of Trust Preferred
Securities will be subject to the withholding provisions of
Section 10.4 of the Amended Declaration and will be required
to make payment or provide indemnity or security as set forth
in the Amended Declaration); under the Delaware Trust Act and
the Amended Declaration, the issuance of the Trust Preferred
Securities is not subject to preemptive rights.
(iv) Under the Delaware Trust Act and the Amended
Declaration, all necessary trust action has been taken to duly
authorize the execution, delivery and performance by the Trust
of the Underwriting Agreement and the Remarketing Agreement.
(v) Assuming the Amended Declaration has been duly
authorized by Capital Markets and has been duly executed and
delivered by Capital Markets and the Regular Trustees, and
assuming due authorization, execution and delivery of the
Amended Declaration by the Property Trustee and the Delaware
Trustee, the Amended Declaration constitutes a valid and
binding obligation of Capital Markets and the Regular
Trustees, enforceable against Capital Markets and the Regular
Trustees in accordance with its terms, except to the extent
that enforcement thereof may be limited by (i) bankruptcy,
insolvency, moratorium, receivership, reorganization,
liquidation, fraudulent conveyance or transfer and other
similar laws relating to or affecting the rights and remedies
of creditors generally, (ii) principles of equity, including
applicable law relating to fiduciary duties (regardless of
whether considered and applied in a proceeding in equity or at
law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or
contribution.
(vi) The issuance and sale by the Trust of the Trust
Securities, the purchase by the Trust of the Debentures, the
execution, delivery and performance by the Trust of the
Underwriting Agreement, the consummation by the Trust of the
transactions contemplated by the Underwriting Agreement and
compliance by the Trust with its obligations thereunder do not
violate
<PAGE>
27
any of the provisions of the Certificate of Trust or the
Amended Declaration or any applicable Delaware law or
administrative regulation.
(vii) Assuming that the Trust derives no income from or
connected with sources within the State of Delaware and has no
assets, activities (other than having a Delaware Trustee as
required by the Delaware Trust Act and the filing of documents
with the Secretary of State of Delaware) or employees in the
State of Delaware, no filing with, or authorization, approval,
consent, license, order, registration, qualification or decree
of, any Delaware court or Delaware governmental authority or
agency (other that as may be required under the securities or
blue sky laws of the state of Delaware, as to which such
counsel need express no opinion) is necessary or required to
be obtained by the Trust solely in connection with the due
authorization, execution and delivery by the Trust of the
Underwriting Agreement or the offering, issuance, sale or
delivery of the Trust Preferred Securities.
(f) Kelley Drye & Warren LLP shall have furnished to the
Underwriters its written opinion, as counsel to The Chase Manhattan
Bank, as Property Trustee and Guarantee Trustee, addressed to the
Underwriters and dated such Delivery Date, in form and substance
satisfactory to the Underwriters, to the effect that:
(i) Each of the Property Trustee and the Guarantee
Trustee is duly incorporated as a New York banking corporation
with all necessary power and authority to execute and deliver
and perform their respective obligations under the terms of
the Amended Declaration and the Guarantee Agreement.
(ii) The execution, delivery and performance by the
Property Trustee of the Amended Declaration and the execution,
delivery and performance by the Guarantee Trustee of the
Guarantee Agreement have been duly authorized by all necessary
corporate action on the part of the Property Trustee and the
Guarantee Trustee, respectively. The Amended Declaration has
been duly executed and delivered by the Property Trustee and
the Guarantee Agreement has been duly executed and delivered
by the Guarantee Trustee and each constitutes the valid and
binding agreement of the Property Trustee and the Guarantee
Trustee, respectively, enforceable against the Property
Trustee and the Guarantee Trustee, respectively, in accordance
with their terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
<PAGE>
28
(iii) The execution, delivery and performance of the
Amended Declaration and the Guarantee Agreement by the
Property Trustee and the Guarantee Trustee, respectively, do
not conflict with or constitute a breach of the charter or
by-laws of the Property Trustee and the Guarantee Trustee,
respectively.
(iv) No consent, approval or authorization of, or
registration with or notice to, any New York or federal
banking authority is required for the execution, delivery or
performance by the Property Trustee and the Guarantee Trustee
of the Amended Declaration and the Guarantee Agreement,
respectively.
(g) Richards, Layton & Finger, P.A. shall have furnished to
the Underwriters its written opinion, as counsel to Chase Manhattan
Bank Delaware, as Delaware Trustee, addressed to the Underwriters
and dated such Delivery Date, in form and substance satisfactory to
the Underwriters, to the effect that:
(i) The Delaware Trustee has been duly incorporated and
is validly existing as a banking corporation in good standing
under the laws of the State of Delaware with all necessary
power and authority to execute and deliver, and to carry out
and perform its obligations under the terms of the Amended
Declaration.
(ii) The execution, delivery and performance by the
Delaware Trustee of the Amended Declaration has been duly
authorized by all necessary corporate action on the part of
the Delaware Trustee. The Amended Declaration has been duly
executed and delivered by the Delaware Trustee and constitutes
the valid and binding agreement of the Delaware Trustee
enforceable against the Delaware Trustee in accordance with
its terms, subject to (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent
conveyance or transfer and other similar laws relating to or
affecting the rights and remedies of creditors generally, (ii)
principles of equity, including applicable law relating to
fiduciary duties (regardless of whether considered and applied
in a proceeding in equity or at law), and (iii) the effect of
applicable public policy on the enforceability of provisions
relating to indemnification or contribution.
(iii) The execution, delivery and performance of the
Amended Declaration by the Delaware Trustee do not conflict
with or constitute a breach of the charter or by-laws of the
Delaware Trustee.
(iv) No consent, approval or authorization of, or
registration with or notice to, any Delaware or federal
banking authority is required for the
<PAGE>
29
execution, delivery or performance by the Delaware Trustee of
the Amended Declaration.
(h) Kelley Drye & Warren LLP shall have furnished to the
Underwriters its written opinion, as counsel to The Chase Manhattan
Bank, as Purchase Contract Agent, addressed to the Underwriters and
dated such Delivery Date, in form and substance satisfactory to the
Underwriters, to the effect that:
(i) The Purchase Contract Agent is duly incorporated as
a New York banking corporation with all necessary power and
authority to execute, deliver and perform its obligations
under the Purchase Contract Agreement and the Pledge
Agreement.
(ii) The execution, delivery and performance by the
Purchase Contract Agent of the Purchase Contract Agreement and
the Pledge Agreement, and the authentication and delivery of
the PIES have been duly authorized by all necessary corporate
action on the part of the Purchase Contract Agent. The
Purchase Contract Agreement and the Pledge Agreement have been
duly executed and delivered by the Purchase Contract Agent,
and constitute the valid and binding agreements of the
Purchase Contract Agent, enforceable against the Purchase
Contract Agent in accordance with their terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.
(iii) The execution, delivery and performance of the
Purchase Contract Agreement and the Pledge Agreement by the
Purchase Contract Agent does not conflict with or constitute a
breach of the charter or by-laws of the Purchase Contract
Agent.
(iv) No consent, approval or authorization of, or
registration with or notice to, any state or federal
governmental authority or agency is required for the
execution, delivery or performance by the Purchase Contract
Agent of the Purchase Contract Agreement and the Pledge
Agreement.
(i) With respect to the letter of Arthur Andersen LLP
delivered to the Underwriters concurrently with the execution of
this Agreement (the "initial letter"), the Issuers shall have
furnished to the Underwriters a letter (the "bring-down letter") of
such accountants, addressed to the Underwriters and dated such
Delivery Date (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of
the Commission,
<PAGE>
30
(ii) stating, as of the date of the bring-down letter (or, with
respect to matters involving changes or developments since the
respective dates as of which specified financial information is
given in the Final Prospectus, as of a date not more than five days
prior to the date of the bring-down letter), the conclusions and
findings of such firm with respect to the financial information and
other matters covered by the initial letter and (iii) confirming in
all material respects the conclusions and findings set forth in the
initial letter.
(j) With respect to the letter of KPMG Peat Marwick, LLP
delivered to the Underwriters concurrently with the execution of
this Agreement (the "initial KPMG letter"), the Issuers shall have
furnished to the Underwriters a letter (the "bring-down letter") of
such accountants, addressed to the Underwriters and dated such
Delivery Date (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of
the Commission, (ii) stating, as of the date of the bring-down
letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified
financial information is given in the Final Prospectus, as of a date
not more than five days prior to the date of the bring-down letter),
the conclusions and findings of such firm with respect to the
financial information and other matters covered by the initial
letter and (iii) confirming in all material respects the conclusions
and findings set forth in the initial KPMG letter.
(k) Each of the Company and Capital Markets shall have
furnished to the Underwriters a certificate, dated such Delivery
Date, of, (i) with respect to the Company, (A) Gary L. Neale, its
Chairman of the Board and President, or Patrick J. Mulchay, its
Executive Vice President, and (B) Stephen P. Adik, its chief
financial officer, and (ii) with respect to Capital Markets, Stephen
P. Adik, its President, and Francis P. Girot, Jr., its chief
financial officer, stating that:
(i) The representations, warranties and agreements of
the Company and Capital Markets in Sections 1 and 2 are true
and correct as of such Delivery Date; the Company and Capital
Markets have complied with all its agreements contained
herein; and the conditions set forth in Section 8(a) have been
fulfilled;
(ii) (A) Neither the Company nor any of its subsidiaries
has sustained since the date of the latest audited financial
statements included or incorporated by reference in the Final
Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, which could,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, otherwise than as set forth or
contemplated in the Final Prospectus and (B) since the
respective
<PAGE>
31
dates as of which information is given in the Final
Prospectus, there has not been any material change in the
consolidated share capital or long-term debt of the Company
and its subsidiaries or the consolidated share capital or
long-term debt of any Significant Subsidiary or any change, or
any development involving a prospective change, in or
affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company
and its subsidiaries (taken as a whole), otherwise than as set
forth or contemplated in the Final Prospectus; and
(iii) They have carefully examined the Registration
Statement and the Final Prospectus and, in their opinion (A)
the Registration Statement, as of its effective date, and the
Final Prospectus, as of its date, did not include any untrue
statement of a material fact and did not omit to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) since such
dates, no event has occurred which should have been set forth
in a supplement or amendment to either of the Registration
Statement or the Final Prospectus.
(l) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Final
Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated
in the Final Prospectus or (ii) since such date there shall not have
been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as
set forth or contemplated in the Final Prospectus, the effect of
which, in any such case described in clause (i) or (ii), is, in the
judgment of the Underwriters, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or
the delivery of the PIES being delivered on such Delivery Date on
the terms and in the manner contemplated in the Final Prospectus.
(m) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the
Company's or any Significant Subsidiary's debt securities by any
"nationally recognized statistical rating organization", as that
term is defined by the Commission for purposes of Rule 436(g)(2) of
the Rules and Regulations and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Company's
or any Significant Subsidiary's debt securities.
<PAGE>
32
(n) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum prices shall have been
established on any such exchange or such market by the Commission,
by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have
been declared by Federal or state authorities, (iii) the United
States shall have become engaged in hostilities, there shall have
been an escalation in hostilities involving the United States or
there shall have been a declaration of a national emergency or war
by the United States or (iv) there shall have occurred such a
material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the
financial markets in the United States shall be such) as to make it,
in the judgment of a majority in interest of the several
Underwriters, impracticable or inadvisable to proceed with the
public offering or delivery of the PIES being delivered on such
Delivery Date on the terms and in the manner contemplated in the
Final Prospectus.
(o) The New York Stock Exchange, Inc. shall have approved the
Corporate PIES for listing, subject only to official notice of
issuance.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
9. Indemnification and Contribution.
(a) The Issuers, jointly and severally, shall indemnify and hold
harmless each Underwriter, its officers and employees and each person, if any,
who controls any Underwriter within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of PIES), to which that
Underwriter, officer, employee or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in the Registration Statement,
any Interim Prospectus or the Final Prospectus, or in any amendment or
supplement thereto, or (B) in any blue sky application or other document
prepared or executed by any Issuer (or based upon any written information
furnished by the Issuers) specifically for the purpose of qualifying any or all
of the Debentures, the Trust Preferred Securities, the Guarantees, the Purchase
Contracts, the Common Stock or the Corporate PIES under the securities laws of
any state or other jurisdiction (any such application, document or information
being hereinafter called a "Blue Sky Application"), or (ii) the omission or
alleged omission to state in the Registration Statement, any Interim Prospectus
or the Final Prospectus, or in any amendment or supplement thereto, or in any
Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading
<PAGE>
33
and shall reimburse each Underwriter and each such officer, employee and
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by that Underwriter, officer, employee or controlling person
in connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that none of the Issuers shall be liable in any such case to
the extent that any such loss, claim, damage, liability or action arises out of,
or is based upon, any untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, any Interim Prospectus
or the Final Prospectus, or in any such amendment or supplement, or in any Blue
Sky Application in reliance upon and in conformity with the written information
furnished to the Issuers by any Underwriter specifically for inclusion therein
and described in Section 9(e); and provided further, that as to any Interim
Prospectus this indemnity agreement shall not inure to the benefit of any
Underwriter, its officers or employees or any person controlling that
Underwriter on account of any loss, claim, damage, liability or action arising
from the sale of PIES to any person by that Underwriter if that Underwriter
failed to send or give a copy of the Final Prospectus, as the same may be
amended or supplemented, to that person within the time required by the
Securities Act, and the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact in such
Interim Prospectus was corrected in the Final Prospectus, unless such failure
resulted from non-compliance by the Company with Section 6(c). For purposes of
the last proviso to the immediately preceding sentence, the term "Final
Prospectus" shall not be deemed to include the documents incorporated therein by
reference, and no Underwriter shall be obligated to send or give any supplement
or amendment to any document incorporated by reference in any Interim Prospectus
or the Final Prospectus to any person other than a person to whom such
Underwriter had delivered such incorporated document or documents in response to
a written request therefor. The foregoing indemnity agreement is in addition to
any liability which the Issuers may otherwise have to any Underwriter or to any
officer, employee or controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company and Capital Markets, their officers and employees,
each of their directors, the Trust and each Trustee and each person, if any, who
controls any of the Issuers within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company or any such director or officer, the Trust
or any Trustee or such controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in the Registration Statement,
any Interim Prospectus or the Final Prospectus, or in any amendment or
supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or
alleged omission to state in the Registration Statement, any Interim Prospectus
or the Final Prospectus, or in any amendment or supplement thereto, or in any
Blue Sky Application any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with the written
information furnished to the Issuers by that Underwriter specifically for
inclusion therein and described in Section 9(e), and shall reimburse the Company
and Capital Markets and any such director or officer, the Trust or any Trustee
or any such controlling
<PAGE>
34
person for any legal or other expenses reasonably incurred by the Company or
Capital Markets or any such director or officer, the Trust or any Trustee or any
such controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which any Underwriter may otherwise have to the Company or Capital
Markets or any such director or officer, the Trust or any Trustee or any such
controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 9 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 9.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Underwriters shall have the right to employ counsel to represent jointly the
Underwriters and their respective officers, employees and controlling persons
who may be subject to liability arising out of any claim in respect of which
indemnity may be sought by the Underwriters against the Issuers under this
Section 9 if, in the reasonable judgment of the Underwriters, it is advisable
for the Underwriters and their respective officers, employees and controlling
persons to be jointly represented by separate counsel, and in that event the
fees and expenses of such separate counsel shall be paid by the Issuers. No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss of
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 9 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 9(a) or 9(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein,
<PAGE>
35
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the Issuers on the one hand and the Underwriters on the other from
the offering of the PIES or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Issuers on the one hand and the Underwriters on the
other with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the Issuers
on the one hand and the Underwriters on the other with respect to such offering
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the PIES purchased under this Agreement (before deducting expenses)
received by the Issuers, on the one hand, and the total compensation received by
the Underwriters with respect to the PIES purchased under this Agreement, on the
other hand, bear to the total gross proceeds from the offering of the PIES under
this Agreement, in each case as set forth on the cover page of the Final
Prospectus. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Issuers
or the Underwriters, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Issuers and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 9(d) were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 9(d)
shall be deemed to include, for purposes of this Section 9(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9(d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the PIES
underwritten by it and distributed to the public was offered to the public
exceeds the amount of any damages which such Underwriter has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 9(d) are several in proportion to their respective underwriting
obligations and not joint.
(e) The Underwriters severally confirm that the statements with
respect to the public offering of the PIES set forth on the cover page of, and
under the caption "Underwriting" in, the Final Prospectus are correct and
constitute the only information furnished in writing to the Company by or on
behalf of the Underwriters specifically for inclusion in the Registration
Statement and the Final Prospectus.
10. Defaulting Underwriters.
<PAGE>
36
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the PIES which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of Firm PIES set forth opposite the
name of each remaining non-defaulting Underwriter in Schedule 1 hereto bears to
the total number of Firm PIES set forth opposite the names of all the remaining
non-defaulting Underwriters in Schedule 1 hereto; provided, however, that the
remaining non-defaulting Underwriters shall not be obligated to purchase any of
the PIES on such Delivery Date if the total number of the PIES which the
defaulting Underwriter or Underwriters agreed but failed to purchase on such
date exceeds 9.09% of the total number of PIES to be purchased on such Delivery
Date, and any remaining non-defaulting Underwriter shall not be obligated to
purchase more than 110% of the number of PIES which it agreed to purchase on
such Delivery Date pursuant to the terms of Section 5. If the foregoing maximums
are exceeded, the remaining non-defaulting Underwriters, or those other
underwriters satisfactory to the Underwriters who so agree, shall have the
right, but shall not be obligated, to purchase, in such proportion as may be
agreed upon among them, all the PIES to be purchased on such Delivery Date. If
the remaining Underwriters or other underwriters satisfactory to the
Underwriters do not elect to purchase the PIES which the defaulting Underwriter
or Underwriters agreed but failed to purchase on such Delivery Date, this
Agreement (or, with respect to the Second Delivery Date, the obligation of the
Underwriters to purchase, and of the Company to sell, the Option PIES) shall
terminate without liability on the part of any non-defaulting Underwriter or the
Issuers, except that the Company and Capital Markets will continue to be liable
for the payment of expenses to the extent set forth in Section 7. As used in
this Agreement, the term "Underwriter" includes, for all purposes of this
Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 10, purchases Firm PIES or
Option PIES which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Issuers for damages caused by its default. If
other underwriters are obligated or agree to purchase the PIES of a defaulting
or withdrawing Underwriter, either the Underwriters or the Company may postpone
the First Delivery Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Final
Prospectus or in any other document or arrangement.
11. Termination.
The obligations of the Underwriters hereunder may be terminated by
the Underwriters by notice given to and received by the Company prior to
delivery of and payment for the Firm PIES if, prior to that time, any of the
events described in Sections 8(l), 8(m) or 8(n) shall have occurred or if the
Underwriters shall decline to purchase the PIES for any reason permitted under
this Agreement.
12. Reimbursement of Underwriters' Expenses. If (a) the Company
shall fail to tender the PIES for delivery to the Underwriters for any reason
permitted under this Agreement, or
<PAGE>
37
(b) the Underwriters shall decline to purchase the PIES for any reason permitted
under this Agreement (including the termination of this Agreement pursuant to
Section 11 other than in accordance with Section 10 as a result of the default
by any Underwriter), the Company shall reimburse the Underwriters for the fees
and expenses of their counsel and for such other out-of-pocket expenses as shall
have been incurred by them in connection with this Agreement and the proposed
purchase of the PIES, and upon demand the Company shall pay the full amount
thereof to the Underwriters. If this Agreement is terminated pursuant to Section
10 by reason of the default of one or more Underwriters, the Company shall not
be obligated to reimburse any defaulting Underwriter on account of those
expenses.
13. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to Lehman Brothers Inc., Three
World Financial Center, New York, New York 10285, Attention:
Syndicate Department (Fax: 212-528-8822);
(b) if to the Company, Capital Markets or to the Trust, shall
be delivered or sent by mail, telex or facsimile transmission to the
address of the Company set forth in the Registration Statement,
Attention: Treasurer (Fax: 219-853-5352);
provided, however, that any notice to an Underwriter pursuant to Section 9(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to Lehman Brothers
Inc., which address will be supplied to any other party hereto by Lehman
Brothers Inc. upon request. Any such statements, requests, notices or agreements
shall take effect at the time of receipt thereof. The Issuers shall be entitled
to act and rely upon any request, consent, notice or agreement given or made on
behalf of the Underwriters by Lehman Brothers Inc.
14. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Issuers and
their respective successors. This Agreement and the terms and provisions hereof
are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Issuers contained
in this Agreement shall also be deemed to be for the benefit of the officers and
employees of each Underwriter and the person or persons, if any, who control
each Underwriter within the meaning of Section 15 of the Securities Act and (B)
the indemnity agreement of the Underwriters contained in Section 9(b) of this
Agreement shall be deemed to be for the benefit of directors, officers and
employees of the Issuers and any person controlling the Issuers within the
meaning of Section 15 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 14, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
15. Survival. The respective indemnities, representations,
warranties and agreements of the Issuers and the Underwriters contained in this
Agreement or made by or on behalf
<PAGE>
38
of them, respectively, pursuant to this Agreement, shall survive the delivery of
and payment for the PIES and shall remain in full force and effect, regardless
of any investigation made by or on behalf of any of them or any person
controlling any of them.
16. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
17. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of New York.
18. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
19. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE>
39
If the foregoing correctly sets forth the agreement among the
Company, Capital Markets, the Trust, and the Underwriters, please indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
NIPSCO INDUSTRIES, INC.
By:
-------------------------------
Title:
NIPSCO CAPITAL MARKETS, INC.
By:
-------------------------------
Title:
NIPSCO CAPITAL TRUST I
By: NIPSCO Capital Markets, Inc., as
Sponsor
By:
-------------------------------
Title:
Accepted:
LEHMAN BROTHERS INC.
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO.
INCORPORATED
By: LEHMAN BROTHERS INC.
By:
-------------------------
Authorized Representative
<PAGE>
SCHEDULE 1
Number of
Firm
Underwriters PIES
------------ ---------
Lehman Brothers Inc. ....................................... 3,300,000
Goldman, Sachs & Co. ....................................... 1,350,000
Morgan Stanley & Co. Incorporated .......................... 1,350,000
---------
Total ................................................ 6,000,000
=========
<PAGE>
(FORM OF FACE OF DEBENTURE)
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT: This Debenture is a
Global Security within the meaning of the Indenture 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 Debenture
is exchangeable for Debentures registered in the name of a person other than the
Depositary or its nominee only in the limited circumstances described in the
Indenture, and no transfer of this Debenture (other than a transfer of this
Debenture 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 Debenture is presented by an authorized representative of the
Depositary to the issuer or its agent for registration of transfer, exchange or
payment, and any Debenture 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 Indenture, 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.]
No._______________
$_________________
CUSIP No. 654638 AC9
5.90% SENIOR DEBENTURE DUE 2005
NIPSCO Capital Markets, Inc., an Indiana corporation ("Capital Markets", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to ______________________, or
registered assigns, the principal sum of _______ Dollars on __________________,
2005, and to pay interest on said principal sum from February 16, 1999, or from
the most recent interest payment date (each such date, an "Interest Payment
Date") to which interest has been paid or duly provided for, quarterly in
arrears on February 19, May 19, August 19 and November 19 of each year
commencing May 19, 1999, at the rate of 5.90% per annum until February 19, 2003,
and at the Reset Rate thereafter, until the principal hereof shall have become
due and payable, and on any overdue principal and premium, if any, and (without
duplication and to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the same rate per
annum compounded quarterly. The amount of interest payable for any period will
be computed (1) for any full quarterly period on the basis of a 360-day year of
twelve 30-day months and (2) for any period shorter than a full quarterly
period, on the basis of a 30-day month and, for any period less than a month, on
the basis of the actual number of days elapsed per 30-day month. In the event
that any date on which interest is payable is not a Business Day, then payment
of the interest payable on such date will be made on the next day that is a
Business Day (and without any interest or other payment in respect of such
delay), except that, if such Business Day is in the next calendar year, then
such payment will be made on the preceding Business Day. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture referred to on the
reverse side hereof, be paid to the person in whose name this Debenture (or one
or more Predecessor Securities, as defined in said Indenture) is registered at
the close of business on the Regular Record Date for such interest installment,
which, if this Debenture is a Global Security, shall be the close of business on
the Business Day preceding such Interest Payment Date or, if this Debenture is
not a Global Security, shall be the close of business on the 15th Business Day
preceding such Interest Payment Date;
<PAGE>
provided that interest paid at maturity shall be paid to the Person to whom
principal is paid. Any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the registered Holder on
such Regular Record Date and may be paid to the Person in whose name this
Debenture (or one or more Predecessor Securities) is registered at the close of
business on a special record date to be fixed by the Trustee referred to on the
reverse side hereof for the payment of such defaulted interest, notice whereof
shall be given to the registered Holders of the Debentures not less than 10 days
prior to such special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Debentures may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture. The principal of
and interest on this Debenture shall be payable at the office or agency of the
Trustee maintained for that purpose in any coin or currency of the United States
of America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of Capital Markets by check mailed to the registered Holder at such
address as shall appear in the Security Register. Notwithstanding the foregoing,
so long as the Holder of this Debenture is the Property Trustee, the payment of
the principal of (and premium, if any) and interest on this Debenture will be
made at such place and to such account as may be designated by the Property
Trustee.
This Debenture is, to the extent provided in the Indenture, senior and unsecured
and will rank in right of payment on a parity with all other senior unsecured
obligations of Capital Markets.
Unless the Certificate of Authentication hereon has been executed by the
Trustee, this Debenture shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose. The provisions of this Debenture are
continued on the reverse side hereof, and such continued provisions shall for
all purposes have the same effect as though fully set forth at this place.
<PAGE>
IN WITNESS WHEREOF, Capital Markets has caused this instrument to be
executed.
NIPSCO CAPITAL MARKETS, INC.
By:
-----------------------------------
Attest:
By:
-------------------------
Secretary
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series referred to in the within-mentioned
Indenture.
Dated: THE CHASE MANHATTAN BANK, as Trustee
----------------
By:
---------------------------------
Authorized Officer
<PAGE>
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Securities of Capital
Markets (herein sometimes referred to as the "Debentures"), all issued under and
pursuant to an Indenture dated as of February 14, 1997, duly executed and
delivered among NIPSCO Industries, Inc. ("Industries"), NIPSCO Capital Markets,
Inc. ("Capital Markets") and The Chase Manhattan Bank, as Trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture thereto dated as
of _________________________, 1999, among Industries, Capital Markets and the
Trustee (such Indenture as so supplemented, the "Indenture"), to which Indenture
and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, Capital Markets, Industries and the
Holders of the Debentures. By the terms of the Indenture, the Securities are
issuable in series that may vary as to amount, date of maturity, rate of
interest and in other respects as provided in the Indenture. This series of
Securities is limited in aggregate principal amount to $355,700,000.
All terms used in this Debenture that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
If a Tax Event occurs and is continuing, Capital Markets may, at its option and
upon not less than 30 nor more than 60 days' notice to the Holders of the
Debentures, redeem the Debentures in whole (but not in part) within 90 days
following the occurrence of such Tax Event at the Redemption Price. The
Redemption Price shall be paid prior to 12:00 noon, New York City time, on the
Tax Event Redemption Date, by check or wire transfer in immediately available
funds at such place and to such account as may be designated by each such
Holder.
The Debentures will not be subject to a sinking fund provision.
In case an Event of Default shall have occurred and be continuing, the principal
of all of the Debentures may be declared, and upon such declaration shall
become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
The Indenture contains provisions permitting Capital Markets and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Debentures and all other series of Securities affected
at the time Outstanding, as defined in the Indenture, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders of the
Debentures; provided, however, that no such supplemental indenture may, without
the consent of the Holder of each outstanding Debenture, among other things, (i)
change the stated maturity of the principal of, or any installment of interest
on, any Debenture, (ii) reduce the principal amount of, or the rate of interest
on or any premium payable upon the redemption of, the Debentures, (iii) impair
the right to institute suit for the enforcement of any such payment on or after
the stated maturity of or any redemption date for the Debentures or (iv) reduce
the above-stated percentage of principal amount of Debentures, the Holders of
which are required to modify or amend the Indenture, to consent to any waiver
thereunder or to approve any supplemental indenture. The Indenture also
contains provisions permitting the Holders of a majority in aggregate principal
amount of the Debentures at the time outstanding affected thereby, on behalf of
all of the Holders of the Debentures, to waive any past default in the
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture with respect to the Debentures, and its consequences,
except a default in the payment of the principal of or interest on any of the
Debentures (unless cured as provided in the Indenture) or in respect of a
covenant or provision that cannot be modified or amended without the consent of
the Holders of each Debenture then outstanding. Any such consent or
<PAGE>
waiver by the registered Holder of this Debenture (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such Holder and upon all
future Holders and owners of this Debenture and of any Debenture issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this Debenture or of
the Indenture shall alter or impair the obligation of Capital Markets, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Debenture at the time and place and at the rate and in the
money herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, this Debenture is transferable by the registered Holder hereof on the
Security Register of Capital Markets, upon surrender of this Debenture for
registration of transfer at the office or agency of Capital Markets in the City
and State of New York accompanied by a written instrument or instruments of
transfer in form satisfactory to Capital Markets or the Trustee duly executed by
the registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Debentures of authorized denominations and for the
same aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be made for any such transfer, but Capital
Markets may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Debenture, Capital
Markets, the Trustee, any paying agent and any Security Registrar may deem and
treat the registered holder hereof as the absolute owner hereof (whether or not
this Debenture shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Security Registrar) for the purpose
of receiving payment of or on account of the principal hereof and premium, if
any, and interest due hereon and for all other purposes, and neither Capital
Markets nor the Trustee nor any paying agent nor any Security Registrar shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the interest on
this Debenture, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Indenture, against any incorporator,
stockholder, officer or director, past, present or future, as such, of Capital
Markets or of any predecessor or successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issuance hereof, expressly waived and
released.
The Indenture imposes certain limitations on the ability of Capital Markets and
Industries to, among other things, merge, consolidate or sell, assign, transfer
or lease all or substantially all of its properties or assets. Such covenants
and limitations are subject to a number of important qualifications and
exceptions. Capital Markets and Industries must report periodically to the
Trustee on compliance with the covenants in the Indenture.
The Debentures of this series are issuable only in registered form without
coupons in denominations of $50 and any integral multiple thereof. As provided
in the Indenture and subject to certain limitations herein and therein set
forth, Debentures of this series so issued are exchangeable for a like aggregate
principal amount of Debentures of this series of a different authorized
denomination, as requested by the Holder surrendering the same.
<PAGE>
February 11, 1999
NIPSCO Industries, Inc.
NIPSCO Capital Markets, Inc.
NIPSCO Capital Trust I
Re: NIPSCO Industries, Inc., NIPSCO Capital Markets, Inc.
and NIPSCO Capital Trust Prospectus Supplement dated
February 9, 1999
Gentlemen:
As special tax counsel to NIPSCO Capital Trust I (the "Trust"), NIPSCO
Industries, Inc. (the "Company") and NIPSCO Capital Markets, Inc. ("Capital
Markets") in connection with the issuance of 6,000,000 Premium Income Equity
Securities of the Company and Trust (the "PIES") and assuming the operative
documents for the PIES described in the Prospectus Supplement dated February 9,
1999 of the Trust, Company and Capital Markets to which this opinion is filed as
an exhibit (the "Prospectus Supplement") will be performed in accordance with
the terms described therein, we are of the opinion that:
1. The Trust will be classified as a grantor trust for United States
federal income tax purposes and not as an association subject to tax
as a corporation;
2. The Debentures, as defined in the Prospectus Supplement, will be
classified as indebtedness of Capital Markets for United States
federal income tax purposes; and
3. The discussion in the Prospectus Supplement under the heading "Certain
United States Federal Income Tax Consequences," to the extent such
information constitutes matters of law, summaries of legal matters, or
legal conclusions, fairly presents in all material respects the
principal United States Federal income tax consequences of an
investment in PIES.
Our opinion is based on current provisions of the Internal Revenue Code of
1986, the Treasury Regulations promulgated thereunder, published pronouncements
of the Internal Revenue Service and case law, any of which may be changed at any
time with retroactive effect. Any change in applicable laws or facts and
circumstances surrounding the offering of the PIES, or any inaccuracy in the
statements, facts, assumptions and representations on which we have relied, may
affect the
<PAGE>
NIPSCO Industries, Inc.
NIPSCO Capital Markets, Inc.
NIPSCO Capital Trust I
February 11, 1999
Page 2
continuing validity of the opinions set forth herein. We assume no
responsibility to inform you of any such change or inaccuracy that may occur or
come to our attention.
We hereby consent to the filing of this opinion as an exhibit to the
Prospectus Supplement and the reference to us under the heading "Certain United
States Federal Income Tax Consequences" Prospectus Supplement.
Very truly yours,
SCHIFF HARDIN & WAITE
By: /s/ Lawrence H. Jacobson
--------------------------------------
Lawrence H. Jacobson
<PAGE>
EXHIBIT 12
NIPSCO INDUSTRIES, INC.
Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------------
1994 1995 1996 1997 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Earnings as defined in item
503(d) of Regulation S-K:
Income before interest
charges........................ $272,678,294 $284,665,276 $287,877,630 $319,514,639 $338,081,136
Adjustments-
Federal income taxes........... 100,320,953 95,676,572 80,626,310 97,010,863 115,799,335
State income tax............... 15,398,420 15,214,803 12,781,207 16,856,952 16,785,056
Deferred investment tax
credit, net................... (6,499,242) (7,515,362) (7,407,813) (7,375,636) (7,360,797)
Deferred income taxes, net..... (11,488,355) (1,479,358) 21,125,012 (1,466,940) (22,460,744)
Federal and state income
taxes included in other
income........................ (16,332,753) (2,698,478) (206,820) 987,240 (1,900,910)
Amortization of
capitalized interest.......... 103,130 247,516 247,512 0 0
------------ ------------ ------------ ------------ ------------
$354,180,447 $384,110,969 $395,043,038 $425,527,118 $438,943,076
============ ============ ============ ============ ============
Fixed charges as defined in
item 503(d) of Regulation SK:
Interest on long-term debt...... $ 78,292,155 $ 82,655,251 $ 84,254,716 $102,842,096 $111,419,929
Other interest.................. 11,650,228 13,561,297 17,759,136 13,453,006 16,536,021
Amortization of premium,
reacquisition premium,
discount and expense on debt,
net............................ 3,897,151 4,401,658 4,605,471 4,718,120 4,589,696
Interest portion of rent
expense........................ 2,220,575 2,415,111 2,656,116 2,939,650 7,899,302
Capitalized interest during
period......................... 2,145,182 234,613 0 0 0
------------ ------------ ------------ ------------ ------------
$ 98,205,291 $103,267,930 $109,275,439 $123,952,872 $140,444,948
============ ============ ============ ============ ============
Plus preferred stock dividends:
Preferred dividend
requirements of subsidiary..... $ 9,912,759 $ 9,046,207 $ 8,711,985 $ 8,691,457 $ 8,538,180
Preferred dividend requirements
factor......................... 1.47 1.54 1.59 1.54 1.49
------------ ------------ ------------ ------------ ------------
Preferred dividend requirements
of subsidiary.................. 14,571,756 13,931,159 13,852,056 13,384,844 12,721,888
Fixed charges................... 98,205,291 103,267,930 109,275,439 123,952,872 140,444,948
------------ ------------ ------------ ------------ ------------
$112,777,047 $117,199,089 $123,127,495 $137,337,716 $153,166,836
============ ============ ============ ============ ============
Ratio of earnings to fixed
charges......................... 3.14 3.28 3.21 3.10 2.87
</TABLE>
