SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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) September 28, 1999
NiSource Inc.
----------------------------------------
(Exact name of registrant as specified in its charter)
Indiana
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(State or other jurisdiction of incorporation)
1-9779 35-1719974
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(Commission File Number) (IRS Employer Identification No.)
801 East 86th Avenue Merrillville, Indiana 46410-6271
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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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Item 7. Financial Statements and Exhibits
The following exhibits are filed herewith:
4.1 Pricing Agreement dated September 23, 1999 among
NiSource Capital Markets, Inc. and Goldman, Sachs & Co.
and Barclays Capital Inc., as Underwriters.
4.2 Form of Certificate Evidencing Puttable Reset
Securities PURS Servicemark due 2010.
12.1 Statement Regarding Computation of Ratio of Earnings to
Fixed Charges.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1935, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
NiSource Inc.
Registrant
Dated: September 30, 1999 By: /s/ Nina M. Rausch
--------------------------
Nina M. Rausch
Secretary
3
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
4.1 Pricing Agreement dated September 23, 1999
among NiSource Capital Markets, Inc. and
Goldman, Sachs & Co. and Barclays Capital
Inc., as Underwriters.
4.2 Form of Certificate Evidencing Puttable Reset
Securities PURS Servicemark due 2010.
12.1 Statement Regarding Computation of Ratio of
Earnings to Fixed Charges.
4
EXHIBIT 4.1
-----------
PRICING AGREEMENT
Goldman, Sachs & Co.,
Barclays Capital Inc.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
September 23, 1999
Ladies and Gentlemen:
NiSource Capital Markets, Inc., an Indiana corporation (the
"Company") and wholly-owned subsidiary of NiSource Inc., an Indiana
corporation ("NiSource"), proposes, subject to the terms and
conditions stated herein and in the Underwriting Agreement, dated
September 23, 1999. (the "Underwriting Agreement"), between NiSource
and the Company on the one hand and Goldman, Sachs & Co. and Barclays
Capital Inc. on the other hand, to issue and sell to the Underwriters
named in Schedule I hereto (the "Underwriters") the Securities
specified in Schedule II hereto (the "Securities"). Each of the
provisions of the Underwriting Agreement is incorporated herein by
reference in its entirety, and shall be deemed to be a part of this
Agreement to the same extent as if such provisions had been set forth
in full herein; and each of the representations and warranties set
forth therein shall be deemed to have been made at and as of the date
of this Pricing Agreement, except that each representation and
warranty which refers to the Prospectus in Section 2 of the
Underwriting Agreement shall be deemed to be a representation or
warranty as of the date of the Underwriting Agreement in relation to
the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the
Prospectus as amended or supplemented relating to the Securities which
are the subject of this Pricing Agreement. Each reference to the
Representatives herein and in the provisions of the Underwriting
Agreement so incorporated by reference shall be deemed to refer to
you. Unless otherwise defined herein, terms defined in the
Underwriting Agreement are used herein as therein defined. The
Representatives designated to act on behalf of the Representatives and
on behalf of each of the Underwriters of the Securities pursuant to
Section 12 of the Underwriting Agreement and the address of the
Representatives referred to in such Section 12 are set forth at the
end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to
the Prospectus, as the case may be, relating to the Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the
Company, at the time and place and at the purchase price to the
Underwriters set forth in Schedule II hereto, the principal amount of
Securities set forth opposite the name of such Underwriter in Schedule
I hereto.
If the foregoing is in accordance with your understanding, please
sign and return to us one for the Company and each of the
Representatives plus one for each counsel counterparts hereof, and
upon acceptance hereof by you, on behalf of each of the Underwriters,
this letter and such acceptance hereof, including the provisions of
the Underwriting Agreement incorporated herein by reference, shall
constitute a binding agreement between each of the Underwriters and
the Company. It is understood that your acceptance of this letter on
behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the
form of which shall be submitted to the Company for examination upon
request, but without warranty on the part of the Representatives as to
the authority of the signers thereof.
Very truly yours,
NiSource Capital Markets, Inc.
By: /s/ Stephen P. Adik
------------------------
Name: Stephen P. Adik
Title: President
NiSource Inc.
By: /s/ Stephen P. Adik
-------------------------
Name: Stephen P. Adik
Title: Senior Executive
Vice President,
Chief Financial
Officer and Treasurer
Goldman, Sachs & Co.
Accepted as of the date hereof:
Goldman, Sachs & Co.
Barclays Capital Inc.
By: /s/ Goldman, Sachs & Co.
---------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
-2-
SCHEDULE I
PRINCIPAL
AMOUNT OF
DESIGNATED
SECURITIES
TO BE
UNDERWRITER PURCHASED
----------- -----------
Goldman, Sachs & Co. $ 80,000,000
Barclays Capital Inc. 80,000,000
---------------
$160,000,000
===============
-3-
SCHEDULE II
TITLE OF SECURITIES:
Puttable Reset Securities PURS Servicemark due 2010 ("PURS")
AGGREGATE PRINCIPAL AMOUNT:
$160,000,000
PRICE TO PUBLIC:
100% of the principal amount of the Securities, plus accrued
interest, if any, from September 28, 1999
PURCHASE PRICE BY UNDERWRITERS:
99.726% of the principal amount of the Securities, plus accrued
interest, if any, from September 28, 1999
FORM OF SECURITIES:
Book-entry only form represented by one or more global securities
deposited with The Depository Trust Company ("DTC") or its
designated custodian, to be made available for checking by the
Representatives at least twenty-four hours prior to the Time of
Delivery at the office of DTC.
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
Federal (same day) funds
TIME OF DELIVERY:
10:00 a.m. (New York City time), September 28, 1999
INDENTURE:
Indenture dated February 14, 1997, as amended by the First
Supplemental Indenture dated February 16, 1999, among the
Company, NiSource and the Trustee
MATURITY:
September 28, 2010
INTEREST RATE:
See Floating Rate Provisions
INTEREST PAYMENT DATES:
-4-
Interest is payable on October 28, 1999, January 28, 2000, April
28, 2000, July 28, 2000 and September 28, 2000.
REDEMPTION PROVISIONS:
No provisions for redemption.
SINKING FUND PROVISIONS:
No sinking fund provisions.
OPTIONAL REPAYMENT PROVISIONS:
Put Option as provided in paragraph 3 of the form of PURS
attached hereto as Exhibit A.
FLOATING RATE PROVISIONS:
Until September 28, 2000, the interest rate on the PURS will be
reset on each of October 28, 1999, January 28, 2000, April 28,
2000, July 28, 2000 and September 28, 2000 to the Applicable
LIBOR Rate plus 125 basis points (1.25%). The Chase Manhattan
Bank will compute the Applicable LIBOR Rate and the interest rate
on the PURS until September 28, 2000.
The Applicable LIBOR Rate means the rate for deposits in U.S.
dollars having the Relevant Maturity that appears on the Telerate
page 3750 as of 11:00 A.M., London time, on the second day on
which dealings in U.S. dollars are transacted in the London
interbank market preceding October 28, 1999, January 28, 2000,
April 28, 2000, July 28, 2000 and September 28, 2000, as the case
may be. The Relevant Maturity for the interest period beginning
on September 28, 1999 will be one month; the Relevant Maturity
for the interest period beginning on October 28, 1999, January
28, 2000 and April 28, 2000 will be three months; and the
Relevant Maturity for the interest period beginning on July 28,
2000 will be two months. Telerate page 3750 means the display
page so designated on the service operated by Bridge Telerate,
Inc. or any other page or pages that may replace that page on
that service or any other service that may be nominated by the
British Banker's Association for the purpose of displaying London
interbank offered rates for U.S. dollar deposits.
If the Applicable LIBOR Rate on an interest determination date
does not appear on the Telerate page 3750, the Applicable LIBOR
Rate will be determined by The Chase Manhattan Bank on the basis
of the rates at which deposits in U.S. dollars are offered by
four major banks in the London interbank market selected by The
Chase Manhattan Bank at approximately 11:00 A.M., London time, on
that interest determination date to prime banks in the London
interbank market having the relevant maturity and in a principal
amount equal to an amount of not less than U.S. $1,000,000 that
is representative for a single transaction in that market at that
-5-
time. The Chase Manhattan Bank will request the principal London
office of each of those four major banks to provide a quotation
of its rate. If at least two quotations are provided, the
Applicable LIBOR Rate will be the arithmetic mean (rounded, if
necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded
upwards) of those quotations. If fewer than two quotations are
provided, the Applicable LIBOR Rate will be the arithmetic mean
(rounded, if necessary, to the nearest one hundred-thousandth of
a percentage point, with five one-millionths of a percentage
point rounded upwards) of the rates quoted by three major banks
in New York City selected by The Chase Manhattan Bank at
approximately 11:00 A.M., New York City time, on the interest
determination date for loans in U.S. dollars to leading European
banks, having the Relevant Maturity and in a principal amount
equal to an amount of not less than U.S. $1,000,000 that is
representative for a single transaction in that market at that
time. If the banks in New York City selected by The Chase
Manhattan Bank are not quoting rates as mentioned above on the
interest determination date, then the Applicable LIBOR Rate for
the subsequent interest period will be the Applicable LIBOR Rate
in effect on the interest determination date.
DEFEASANCE PROVISIONS:
None
CLOSING LOCATION FOR DELIVERY OF SECURITIES:
Schiff Hardin & Waite
6600 Sears Tower
Chicago, Illinois 60606
NAMES AND ADDRESSES OF REPRESENTATIVES:
Goldman, Sachs & Co.
Barclays Bank Inc.
Address for Notices, etc.:
Goldman, Sachs & Co.
Attn: Registration Department
85 Broad Street
New York, New York 10004
Barclays Capital Inc.
Attn: Swap Operations
222 Broadway
New York, New York 10038
-6-
OTHER TERMS:
As provided in paragraphs 2, 3, 4, 5 and 10 of the form of PURS
attached hereto as Exhibit A.
At the time of the closing of the sale and purchase of the PURS,
and subject thereto, Goldman, Sachs & Co. and Barclays Bank PLC
will pay to the Company, in immediately available funds, an
amount equal to 1.83% of the principal amount of the PURS in
respect of the call option granted to Goldman, Sachs & Co. and
Barclays Bank PLC pursuant to the terms of the PURS.
The opinion in section 7(c) of the Underwriting Agreement will
also cover the validity, binding effect and enforceability of the
Calculation Agency Agreement to be entered into in connection
with the PURS.
-7-
EXHIBIT 4.2
-----------
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED
TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME
OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO
SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND
DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN
LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE
FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to NiSource Capital Markets, Inc. or its agent for
registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
NISOURCE CAPITAL MARKETS, INC.
Puttable Reset Securities PURS Servicemark due 2010
CUSIP No. 1
No. 65473NAA8 $160,000,000
NISOURCE CAPITAL MARKETS, INC., an Indiana corporation (herein
called the "Company", which term includes any successor Person under
the Indenture hereinafter referred to), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal
sum of One Hundred and Sixty Million Dollars, and to pay interest
thereon from September 28, 1999, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, on
October 28, 1999, January 28, 2000, April 28, 2000, July 28, 2000,
September 28, 2000 and, thereafter, semi-annually on March 28 and
September 28 in each year at the applicable rate described below,
until the principal hereof is paid or made available for payment. The
interest payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular
Record Date for such Interest Payment Date (whether or not a Business
Day). The Regular Record Dates shall be October 13, 1999, January 13,
2000, April 13, 2000 and July 13, 2000 for the October 28, 1999,
January 28, 2000, April 28, 2000 and July 28, 2000 Interest Payment
Dates, respectively. Commencing September 28, the Regular Record
Dates shall be the March 13 or the September 13, as the case may be,
next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be
fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this series not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said
Indenture.
From and including September 28, 1999 to but excluding September
28, 2000 (the "Reset Date"), interest shall accrue on the principal
sum of this Security at the Applicable LIBOR rate referred to on the
reverse hereof plus 125 basis points (1.25%). On the Reset Date, the
interest rate on this Security shall be reset so as to equal a fixed
rate determined as described on the reverse hereof, unless the Company
is obligated to repurchase this Security on such date pursuant to the
Put Option referred to on the reverse hereof. Notwithstanding the
foregoing, reset of the interest rate on this Security on the Reset
Date shall be subject to the occurrence of a Market Disruption Event
or a Failed Remarketing as described on the reverse hereof and the
settlement of the Call Option in certain circumstances at the election
of Goldman, Sachs & Co., on behalf of itself and Barclays Bank PLC, as
described on the reverse hereof.
Payment of the principal of and any interest on this Security
will be made at the corporate trust office of the Trustee in New York
City or such other office or agency maintained by the Company for that
purpose, in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and
private debts; PROVIDED, HOWEVER, that at the option of the Company
payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security
Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this
place. Such provisions include, without limitation, provisions
relating to the Call Option, the Put Option and the interest rate
reset mechanism.
Unless the certificate of authentication hereon has been executed
by the Trustee referred to on the reverse hereof by manual signature,
2
this Security shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated: September 28, 1999
NISOURCE CAPITAL MARKETS, INC.
By
----------------------------
Name: Francis P. Girot, Jr.
Title: Treasurer
3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series referred to in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By
-------------------------------
Authorized Officer
4
1. Indenture.
---------
This Security is one of a duly authorized issue of securities of
the Company (herein called the "Securities"), issued and to be issued
in one or more series under an Indenture (Senior Debt Securities)
dated as of February 14, 1997, as amended by the First Supplemental
Indenture dated as of February 16, 1999 (herein called the
"Indenture"), among the Company, NiSource Inc. ("NiSource") and The
Chase Manhattan Bank, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, NiSource, the Trustee
and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof, limited
in aggregate principal amount of $160,000,000.
If an Event of Default with respect to Securities of this series
shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the
effect provided in the Indenture. No failure by Goldman, Sachs & Co.
and/or Barclays Bank PLC (or any successor firm) to purchase any
Security of this series pursuant to the Call Option shall be deemed to
be a default under this Security or the Indenture for any purpose.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and NiSource and the rights of the Holders
of the Securities of each series to be affected under the Indenture at
any time by the Company, NiSource and the Trustee with the consent of
the Holders of a majority in principal amount of the Securities at the
time Outstanding of each series to be affected. Notwithstanding the
foregoing, the Company has agreed with Goldman Sachs & Co. and
Barclays Bank PLC, as holders of the Call Option, that the Company
will not cause or permit the terms or provisions of this Security or
the Indenture as it relates to this Security to be modified in any way
without the prior written consent of Goldman, Sachs & Co., on behalf
of itself and Barclays Bank PLC. The Indenture also contains
provisions permitting the Holders of specified percentages in
principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company or NiSource or both, with
certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver
shall be conclusive and binding upon the Holder of this Security and
upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
5
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal
of and any premium and interest on this Security at the times, place
and rate, and in the coin or currency, herein prescribed.
2. Determination of the Applicable LIBOR Rate.
------------------------------------------
From and including September 28, 1999 to but excluding the Reset
Date, interest shall accrue on the principal sum of this Security at
the Applicable LIBOR Rate described below plus 125 basis points
(1.25%). The Trustee will compute the Applicable LIBOR Rate and the
interest rate on the Security until the Reset Date. From September
28, 1999 until the Reset Date, there will be five interest periods on
this Security. The interest rate for the first period, beginning
September 28, 1999, will be based on the one month LIBOR Rate. The
interest rates for the next three interest periods, beginning October
28, 1999, January 28, 2000 and April 28, 2000, will be based on the
three month LIBOR Rate. The interest rate for the fifth interest
period, beginning July 28, 2000, will be based on the two month LIBOR
Rate.
If any interest determination date or Interest Payment Date would
otherwise be a day that is not a LIBOR business day, then interest
will be determined or paid on the next succeeding LIBOR business day,
as long as that next succeeding LIBOR business day is in the same
calendar month. If the next succeeding LIBOR business day is in the
next calendar month, the interest will be determined or paid on the
immediately preceding LIBOR business day. As used herein, a "LIBOR
business day" is a day that is not a Saturday, Sunday or a day on
which banking institutions in the City of New York or the City of
London are generally authorized to close.
The Applicable LIBOR Rate means the rate for deposits in U.S.
dollars having the relevant maturity that appears on the Telerate page
3750 as of 11:00 A.M., London time on the relevant interest
determination date. The relevant maturity for the interest period
beginning on September 28, 1999 will be one month, the relevant
maturity for the interest periods beginning on October 28, 1999,
January 28, 2000 and April 28, 2000 will be three months, and the
relevant maturity for the interest period beginning on July 28, 2000
will be two months. As used herein, the "interest determination date"
is the second day on which dealings and deposits in U.S. dollars are
transacted in the London interbank market preceding September 28,
1999, October 28, 1999, January 28, 2000, April 28, 2000 or July 28,
2000, as the case may be. As used herein, "Telerate page 3750" means
the display page so designated on the service operated by Bridge
Telerate, Inc., or any other page or pages that may replace that page
on that service or any other service that may be nominated by the
British Banker's Association for the purpose of displaying London
interbank offered rates for U.S. dollar deposits.
6
If the Applicable LIBOR Rate on an interest determination date
does not appear on the Telerate page 3750, the Applicable LIBOR Rate
will be determined by the Trustee on the basis of the rates at which
deposits in U.S. dollars are offered by four major banks in the London
interbank market selected by the Trustee at approximately 11:00 A.M.,
London time, on that interest determination date to prime banks in the
London interbank market having the relevant maturity and in a
principal amount equal to an amount of not less than U.S. $1,000,000
that is representative for a single transaction in that market at that
time. The Trustee will request the principal London office of each of
those four major banks to provide a quotation of its rate. If at
least two quotations are provided, the Applicable LIBOR rate will be
the arithmetic mean (rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point, with five one-millionths of
a percentage point rounded upwards) of those quotations. If fewer
than two quotations are provided, the Applicable LIBOR Rate will be
the arithmetic mean (rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point, with five one-millionths of
a percentage point rounded upwards) of the rates quoted by three major
banks in New York City selected by the Trustee at approximately 11:00
A.M., New York City time, on the interest determination date for loans
in U.S. dollars to leading European banks, having the relevant
maturity and in a principal amount equal to an amount of not less than
U.S. $1,000,000 that is representative for a single transaction in
that market at that time. If the banks in New York City selected by
the Trustee are not quoting rates as mentioned above on the interest
determination date, then the Applicable LIBOR Rate for the subsequent
interest period will be the Applicable LIBOR Rate in effect on the
interest determination date.
The amount of interest for each day that this Security is
outstanding until, but not including, the Reset Date shall be
calculated by dividing the interest rate in effect for that day by 360
and multiplying the result by the principal amount of this Security.
The amount of interest to be paid on any PURS for any interest period
until the Reset Date shall be calculated by adding the daily interest
amounts for each day in the interest period.
3. Call Option.
-----------
Goldman, Sachs & Co. and Barclays Bank PLC (or any successor
firms) (each, a "Call Option Holder") shall have the right to
purchase, on the Reset Date, all of the Securities of this series
Outstanding on the Reset Date (in whole and not in part), including
this Security, from the Holders thereof (such right, the "Call
Option") at a price equal to 100% of the principal amount of the
Securities of this series purchased and subject to Goldman, Sachs &
Co., on behalf of the Call Option Holders, giving notice of their
intention to purchase the Outstanding Securities of this series as
described below. Whether or not the Call Option is exercised, the
Company will remain obligated to pay all accrued and unpaid interest
7
on this Security. Interest that becomes payable on the Reset Date
will be payable to the Holder of this Security on the corresponding
Regular Record Date, as provided in this Security and the Indenture.
To exercise the Call Option, Goldman, Sachs & Co., on behalf of
the Call Option Holders, must give the holder of this Security notice
of the Call Option Holders' intention to purchase the outstanding
Securities of this series no later than the tenth Market Day (as
defined below) prior to the Reset Date in the manner described under
paragraph 8 below. In the event the Call Option is exercised, the
Holder of this Security on the Reset Date will be obligated to sell to
the Call Option Holders, and the Call Option Holders will be obligated
to purchase from the Holder, this Security on the Reset Date at 100%
of its principal amount. The sale and purchase of this Security will
be effected through DTC. Each Holder will be deemed to have
automatically tendered this Security for sale to the Call Option
Holders on the Reset Date in accordance with applicable DTC
procedures. Notwithstanding the exercise of the Call Option, this
Security will remain Outstanding until this Security is purchased or
paid by the Company. A Market Day is a Business Day in the City of
New York other than a day on which dealings in the U.S. Treasury bond
market are generally not conducted. Goldman, Sachs & Co. has the sole
authority to exercise the Call Option on behalf of both Call Option
Holders, and Barclays Bank PLC may not exercise the Call Option
independently of Goldman, Sachs & Co.
If the Call Option is exercised, this Security will be subject to
purchase by Goldman, Sachs & Co. on the Reset Date as provided herein
and in accordance with paragraph 6(a) below.
If, on or before the Reset Date, an Event of Default, or any
event which, with the giving of notice or passage of time or both
would constitute an Event of Default, shall have occurred and be
continuing, or if the Company modifies the terms or provisions of the
Securities of this series without the prior written consent of
Goldman, Sachs & Co. on behalf of the Call Option Holders, then upon
the occurrence of such event Goldman, Sachs & Co., on behalf of the
Call Option Holders, will be entitled to demand that the Company pay
the Call Option Holders, within three Business Days of such demand, an
amount (the "Call Option Termination Amount") to be determined in
accordance with the Calculation Agency Agreement dated September 23,
1999, among the Company, Goldman Sachs & Co. and Barclays Bank PLC
(the "Calculation Agency Agreement"). The Call Option will terminate
upon payment of the Call Option Termination Amount. If the Call
Option is terminated, the Holders will be deemed to have exercised
their Put Option as described below on the Reset Date.
Notwithstanding any provision herein to the contrary, neither
Goldman, Sachs & Co. nor Barclays Bank PLC may transfer or assign the
Call Option without the prior written consent of the Company.
8
4. Put Option
----------
If Goldman, Sachs & Co. does not exercise the Call Option on
behalf of the Call Option Holders, the Holder of this Security will
have the right to require the Company to repurchase all, but not less
than all, of this Security on the Reset Date (such right, the Holder's
"Put Option") at a price equal to 100% of the principal amount of this
Security repurchased in the circumstances described in the next
paragraph. Whether or not a Holder's Put Option is exercised, the
Company will remain obligated to pay all accrued and unpaid interest
on the Securities of this series. Interest that becomes payable on
the Reset Date will be payable to the Holders of record on the
corresponding Regular Record Date, as provided in this Security and
the Indenture. If for any reason payment of the repurchase price is
not made on the Reset Date, interest will continue to accrue on this
Security from the Reset Date to the date payment is made by the
Company.
On the Reset Date, the Holder of this Security will be deemed to
have exercised its Put Option automatically in respect of this
Security unless either (a) Goldman, Sachs & Co., on behalf of the Call
Option Holders, has exercised the Call Option, or (b) the Call Option
is not exercised and such Holder validly elects not to sell this
Security to the Company. To make an election not to sell this
Security, (1) no later than 10:00 A.M. (New York City time) on the
seventh Market Day prior to the Reset Date, the Holder must give
notice to the Trustee, as provided in paragraph 8 below, that the
Holder elects not to sell this Security (or, as long as this Security
is issued in the form of a Global Security, a specified portion
hereof) to the Company on the Reset Date and (2) the notice must be
effective under the 10% requirement described in the next paragraph.
Consequently, with respect to the Holder of this Security, if the
Holder is deemed to have exercised its Put Option, on the Reset Date,
the Company will be obligated to repurchase from the Holder, and the
Holder will be obligated to sell to the Company, this Security in
whole (or in whole but for any specified portion) on the Reset Date at
100% of its principal amount. The sale and purchase of this Security
pursuant to the Put Option will be effected through DTC, with the
Holder of this Security on the Reset Date being deemed (in the absence
of an effective notice of its election not to sell any of its
Securities to the Company as described herein) to have automatically
tendered this Security in whole (or in whole but for any specified
portion) for sale to the Company on the Reset Date in accordance with
applicable DTC procedures. If the Company is obligated to purchase
this Security pursuant to the Put Option, the Security will remain
outstanding until 100% of the principal amount of this Security (and
accrued interest) has been paid.
Notwithstanding the foregoing, a Holder's notice of election not
to sell this Security to the Company will not be effective unless such
notices are duly given by the Holders of record of at least 10% of the
9
aggregate principal amount of the Securities of this series
outstanding at 10:00 A.M. (New York City time) on the tenth Market Day
prior to the Reset Date. If any Holder gives such a notice to the
Trustee when this 10% requirement has not been satisfied, the Trustee
will give written notice of that fact to the Holder and the Company no
later than the close of business on the seventh Market Day before the
Reset Date, in the manner described in paragraph 8 below.
5. Reset of Interest Rate on Reset Date.
------------------------------------
The interest rate on this Security will be reset on the Reset
Date, unless the Company is obligated to repurchase this Security on
such date pursuant to the Holder's Put Option. Notwithstanding the
foregoing, reset of the interest rate is subject to the occurrence of
a Market Disruption Event or a Failed Remarketing, each as defined
below.
The Company has initially appointed Goldman, Sachs & Co. as its
calculation agent for the purpose of resetting the interest rate on
the Reset Date (such agent, including any successor agent, the
"Calculation Agent"). If the interest rate is to be reset on the
Reset Date, the Calculation Agent will effect the reset as follows:
Between the tenth Market Day prior to the Reset Date and 11:00
A.M., New York City time, on the sixth Market Day prior to the Reset
Date (the "Calculation Date"), the Calculation Agent shall select
three leading financial institutions (which may include Goldman, Sachs
& Co. and Barclays Bank PLC, if they request that they be included)
that deal actively in the Company's debt securities and have agreed to
participate as reference dealers in accordance with the procedures
described below and pursuant to participation agreements satisfactory
to Goldman, Sachs & Co. (the "Reference Dealers"). If Goldman, Sachs
& Co. has exercised the Call Option on behalf of the Call Option
Holders, each Reference Dealer must include in its participation
agreement a written commitment satisfactory to Goldman, Sachs & Co.
that, if it is selected as the Final Dealer (as defined below), it
will purchase from the Call Option Holders on the Calculation Date for
settlement on the Reset Date and at the Final Offer Price (as defined
below), all the Securities of this series that the Call Option Holders
purchase pursuant to the Call Option and tender for resale to the
Final Dealer on the Reset Date.
On the Calculation Date, the Calculation Agent shall undertake
the following actions to calculate a fixed rate at which interest will
accrue on the Securities of this series from and including the Reset
Date to but excluding September 28, 2010. Each notice described below
shall be given telephonically and confirmed as soon as practicable
thereafter by facsimile to each of the Calculation Agent and the
Company. The times set forth below are guidelines for action, and the
Calculation Agent shall use reasonable efforts to adhere to these
times.
10
(a) At 12:00 P.M., New York City time, the Calculation Agent
shall:
(i) determine (or obtain from Goldman, Sachs & Co., if
Goldman, Sachs & Co. has exercised the Call Option on behalf
of the Call Option Holders) the approximate 10-year U.S.
Treasury bond yield at or about such time, which shall be
expressed as a percentage (the "Designated Treasury Yield")
and shall be based on the "offered side" quotations of the
then-current 10-year U.S. Treasury bond;
(ii) calculate and provide to the Reference Dealers, on
a preliminary basis, a hypothetical offer price at which the
Securities of this series might be offered for sale to a
Reference Dealer on the Reset Date. The offer price shall
be expressed as a percentage of the principal amount of the
Securities of this series Outstanding and shall equal 100%
plus the Margin (as defined below), if the Treasury Rate
Difference (as defined below) is positive, or 100% minus the
Margin, if the Treasury Rate Difference is negative. The
Margin shall also be expressed as a percentage of the
principal amount of the Securities of this series
Outstanding and shall equal the present value of the
absolute value of the Treasury Rate Difference applied to 20
semiannual periods (i.e., 10 years), discounted at the
Designated Treasury Yield divided by two. The "Treasury
Rate Difference" means the percentage (which may be positive
or negative) equal to 5.91% minus the Designated Treasury
Yield; and
(iii) request each Reference Dealer to provide to
the Calculation Agent, when notified of the Final Offer
Price as described in paragraph (b) below, a firm bid,
expressed as a percentage representing an interest rate
spread over the Designated Treasury Yield, at which such
Reference Dealer would be willing to purchase on the
Calculation Date for settlement on the Reset Date, at the
Final Offer Price, all of the Securities of this series then
Outstanding. Each such firm bid is to be given on an "all-
in" basis and is to remain open for at least 30 minutes
after it is given.
(b) At 12:30 P.M., New York City time, the Calculation
Agent shall determine (or obtain from Goldman, Sachs & Co., if
Goldman, Sachs & Co. has exercised the Call Option on behalf of
the Call Option Holders) the Designated Treasury Yield on a final
basis, calculate and provide to the Reference Dealers the offer
price on a final basis (the "Final Offer Price") and request each
Reference Dealer to submit its bid immediately as described in
clause (a)(iii) above. If the Calculation Agent receives at
least two bids, the following will occur:
11
(i) the Reference Dealer providing the bid
representing the lowest all-in spread over the Designated
Treasury Yield will be the "Final Dealer";
(ii) if Goldman, Sachs & Co. has exercised the Call
Option on behalf of the Call Option Holders, the Final
Dealer shall be obligated to purchase from the Call Option
Holders at the Final Offer Price, for settlement on the
Reset Date, all of the Securities of this series that the
Call Option Holders purchase pursuant to the Call Option and
tender for resale to the Final Dealer on the Reset Date
(assuming that the interest rate on the Securities of this
series will be reset so as to be equal to the Adjusted Rate
(as defined below) from and including the Reset Date to but
excluding September 28, 2010). As described below, the
Final Dealer will not be obligated to purchase any
Securities of this series if Goldman, Sachs & Co. has not
exercised the Call Option on behalf of the Call Option
Holders;
(iii) the Calculation Agent shall calculate and
provide to the Company the "Adjusted Rate," which shall be
the semiannual, bond-equivalent, fixed interest rate on the
Securities of this series required to produce, from and
including the Reset Date to but excluding September 28,
2010, a seminannual, bond-equivalent yield on the Securities
of this series that equals the sum of the lowest all-in
interest rate spread over the Designated Treasury Yield plus
the final Designated Treasury Yield, assuming that the
Securities of this series are purchased on the Reset Date at
the Final Offer Price; and
(iv) the interest rate on the Securities of this series
shall be adjusted to equal the Adjusted Rate, effective from
and including the Reset Date to but excluding September 28,
2010. If Goldman, Sachs & Co. has not exercised the Call
Option on behalf of the Call Option Holders and the Holders
of at least 10% of the Securities of this series Outstanding
have given effective notices to the Trustee that they elect
not to sell any of their Securities of this series to the
Company, the Company will promptly give written notice of
the Adjusted Rate to those Holders and the Trustee.
All determinations regarding the Designated Treasury Yield and
the then-current 10-year U.S. Treasury bond on which it is based, as
described in clause (a)(i) and the first sentence of clause (b) above
will be made by Goldman, Sachs & Co., unless Goldman, Sachs & Co., on
behalf of the Call Option Holders, has elected not to exercise the
Call Option.
If the Calculation Agent determines that, on the Calculation Date
(x) a Market Disruption Event (as defined below) has occurred and is
12
continuing or (y) fewer than two Reference Dealers have provided firm
bids in a timely manner pursuant to participation agreements
satisfactory to Goldman, Sachs & Co. (a "Failed Remarketing"), the
steps described above, including the determination of the Designated
Treasury Yield, the Treasury Rate Difference and the Margin, will be
taken on the next Market Day on which the Calculation Agent determines
that no Market Disruption Event has occurred and is continuing and at
least two Reference Dealers have provided bids pursuant to
participation agreements satisfactory to Goldman, Sachs & Co. If the
Calculation Agent determines that a Market Disruption Event or a
Failed Remarketing has occurred and is continuing for at least four
consecutive Market Days starting on the Calculation Date, then
Goldman, Sachs & Co. will be deemed not to have exercised the Call
Option on behalf of the Call Option Holders, all Holders will be
deemed to have exercised their Put Options, and the Company will
repurchase this Security from its Holder on the Reset Date at 100% of
its principal amount. In addition, if Goldman, Sachs & Co. is deemed
not to have exercised the Call Option on behalf of the Call Option
Holders because either a Failed Remarketing or a Market Disruption
Event has occurred, and the Treasury Rate Difference is positive, the
Company will pay to Goldman, Sachs & Co. and Barclays Bank PLC an
amount equal to the product of the Margin and the aggregate principal
amount of the Securities of this series Outstanding. For the purpose
of this payment, Goldman, Sachs & Co. will redetermine the Designated
Treasury Yield, the Treasury Rate Difference and the Margin. In these
circumstances, the Holder of this Security will not have the right to
elect to continue to hold this Security (or any portion hereof). The
Calculation Agent will notify the Company of such determination
promptly after the close of business on such fourth Market Day. The
Company will give notice to the Holder of this Security that this
Security will be repurchased by the Company from the Holder on the
Reset Date, at 100% of the principal amount of this Security, no later
than the second Market Day prior to the Reset Date in the manner
described in paragraph 8 below. If at any time Goldman, Sachs & Co.
is not acting as Calculation Agent, then the determinations and notice
to the Company described in this paragraph will be made and given by
Goldman, Sachs & Co., unless Goldman, Sachs & Co. has elected not to
exercise the Call Option on behalf of the Call Option Holders.
"Market Disruption Event" means any of the following: (i) a
suspension or material limitation in trading in securities generally
on the New York Stock Exchange or the establishment of minimum prices
on such exchange; (ii) a general moratorium on commercial banking
activities declared by either federal or New York State authorities;
(iii) any material adverse change in the existing financial, political
or economic conditions in the United States of America; (iv) an
outbreak or escalation of hostilities involving the United States of
America or the declaration of a national emergency or war by the
United States of America; or (v) any material disruption of the U.S.
government securities market, U.S. corporate bond market and/or U.S.
federal wire system.
13
All determinations regarding Market Disruption Events and Failed
Remarketing, including whether or not any event has occurred or is
continuing, shall be made by Goldman, Sachs & Co. in consultation with
Barclays Bank PLC.
All percentages resulting from any calculation with respect to
the Securities of this series will be rounded upwards, if necessary,
to the nearest one ten-thousandth of a percentage point (e.g.,
5.76531% (or 0.0576531) being rounded to 5.7654% (or 0.057654)), and
all U.S. dollar amounts will be rounded to the nearest cent (with one-
half cent being rounded upwards).
All determinations made by the Calculation Agent (or Goldman,
Sachs & Co.) regarding the matters described herein shall, absent
manifest error, be final, conclusive and binding on all concerned and
will not give rise to any liability on the part of the Calculation
Agent, Goldman, Sachs & Co., Barclays Bank PLC, the Trustee, the
Company or NiSource.
6. Settlement on Exercise of the Put and Call Options.
--------------------------------------------------
For as long (but only for as long) as this Security or any
portion hereof is issued in the form of a Global Security, the
provisions of paragraph 6(a) through 6(d) below, inclusive, shall
apply with respect to this Security or such portion, as the case may
be.
(a) If the Call Option is exercised, then, on the Reset
Date, all beneficial interests in this Security held through
Agent Members (as defined below) shall be transferred to a DTC
account designated by Goldman, Sachs & Co on behalf of the Call
Option Holders. The transfers shall be made automatically,
without any action on the part of any beneficial owner, by book
entry through DTC. Goldman, Sachs & Co. and Barclays Bank PLC
shall be obligated to make payment of 100% of the principal
amount of this Security to DTC or its nominee, for credit to the
accounts of the Agent Members through which beneficial interests
in this Security are held, by the close of business on the Reset
Date. Each transfer shall be made against the corresponding
payment, and each such payment shall be made against the
corresponding transfer, in accordance with the applicable DTC's
Applicable Procedures.
If the Call Option Holders fail to pay 100% of the principal
amount of this Security on the applicable Reset Date, the Call
Option shall be deemed not to have been exercised and the Put
Option will be deemed to have been exercised with respect to this
Security in whole. In these circumstances, the Holder on the
Reset Date may not continue to hold this Security (or any portion
hereof) by giving the Trustee notice of its election not to sell
this Security to the Company, and the Company will be obligated
14
to pay, not later than two Business Days following the Reset
Date, 100% of the principal amount of this Security (plus accrued
interest from and including the Reset Date to but excluding the
date payment is made), with settlement occurring as described in
paragraph (b) below.
In any event, the Company shall remain obligated to make
payment of accrued and unpaid interest due on this Security, with
interest payable on the Reset Date being payable to the Holder on
the corresponding Regular Record Date.
As used herein, (i) "Agent Member" means, at any time, any
person who is a member of, or participant in, DTC at such time
and (ii) "Applicable Procedures" means, with respect to any
payment, transfer or other transaction to be effected with
respect to a Global Security through the facilities of DTC at any
time, the policies and procedures of DTC applicable to such
transactions, as in effect at such time.
(b) If the Put Option is exercised as to this Security (or
any portion hereof), then, on the Reset Date, all beneficial
interests in this Security or any such portion held by or through
Agent Members shall be transferred to a DTC account designated by
the Company. The transfers shall be made automatically, without
any action on the part of any beneficial owner, by book entry
through DTC. The Company shall be obligated to make payment of
100% of the principal amount of this Security (or any such
portion) to DTC or its nominee, for credit to the accounts of the
Agent Members by or through which beneficial interests in this
Security (or any such portion) are held, by the close of business
on the Reset Date (or if the Put Option is deemed to have been
exercised as contemplated by the second paragraph of paragraph
6(a) above, by the close of business on the second Business Day
following the Reset Date). Each transfer shall be made against
the corresponding payment, and each such payment shall be made
against the corresponding transfer, in accordance with DTC's
Applicable Procedures. If the Company fails to pay 100% of the
principal amount of this Security (or any such portion) on the
Reset Date, accrued interest at the rate in effect immediately
before the Reset Date to the date the payment is made shall be
payable as part of the repurchase price, in the same manner and
for credit to the same accounts as such repurchase price.
Whether or not purchased pursuant to the Put Option, the Company
shall remain obligated to make payment of accrued and unpaid
interest due on this Security, with interest payable on the Reset
Date being payable to the Holder on the corresponding Regular
Record Date, as provided herein and in the Indenture.
(c) The transactions described in paragraphs 6(a) and 6(b)
above shall be executed on the Reset Date (or the second Business
Day thereafter, to the extent specified above) through DTC in
accordance with its Applicable Procedures, and the accounts of
15
the respective Agent Members shall be debited and credited and
beneficial interests in this Security shall be delivered by book
entry as necessary to effect the purchases and sales thereof.
Unless DTC's Applicable Procedures require otherwise, such
transactions shall settle, and all other payments in respect of
the Securities of this series shall be made, in immediately
available funds through DTC's settlement system. Notwithstanding
any provision hereof or of the Indenture, none of the Company,
NiSource, the Trustee, Goldman, Sachs & Co., Barclays Capital
Inc. or Barclays Bank PLC, or any agent of any such person, shall
have any responsibility with respect to the Applicable Procedures
or for any payments, transfers or other transactions, or any
notices or other communications, among DTC, its Agent Members,
any other direct or indirect participants therein and any
beneficial owners of a Global Security. For all purposes of this
Security and the Indenture, any payment or notice to be made or
given with respect to this Security by the Company, Goldman,
Sachs & Co. or Barclays Bank PLC shall be deemed made or given
when made or given to DTC or its nominee, in accordance with its
Applicable Procedures.
(d) The settlement procedures described in paragraphs 6(a),
6(b) and 6(c) above may be modified, notwithstanding any contrary
terms of the Securities of this series or the Indenture, to the
extent required by DTC. In addition, Goldman, Sachs & Co., on
behalf of the Call Option Holders, and the Company may,
notwithstanding any contrary terms of the Indenture, modify the
settlement procedures described in paragraphs 6(a), 6(b) and 6(c)
above in order to facilitate the settlement process.
(e) If any Securities of this series are issued in non-
book-entry form, the Company shall modify the provisions of
paragraphs 6(a) through 6(d) above, inclusive, so as to ensure
that Reset Date settlements of transactions in such Securities of
this series are effected in as comparable a manner as practical,
PROVIDED that such modified procedures shall not adversely affect
the interests of the holders of the Outstanding Securities of
this series.
7. Transfer; Global Securities.
---------------------------
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registerable in
the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in any
place where the principal of and any premium and interest on this
Security are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the
Security Registrar, duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Securities
of this series and of like tenor, of authorized denominations and for
16
the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Securities of this series are issuable only in registered
form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of
this series and of like tenor of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, NiSource, the Trustee and any agent of the
Company, NiSource or the Trustee may treat the Person in whose name
this Security is registered as the owner hereof for all purposes,
whether or not this Security is overdue, and none of the Company,
NiSource, the Trustee nor any such agent shall be affected by notice
to the contrary.
If DTC shall at any time be unwilling or unable to continue as
depositary and a successor depositary shall not be appointed by the
Company, the Company shall issue the Securities in definitive form, in
exchange for the total amount of the certificates representing the
Securities. Notwithstanding any provision to the contrary set forth
in the Indenture, at all times prior to the Reset Date (i) the Company
will use its best efforts to maintain this Security in book-entry form
with DTC or any successor thereto and to appoint a successor
depositary to the extent necessary to maintain this Security in book-
entry form and (ii) the Company hereby waives any discretionary right
it otherwise may have under the Indenture to cause this Security to be
issued in certificated form. In addition, the Company may at any time
after the Reset Date determine not to have the Securities represented
by Global Securities, and in such event, the Company will issue
securities in definitive form in exchange for the total amount of the
certificates representing the Global Securities. In addition, if any
event shall have happened and be continuing that constitutes an Event
of Default with respect to the Securities, the owners of beneficial
interests in certificates for this Global Security will be entitled to
receive Securities in certificated form in exchange for the book-entry
certificate or certificates representing this Global Security. In any
such instance, an owner of a beneficial interest in such certificates
will be entitled to physical delivery in definitive form of Securities
equal in amount to such beneficial interest and to have such
Securities registered in its name.
17
8. Certain Notices.
---------------
For so long as this Security is represented by a Global Security,
any notices to be given to the Holder of this Security will be deemed
to have been duly given to the Holder when given to DTC or its nominee
in accordance with DTC's policies and procedures. None of the
Company, NiSource, the Calculation Agent, Goldman, Sachs & Co.,
Barclays Capital Inc., Barclays Bank PLC or the Trustee will have any
responsibility with respect to those policies and procedures or for
any notices or other communications among DTC, its direct and indirect
participants and the beneficial owners of this Security in global
form.
For so long as this Security is not represented by a Global
Security, any notices to be given to the Holder of this Security will
be deemed to have been duly given to the Holders upon the mailing of
such notices to the Holder at his address as it appears on the
relevant Securities Register maintained by the Company or its agent as
of the close of business on the day before the day that notice is
given.
Neither the failure to give any notice nor any defect in any
notice given to a particular Holder will affect the sufficiency of any
notice given to another Holder.
Notice of the Holder's election not to sell this Security
pursuant to the Put Option may be given by the Holder of this Security
to the Trustee only by facsimile transmission or by mail or hand
delivery and MUST ACTUALLY BE RECEIVED by the Trustee at the following
address no later than 10:00 A.M., New York City time, on the seventh
Market Day prior to the Reset Date:
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Capital Markets Fiduciary Services
Facsimile no.: (212) 946-8158
Notice of the Holder's election not to sell this Security of this
series pursuant to the Put Option may be given only by the registered
Holder of this Security.
9. Holder.
------
Prior to due presentment of this Security for registration of
transfer, the Company, NiSource, the Trustee, any agent of the
Company, NiSource or the Trustee and the Call Option Holders may treat
the Person in whose name this Security is registered as the owner
hereof for all purposes, including the making of any payment in
respect hereof, any exercise of the Call Option or the Put Option and
18
consummation of any sale and purchase hereof pursuant thereto, the
giving of any notice with respect hereto, and the giving of any
consent or taking of any other action with respect hereto, whether or
not this Security be overdue, and neither the Company, NiSource, the
Trustee nor any such agent shall be affected by notice to the
contrary.
10. Provisions Relating to the Call Option Holders
----------------------------------------------
Insofar as the provisions of this Security purport to provide
rights to the Call Option Holders against any Holder of this Security,
such rights (including such rights to purchase this Security pursuant
to the Call Option on the Reset Date) shall also be rights of the
Company and shall be enforceable by the Company against such Holder.
Each Holder of this Security shall hold this Security (and by holding
the same be deemed to have agreed to do so) subject to the foregoing.
Without limiting the foregoing, the Call Option Holders may take any
action under this Security (including giving any notice, making any
determination and effecting any settlement pursuant to paragraphs 3, 5
and 6 hereof) that the provisions of this Security contemplate may be
taken by the Call Option Holders.
Pursuant to Section 6(a) of the Calculation Agency Agreement, the
Call Option Holders have agreed with the Company, for the benefit of
the applicable Holders of this Security from time to time, that, if
Goldman, Sachs & Co. exercises the Call Option on behalf of the Call
Option Holders when this Security is Outstanding, the Call Option
Holders will purchase this Security from the Holder hereof on the
Reset Date, upon the terms and subject to the conditions set forth
herein. No Holder of this Security shall have any right, remedy or
claim against the Call Option Holders under this Security, the
Indenture or the Calculation Agency Agreement.
No provision of this paragraph shall be construed to impair or
otherwise affect any rights that the Call Option Holders may have at
any time as a Holder of this Security.
11. Miscellaneous.
-------------
The Indenture provides that the Company and NiSource, at the
Company's option, (a) will be discharged from any and all obligations
in respect of the Securities (except for certain obligations to
register the transfer or exchange of Securities, replace stolen, lost
or mutilated Securities, maintain paying agencies and hold moneys for
payment in trust) or (b) need not comply with certain restrictive
covenants of the Indenture, in each case if the Company or NiSource
deposits, in trust with the Trustee, money or U.S. Government
Obligations (or Foreign Government Obligations if the Securities are
denominated in a foreign currency or currencies) which through the
payment of interest thereon and principal thereof in accordance with
their terms will provide money, in an amount sufficient to pay all the
principal of, and (premium, if any) and interest on, the Securities on
19
the dates such payments are due in accordance with the terms of such
Securities, and certain other conditions are satisfied.
Except pursuant to the Support Agreement referred to in paragraph
12 below, no recourse shall be had for the payment of the principal of
or interest on this Security, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental or series designation thereto,
against any incorporator, stockholder, officer or director, as such,
past, present or future, of the Company or of any successor
corporation, or of NiSource or of any 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 issue hereof, expressly waived and released.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
12. Support Agreement.
-----------------
The indebtedness evidenced by this Security is entitled to the
benefits of a Support Agreement dated as of April 4, 1989, as amended
as of May 15, 1989, December 10, 1990, and February 14, 1991 (as such
Agreement may be hereafter amended, modified or supplemented from time
to time in accordance with the terms and conditions of the Indenture,
the "Support Agreement") between the Company and NiSource. The
Support Agreement provides that during the term thereof (i) NiSource
will own all of the voting stock of the Company, (ii) NiSource will
cause the Company to have at all times a positive net worth (net
assets less intangible assets, if any), as determined in accordance
with generally accepted accounting principles, and (iii) if the
Company is unable to make timely payment of principal of or any
premium or interest on any Debt (as defined below) issued by the
Company, NiSource will, at the request of the Company or any Lender
(as defined below), provide funds to the Company to make such
payments. The Support Agreement also provides that any Lender to the
Company shall have the right to demand that the Company enforce its
rights against NiSource under the Support Agreement as described in
the previous sentence, and the event that the Company fails to require
NiSource to perform such obligations or the Company defaults in the
timely payment of principal of or any premium or interest on any Debt
owed to a Lender, such Lender may proceed directly against NiSource to
enforce the Company's rights against NiSource under the Support
Agreement or to obtain payment of such defaulted principal, premium or
interest owed to such Lender.
The Support Agreement provides that in no event may any Lender,
on default of the Company or NiSource or upon failure by the Company
or NiSource to comply with the Support Agreement, have recourse to or
against the stock or assets of Northern Indiana Public Service Company
("Northern Indiana") or any interest of the Company or NiSource
therein. Notwithstanding this limitation, the Support Agreement
provides that funds available to NiSource to satisfy any obligations
20
under the Support Agreement will include cash dividends paid by
Northern Indiana to NiSource.
The term "Debt" is defined in the Support Agreement as debt
securities or other obligations and includes the Securities. The term
"Lender" is defined in the Support Agreement as any person, firm or
corporation to which the Company is indebted for money borrowed or to
which the Company otherwise owes any Debt or which is acting as
trustee or authorized representative on behalf of such person, firm or
corporation. The Indenture provides that each Holder of this
Security, as well as the Trustee, shall be considered a "Lender" for
purposes of the Support Agreement and shall have all rights of a
"Lender" set forth therein.
The Support Agreement may be amended or terminated at any time by
the agreement of NiSource and the Company, provided that (i) no
amendment regarding the terms described above may be made unless all
Lenders consent in advance and in writing to such amendment, (ii) no
amendment regarding any other term of the Support Agreement may be
made in a manner that adversely affects the rights of Lenders unless
all affected Lenders consent in advance and in writing to such
amendment, and (iii) no termination shall be effective until such time
as all Debt (including this Security) shall have been paid in full.
21
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EXHIBIT 12-1
------------
NISOURCE INC.
RATIO OF EARNINGS TO FIXED CHARGES
Twelve
Months
Ended
Year Ended December 31, June 30,
---------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <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 $359,775,607
Adjustments-
Federal income taxes 100,320,953 95,676,572 80,626,310 97,010,863 115,799,335 111,112,976
State income tax 15,398,420 15,214,803 12,781,207 16,856,952 16,785,056 17,054,730
Deferred investment tax credit, net (6,499,242) (7,515,362) (7,407,813) (7,375,636) (7,360,787) (7,526,107)
Deferred income taxes, net (11,488,355) (1,479,358) 21,125,012 (1,466,940) (22,460,744) (10,300,045)
Federal and state income taxes
included in other income (16,332,753) (2,698,478) (206,820) 987,240 (1,900,910) (668,836)
Amortization of
capitalized interest 103,130 247,516 247,512 0 0 0
------------ ------------ ------------ ------------ ------------ ------------
$354,180,447 $384,110,969 $395,043,038 $425,527,118 $438,943,086 $469,448,325
============ ============ ============ ============ ============ ============
Fixed charges as defined in
item 503(d) of Regulation
S-K:
Interest on long-term debt $78,292,155 $82,655,251 $84,254,716 $102,842,096 $111,419,929 $121,290,658
Other interest 11,650,228 13,561,297 17,759,136 13,453,006 16,536,021 22,696,521
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 4,867,887
Interest portion of rent
expense 2,220,575 2,415,111 2,656,116 2,939,650 7,899,302 12,120,929
Minority Interest
(Topies)................ 7,633,125
Capitalized interest during period 2,145,182 234,613 0 0 0 0
----------- ------------ ------------ ------------ ------------ ------------
$98,205,291 $103,267,930 $109,275,439 $123,952,872 $140,444,948 $168,609,120
=========== ============ ============ ============ ============ ============
Plus preferred stock dividends:
Preferred dividend
requirements of subsidiary $9,912,759 $9,046,207 $8,711,985 $8,691,457 $8,538,180 $8,436,179
Preferred dividend
requirements factor 1.47 1.54 1.59 1.54 1.49 1.54
Preferred dividend
requirements of subsidiary 14,571,756 13,931,159 13,852,056 13,384,844 12,721,888 12,991,716
Fixed charges 98,205,291 103,267,930 109,275,439 123,952,872 140,444,948 168,609,120
------------ ------------ ------------ ------------ ------------ ------------
$112,777,047 $117,199,089 $123,127,495 $137,337,716 $153,166,836 $181,600,836
============ ============ ============ ============ ============ ============
Ratio of earnings to fixed
charges 3.14 3.28 3.21 3.10 2.87 2.59
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