-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, LgOueZ5My8rqRCBXyKgKRcOy9ZQ6lNjxkLTEHvbGrcYPPTcbcUahSUfJWWIIkbDr Q7FBzZLxNLERT+HqaCLCpQ== 0000950124-95-001615.txt : 19950601 0000950124-95-001615.hdr.sgml : 19950601 ACCESSION NUMBER: 0000950124-95-001615 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19950531 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED CITIES GAS CO CENTRAL INDEX KEY: 0000101105 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 361801540 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-56983 FILM NUMBER: 95543628 BUSINESS ADDRESS: STREET 1: 5300 MARYLAND WAY CITY: BRENTWOOD STATE: TN ZIP: 37027 BUSINESS PHONE: 6153730104 MAIL ADDRESS: STREET 1: 5300 MARYLAND WAY CITY: BRENTWOOD STATE: TN ZIP: 37027 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHEASTERN ILLINOIS GAS CO DATE OF NAME CHANGE: 19670829 S-3/A 1 AMENDMENT #1 TO S-3 1 REGISTRATION NO. 33-56983 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------ UNITED CITIES GAS COMPANY (Exact name of Registrant as specified in charter) ILLINOIS & VIRGINIA 36-1801540 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
5300 MARYLAND WAY BRENTWOOD, TENNESSEE 37027 615-373-5310 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) GENE C. KOONCE, PRESIDENT 5300 MARYLAND WAY BRENTWOOD, TENNESSEE 37027 615-373-5310 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies of communications to: JOHN M. DIXON, ESQ. ROBERT A. YOLLES, ESQ. CHAPMAN AND CUTLER JONES, DAY, REAVIS & POGUE 111 W. MONROE STREET 77 WEST WACKER DRIVE CHICAGO, ILLINOIS 60603-4080 CHICAGO, ILLINOIS 60601-1692
------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after this Registration Statement becomes effective as determined by market conditions and other factors. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. /X/ ------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. SUBJECT TO COMPLETION, DATED MAY 31, 1995 UNITED CITIES GAS COMPANY DEBT SECURITIES COMMON STOCK ------------------ United Cities Gas Company (the "Company") may offer, from time to time, (i) its First Mortgage Bonds (the "Bonds"), (ii) its notes (the "Notes" and collectively with the Bonds, the "Debt Securities") and/or (iii) shares of its Common Stock, without par value (the "Common Stock"), at prices and on terms to be determined when an agreement to sell is made or at the time or times of sale, as the case may be. The Debt Securities and the Common Stock may be issued in one or more series or issuances, as the case may be, and the aggregate initial offering price thereof will not exceed $200,000,000. The Debt Securities and the Common Stock are collectively referred to herein as the "Securities." This Prospectus will be supplemented by an accompanying prospectus supplement or supplements ("Prospectus Supplement") that will set forth, in the case of any Debt Securities for which this Prospectus is being delivered ("Offered Bonds" in the case of Bonds or "Offered Notes" in the case of Notes), the form in which such Debt Securities are to be issued and the designation thereof, their aggregate principal amount, rate or rates and times of payment of interest, maturity or maturities, their purchase price or prices and initial offering price or prices, redemption or repurchase provisions, if any, whether, in the case of Offered Notes, such Offered Notes will be collateralized by the Company's First Mortgage Bonds or convertible into Common Stock and other specific terms of such Debt Securities and, in the case of any Common Stock for which this Prospectus is being delivered ("Offered Stock"), the number of shares of such Common Stock and their purchase price and the initial public offering price or prices. See "Description of Debt Securities" and "Description of Capital Stock" herein. The Common Stock of the Company is traded on the Nasdaq National Market under the symbol "UCIT." Unless otherwise specified in the applicable Prospectus Supplement, the Offered Stock will be listed, subject to notice of issuance, on the Nasdaq National Market. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------ The Company may sell the Securities to or through underwriters, dealers or agents, or directly to one or more purchasers. The Prospectus Supplement will set forth the names of underwriters or agents, if any, any applicable commissions or discounts and the net proceeds to the Company from any such sale. See "Plan of Distribution" for possible indemnification arrangements for underwriters, dealers and agents. ------------------ The date of this Prospectus is , 1995. 3 IN CONNECTION WITH THIS OFFERING THE UNDERWRITERS MAY, IF APPLICABLE, OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS OR SERIES OF THE SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. ------------------ AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information filed by the Company with the Commission pursuant to the informational requirements of the Exchange Act may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of the Commission: Northeast Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048; and Midwest Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents, heretofore filed by the Company with the Commission pursuant to the Exchange Act, are hereby incorporated by reference: 1. The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994. 2. The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of this offering shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be modified or superseded, for purposes of this Prospectus, to the extent that a statement contained herein or in any subsequently filed document which is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom a copy of this Prospectus is delivered, upon the written or oral request of any such person, a copy of any or all of the documents described above (other than exhibits unless such exhibits are specifically incorporated by reference into such documents). Requests for such copies should be directed to Investor Relations/Corporate Communications, United Cities Gas Company, 5300 Maryland Way, Brentwood, Tennessee 37027, telephone (615) 373-5310. 2 4 THE COMPANY The Company was incorporated under the laws of Illinois in 1929 and was domesticated under the laws of Virginia in 1966. The Company's principal executive offices are located at 5300 Maryland Way, Brentwood, Tennessee 37027, and its telephone number is (615) 373-5310. The Company's predominant business is the distribution of natural gas. As of December 31, 1994 the Company supplied natural gas service to approximately 301,000 customers. In addition to its business of natural gas distribution, the Company sells and installs gas appliances and performs certain appliance service work. The Company has two wholly-owned subsidiaries. One subsidiary, UCG Energy Corporation ("UCG Energy"), incorporated under the laws of Delaware in 1965, is a broker procuring natural gas for the Company, certain of the Company's industrial customers, local distribution companies and others, and is engaged in exploration and production activities. In addition, UCG Energy leases appliances, real estate, equipment and vehicles to the Company and others. UCG Energy has two wholly-owned subsidiaries, United Cities Propane Gas of Tennessee, Inc. and UCG Leasing, Inc. United Cities Propane Gas of Tennessee, Inc., incorporated under the laws of Tennessee in 1976, is engaged in the retail distribution of propane (LP) gas. As of December 31, 1994, the propane operation served approximately 22,000 customers in Tennessee, Virginia and North Carolina. UCG Leasing, Inc. was incorporated under the laws of Georgia in 1987 and leases vehicles, equipment and real estate to the Company. The other subsidiary, United Cities Gas Storage Company ("UCG Storage"), was formed in 1989 to provide natural gas storage services. A natural gas storage field was purchased in Kentucky to supplement natural gas used by the Company's customers in Tennessee and Illinois. In addition, natural gas storage fields located in Kansas and included in the Company's 1989 acquisition of Union Gas System, Inc. were sold to UCG Storage. These fields are used to supplement natural gas used by the Company's Kansas customers. 3 5 USE OF PROCEEDS The net proceeds to be received by the Company from the issuance and sale of the Securities offered hereby may be used for one or more of the following purposes: for the repayment of all or a portion of the Company's short-term debt outstanding at the time of issuance of the Securities; for the purchase, acquisition and construction of additional properties and facilities, as well as improvements to the Company's existing utility plant; for the refunding of maturing long-term debt and satisfaction of sinking fund requirements; for the refunding of higher-coupon long-term debt as market conditions permit; and for general corporate purposes. Reference is made to the applicable Prospectus Supplement for a description of the long-term debt, if any, to be refunded with the net proceeds from any issuance and sale of the Securities offered hereby. RATIO OF EARNINGS TO FIXED CHARGES The ratios of consolidated earnings to fixed charges for the Company and its subsidiaries for the twelve months ended March 31, 1995 and for each of the years ended December 31, 1994 through 1990 are 2.22, 2.30, 2.21, 2.17, 1.92 and 1.42, respectively. Earnings consist of net income to which have been added fixed charges and taxes on income. Fixed charges consist of interest on long-term debt and amortization of debt discount. DESCRIPTION OF DEBT SECURITIES DESCRIPTION OF BONDS General The Bonds will be issued under the Indenture of Mortgage dated as of July 15, 1959 (the "Original Mortgage") from the Company to Bank of America Illinois (successor to Continental Bank, National Association) (the "Mortgage Trustee") and Robert J. Donahue (successor to M.J. Kruger), as Trustees (the Mortgage Trustee and Robert J. Donahue are hereinafter referred to as the "Mortgage Trustees"), as amended and supplemented, and as to be further supplemented by one or more supplemental indentures creating the Bonds (the "Supplemental Indenture"). The Original Mortgage as so amended and supplemented is hereinafter referred to as the "Mortgage" and all bonds issued under the Mortgage are hereinafter referred to as the "bonds." The statements herein concerning the Bonds do not purport to be complete and are qualified in their entirety by express reference to the Mortgage and to the definitions therein of the terms used herein. References to article and section numbers under this heading are to articles and section numbers in the Mortgage. Reference is made to the applicable Prospectus Supplement for the following terms of the Offered Bonds (among others): (i) the designation and series of the Offered Bonds; (ii) the percentage or percentages of their principal amount at which such Offered Bonds will be issued; (iii) the date or dates on which the Offered Bonds will mature; (iv) the rate or rates at which the Offered Bonds will bear interest; (v) the times at which such interest will be payable; (vi) the dates, if any, on which and the price or prices at which the Offered Bonds will, pursuant to any mandatory sinking fund provisions, or may, pursuant to any optional sinking fund provisions, be redeemed by the Company, and the other detailed terms and provisions of any such sinking funds; (vii) the date, if any, after which and the price or prices at which the Offered Bonds will, pursuant to any optional redemption provisions, be redeemable at the option of the Company or the holders thereof and the other detailed terms and provisions of such optional redemptions; and (viii) any other special terms or provisions not inconsistent with the terms of the Mortgage. The Mortgage does not contain any covenants or other provisions that are specifically intended to afford holders of the bonds special protection in the event of a highly leveraged transaction. 4 6 Form and Exchangeability The Bonds will be issued only as fully registered bonds without coupons, in denominations of $1,000 and multiples thereof. The Bonds will be exchangeable for a like aggregate principal amount of other Bonds of the same series of different authorized denominations, and may be transferred, in each case upon surrender thereof at the principal corporate trust office of the Mortgage Trustee in Chicago, Illinois. The Company may require the payment of a sum sufficient to pay any stamp tax or other governmental charge imposed in relation to any transfer or exchange of the Bonds, and in addition thereto, such charge for any such transfer or exchange as it may deem proper, not exceeding $2.00 for each new Bond issued upon such transfer or exchange. Interest and Payment Reference is made to the applicable Prospectus Supplement for the interest rate or rates, if any, of the Offered Bonds and the date or dates on which such interest is payable. Unless otherwise specified in the applicable Prospectus Supplement, principal and interest on the Bonds are payable to the registered holder thereof at the principal corporate trust office of the Mortgage Trustee in Chicago, Illinois. Redemption The Supplemental Indenture will provide that the Bonds are redeemable, in whole or in part, at any time upon notice as required in the Mortgage through the application of cash deposited with the Mortgage Trustee in accordance with the provisions of Section 3.14 of the Original Mortgage (relating to insurance and certain other compensatory proceeds) or Section 7.02, 7.03 or 7.04 of the Original Mortgage (relating to proceeds from the disposition, release or governmental taking of mortgaged properties) at 100% of the principal amount thereof, together with interest accrued thereon, if any, to the date of redemption. (Art. 2, Sec. 2.03 of the Supplemental Indenture) Any additional terms for the optional or mandatory redemption of Offered Bonds will be set forth in the applicable Prospectus Supplement. Except as shall otherwise be provided with respect to Offered Bonds redeemable at the option of the holder thereof, such Offered Bonds will be redeemable only upon notice, by mail, not less than 30 days and not more than 90 days prior to the date fixed for redemption, postage prepaid, to each registered holder of Offered Bonds to be redeemed. (Art. 4, Section 4.03 of the Original Mortgage) If less than all of the Offered Bonds of any series are to be redeemed, the particular Offered Bonds to be redeemed will be selected by such methods as the Mortgage Trustee deems fair and appropriate. (Art. 3, Sec. 3.02 of the Supplemental Indenture) Issuance of Additional Bonds The Company may issue additional bonds: (a) to a principal amount equal to 60% of the cost or fair value, whichever is less, of net unbonded Property Additions (subject to deductions if such net Property Additions secure Prior Lien Bonds or were made the basis for the release of either property or cash under the Mortgage) evidenced to the Mortgage Trustee for such purpose; (b) to a principal amount equal to the amount of cash deposited with the Mortgage Trustee for such purpose; and (c) to a principal amount equal to the principal amount of any bonds of any series voluntarily retired by the Company, by purchase or redemption, and bonds retired by payment at their stated maturity; provided that in case bonds described in clauses (a) and (b) above are issued, or bonds described in this clause (c) are to be certified and delivered more than one year prior to the maturity date of the bonds to be refunded and are to bear a higher rate of interest than the bonds to be refunded, Net Earnings for any period of 12 consecutive months within a 15 month period ending not more than 60 days prior to the date of such proposed issue shall have been at least equal to 175% of the interest requirements for a period of 5 7 12 months on all bonds (including Prior Lien Bonds) to be outstanding immediately thereafter. (Art. 2, Sec. 2.02 of the Original Mortgage; Art. 5, Sec. 5.01 of the Nineteenth Supp. Ind.) For purposes of the Mortgage, "Property Additions" is defined as all property, with certain exceptions, of a fixed or permanent nature constructed or acquired by the Company after July 31, 1959 and used or useful in the business of providing natural gas service including all plants and properties constructed or acquired and used solely for the purpose of furnishing other than natural gas to augment the supply of natural gas in order to effect "peak shaving," all property of the aforementioned described character in process of construction to the extent that the Company has incurred liability therefor, and proper charges for overhead in accordance with generally accepted principles of accounting, and all Cushion Gas (defined as that minimum volume of natural gas necessary to be retained in a gas storage reservoir owned by the Company in order to maintain the integrity and viability of the geological strata and the horizons of a gas reservoir for the storage of natural gas); provided, however, that until the date on which no bonds of any series issued under the Mortgage and outstanding immediately prior to January 26, 1990 are outstanding, the amount of Cushion Gas which shall be included as Property Additions shall at no time exceed 10% of Property Additions. (Art. 12, Sec. 12.05 of the Original Mortgage; Art. 5, Sec. 5.01 of the Nineteenth Supp. Ind.) Two series of bonds issued under the Mortgage and outstanding immediately prior to January 26, 1990 remain outstanding on May 31, 1995. "Net Earnings" is defined, for any period, as the amount obtained by deducting from the gross earnings derived from the operation of the mortgaged property all operating expenses of the Company, and by adding to the remainder all net non-operating earnings not in excess of 15% of such remainder; provided, however, that the Supplemental Indenture will provide that each holder of the Bonds and bonds of any subsequent series shall agree that effective on the earlier of (i) the date on which the holders of the bonds of each series issued under the Mortgage and outstanding immediately prior to January 26, 1990 consent to such amendment, or (ii) the date on which no bonds of any series issued under the Mortgage and outstanding immediately prior to January 26, 1990 remain outstanding, the definition of Net Earnings shall be amended to replace the words "not in excess of 15% of such remainder" with "other than any portion of such earnings which represents the net gain arising from any sale or other disposition of capital assets, or any other items, which would, in accordance with generally accepted accounting principles, require separate treatment or classification in the preparation of the Company's financial statements as 'extraordinary items'." (Art. 12, Sec. 12.05 of the Original Mortgage; Art. 5, Sec. 5.01 of the Supplemental Indenture) As of March 31, 1995, unbonded net Property Additions available as a basis for the issuance of bonds were approximately $366,479,000 and unbonded bond retirements available as a basis for the issuance of bonds were approximately $292,607,000. It is expected that the Bonds will be issued primarily upon the basis of unbonded net Property Additions. Withdrawal of Certain Cash Cash deposited with the Mortgage Trustee as a basis for the issuance of additional bonds may be withdrawn by the Company against net unbonded Property Additions (subject to deductions if such net Property Additions secure Prior Lien Bonds or were made the basis for the release of either property or cash under the Mortgage) in an amount equal to at least 166 2/3% of the amount of such cash. (Art. 2, Sec. 2.04 of the Original Mortgage) Cash deposited with the Mortgage Trustee pursuant to Section 3.14, 7.02, 7.03 or 7.04 of the Original Mortgage may be withdrawn by the Company against gross unbonded Property Additions (subject to deductions if such gross Property Additions secure Prior Lien Bonds or were made the basis for the release of either property or cash under the Mortgage) in an amount equal to 100% of the amount of such cash; provided, however, such cash shall be withdrawn by the Company within twelve months, if such cash was deposited pursuant to Section 3.14 (relating to insurance and certain other compensatory proceeds), or two years, if such cash was deposited pursuant to Section 7.02, 7.03 or 7.04 (relating to proceeds from the disposition, release or governmental taking of mortgaged properties), from the date of deposit of such cash if 6 8 the Company shall have gross Property Additions available for such purpose. (Art. 3 and 7 of the Original Mortgage; Art. 4, Sec. 4.02 of the Supplemental Indenture) Limitations on Liens The Company will not, directly or indirectly, create, assume, incur or suffer to exist any lien upon any of its property or assets, whether now owned or hereafter acquired, other than the lien of the Mortgage and permitted liens and encumbrances described in the Mortgage, including, without limitation, Prior Liens subject to the restrictions described below. (Art. 3, Sec. 3.09 of the Original Mortgage) The Mortgage provides that the Company will not acquire any property subject to Prior Liens if the aggregate amount of Prior Lien Bonds outstanding after such acquisition will: (i) be in excess of 10% of the aggregate amount of bonds at the time outstanding under the Mortgage, or (ii) exceed 60% of the cost or fair value of such property, whichever is less, unless there shall be filed with the Mortgage Trustee a certificate evidencing gross Property Additions in an amount not less than 166-2/3% of such excess and all Property Additions certified for such purpose shall constitute Funded Property. (Art. 3, Sec. 3.17 of the Original Mortgage) For purposes of the Mortgage, "Prior Liens" are defined as any mortgages or other instruments constituting a lien upon property acquired by the Company prior to the lien of the Mortgage. "Prior Lien Bonds" are defined as any bonds, notes or other evidences of indebtedness secured by Prior Liens. (Art. 12, Sec. 12.05 of the Original Mortgage) Maintenance of Net Earnings The Company will, so long as the bonds of any series issued and outstanding under the Mortgage immediately prior to January 26, 1990 remain outstanding, maintain its Net Earnings for any period of 12 consecutive months within a 15 month period ending March 31 and September 30 of each year, at least equal to 175% of the interest requirements for a period of 12 months on all bonds (including Prior Lien Bonds) outstanding as of such March 31 and September 30 of each year. (Art. 5, Sec. 5.01 of the Nineteenth Supp. Ind.) Dividend Restrictions For so long as any of the bonds issued under the Mortgage prior to January 26, 1990 remain outstanding, the Company will not declare or pay any dividends or directly or indirectly purchase, redeem or otherwise acquire any shares of Common Stock (except out of the net cash proceeds derived from the issuance of other shares of Common Stock), or make any other distribution on shares of Common Stock (such non-excepted declarations, payments, purchases, redemptions or other acquisitions and distributions, hereinafter referred to as "Restricted Payments"), unless after giving effect thereto the aggregate amount of all such Restricted Payments made during the period from December 31, 1985 to and including the date of the making of the Restricted Payment in question does not exceed the sum of $9,000,000 plus (or minus in case of a deficit) the amount of Consolidated Net Income Available for Common Stock Dividends for such period. The supplemental indentures, including, unless otherwise stated in the applicable Prospectus Supplement, the Supplemental Indenture, creating each series of bonds issued on and after January 26, 1990 contain or will contain a similar dividend covenant but prohibit the making of Restricted Payments during the period from December 31, 1988 in excess of the sum of $15,038,000 plus (or minus in case of a deficit) the amount of Consolidated Net Income Available for Common Stock Dividends for such period. "Consolidated Net Income Available for Common Stock Dividends" for any period is defined under the Mortgage as the net income of the Company and its subsidiaries for such period available for dividends on capital stock, after deducting therefrom dividends paid and accrued during such period on preferred stock, determined on a consolidated basis in accordance with generally accepted accounting principles; provided, however, that no effect shall be given to any gains or losses or other additions or deductions arising by reason of 7 9 the issue, purchase, sale, conversion or retirement by the Company or any subsidiary of any of its or their securities, or arising by reason of any purchases, sales, write-ups, write-downs, increase or decrease in book value, or other transactions or changes in respect of capital assets, tangible or intangible, and deductions for income taxes shall be adjusted by giving effect to any change in the amount thereof resulting from the elimination of any of the capital transactions or changes referred to above. (Art. 5 of the Fourteenth and Eighteenth Supplemental Indentures; Art. 4 of the Fifteenth, Sixteenth, Seventeenth, Nineteenth and Twentieth Supplemental Indentures; Art. 4, Sec. 4.03 of the Supplemental Indenture) Under the foregoing provisions, none of the Company's retained earnings at March 31, 1995 was unavailable to pay dividends on the Common Stock. Merger, Consolidation and Sale The Mortgage does not prevent any consolidation or merger of the Company with or into, or any conveyance or transfer of all or substantially all of the mortgaged property as an entirety to, any corporation lawfully entitled to acquire and operate the same; unless such consolidation, merger, conveyance or transfer shall impair the lien of the Mortgage, or any of the rights or powers of the Mortgage Trustees or the bondholders thereunder. (Art. 8, Sec. 8.01 of the Original Mortgage) In the Supplemental Indenture, the Company will covenant that so long as any of the Bonds remain outstanding, any of the provisions of Article 8 of the Original Mortgage to the contrary notwithstanding, the Company will not consolidate or merge with or into, or convey or transfer all or substantially all of the mortgaged property to, any other entity if at the time thereof or after giving effect thereto any event of default shall or would exist under the Mortgage. (Art. 4, Sec. 4.04 of the Supplemental Indenture) Modification of the Mortgage The Mortgage may be modified with the written consent of the holders of not less than 66 2/3% in aggregate principal amount of each series of bonds then outstanding, and not less than 66 2/3% in principal amount of the bonds of any particular series then outstanding can waive any right specifically applicable to that series, provided that no such modification or waiver shall be effective against any bondholder that changes the obligation of the Company in respect of the amount or time of the payment of principal, interest, or premium on any bond outstanding, or reduces the percentage in principal amount of the bonds required to approve any such modification or waiver, or subordinates the bonds or the lien of the Mortgage in favor of other creditors of the Company, without the consent of such bondholder; and no modification of any of the rights or obligations of the Mortgage Trustees under the Mortgage shall be effective against the Mortgage Trustees without their consent. (Art. 12, Sec. 12.08 of the Original Mortgage) The Mortgage may be modified without the written consent of the holders of the bonds to set out the provisions of an additional series of bonds, to subject other property to the lien of the Mortgage, to add further covenants and conditions of the Company for the further security of the bondholders, to limit the amount of any bond or all bonds of any series that may be issued under the Mortgage, to conform to the requirements of the Trust Indenture Act of 1939 and the regulations thereunder as the same may from time to time be amended, or to cure any ambiguity or to correct any defective or inconsistent provisions in the Mortgage or in any supplemental indenture thereto. (Art. 12, Sec. 12.08 of the Original Mortgage) Default and Notice Thereof The Mortgage Trustees or the holders of a majority in aggregate principal amount of bonds outstanding may declare the principal and interest of the bonds immediately due and payable if any of the following events of default exist: (a) a default in the payment of any installment of interest on any of the bonds when due and payable and such default continues for a period of 10 days; (b) a default in the payment of any installment of sinking fund payments when due and payable; (c) a default in the payment of the principal of or premium on any bond when due and payable whether at its stated maturity, by call for redemption, by declaration or otherwise; (d) a violation of covenants or conditions in the Mortgage or any bonds which have not been cured within 60 days after written notice by the Mortgage Trustee; or (e) the insolvency of the Company or the 8 10 occurrence of certain bankruptcy, insolvency or receivership proceedings; provided, however, at any time before a sale of the mortgaged property, the holders of a majority in aggregate principal amount of bonds outstanding may annul such declaration. (Art. 6 of the Original Mortgage) The holders of a majority in aggregate principal amount of bonds outstanding have the right to direct and control the time, method and place of any action of the Mortgage Trustees to be taken upon the occurrence of a default. (Art. 6, Sec. 6.08 of the Original Mortgage) The Mortgage Trustees are not required to act under the Mortgage, whether or not requested to do so by the bondholders, unless they shall have received indemnity satisfactory to them. (Art. 10, Sec. 10.01 of the Original Mortgage) The Mortgage Trustees may withhold notice of an event of default (except in the payment of principal, interest or sinking fund installments on any bond) if they determine in good faith that the withholding of such notice is in the interests of the holders of the bonds. The Company is required to file annually with the Mortgage Trustee a certificate as to compliance with all terms and conditions of the Mortgage. (Art. 3, Sec. 3.08 of the Original Mortgage) Defeasance The Mortgage provides that when the principal of all bonds at the time outstanding under the Mortgage shall have become payable, or will become payable within six months, by their terms, on redemption, by declaration or in any other manner, and the Company irrevocably deposits or causes to be deposited with the Mortgage Trustee for the account of the holders of such bonds, a sum sufficient, with any other moneys then held by the Mortgage Trustee applicable to that purpose, to pay the whole amount of the principal, premium, if any, and interest due or to become due on all of the bonds then outstanding, immediately upon such irrevocable deposit and, in case of redemption, upon furnishing to the Mortgage Trustee proof satisfactory to the Mortgage Trustee that the notice of redemption has been given or waived as provided in the Mortgage or when there shall be or shall have been delivered to the Mortgage Trustee, for immediate cancellation, all bonds then outstanding, and, in such case, immediately upon such delivery, then and in any such case the bonds shall cease to be entitled to any benefit or security under the Mortgage except the right to receive payment of the moneys deposited and held for the payment thereof and the lien of the Mortgage shall be released and/or the mortgaged property shall revert to the Company. (Art. 11, Sec. 11.01 of the Original Mortgage) Security and Priority The Bonds will rank pari passu as to security with the bonds of the other series outstanding under the Mortgage, which, in the opinion of counsel to the Company, is a valid first lien on substantially all the properties, franchises and contract rights used by or useful to the Company in the operation of its business, whether now owned or hereafter acquired by the Company (except as noted below), subject to permitted liens and encumbrances described in the Mortgage and, with respect to property hereafter acquired, to Prior Liens. There are excepted from the lien of the Mortgage all cash, notes and bills, accounts receivable, not specifically pledged, all stocks, bonds and securities not specifically pledged, all merchandise held for resale and consumable materials and supplies (other than Cushion Gas), all automotive equipment and all inventory of pipe, meters and equipment. (Granting Clauses of the Original Mortgage; Art. 5, Sec. 5.01 of the Nineteenth Supp. Ind.) The Mortgage contains provisions subjecting to the lien thereof all property, real, personal and mixed (other than property of the kind excepted from the lien as described above) acquired by the Company after the date of the delivery of the Original Mortgage. Release and Substitution of Property Unless an event of default shall have occurred and is continuing, the Company may sell, exchange or dispose of, free from the lien of the Mortgage, any property (other than real property) which has become worn out, unserviceable, undesirable or unnecessary for use in the conduct of its business; provided that the Company shall replace such property, if necessary for the efficient and proper operation of its business, by other property of equal or greater value or utility to the Company, or if not so necessary, the Company shall 9 11 deposit the proceeds of the disposition of such property with the Mortgage Trustee. (Art. 7, Sec. 7.02 of the Original Mortgage) DESCRIPTION OF NOTES General The Notes will be issued under an Indenture (the "Indenture") to be entered into between the Company and Bank of America Illinois, as trustee (the "Indenture Trustee"). The summaries under this heading do not purport to be complete and are qualified in their entirety by express reference to the detailed provisions of the Indenture. References to article and section numbers under this heading are to articles and section numbers in the Indenture. Terms used under this heading or in any Prospectus Supplement relating to the Offered Notes which are defined under this heading are so defined solely with reference to the Offered Notes. The Indenture provides that debt securities (including both interest bearing and original issue discount securities), including the Notes, may be issued thereunder, without limitation as to the aggregate principal amount. (Art. Three, Sec. 301) The Notes and all other debt securities issued under the Indenture are collectively referred to herein as the "Indenture Securities." The Indenture does not limit the amount of other debt, secured or unsecured, which may be issued by the Company. The Notes will rank pari passu with all other unsecured indebtedness of the Company; provided, however, that if specified in the applicable Prospectus Supplement, a particular series of Offered Notes may be collateralized by the Company's First Mortgage Bonds. See "Description of Capital Stock -- Restriction on Issuance of Funded Debt" for a description of provisions contained in the Company's Amended Articles of Incorporation, as amended, which may restrict the Company's ability to issue Indenture Securities under the Indenture. Reference is made to the applicable Prospectus Supplement for the following terms of the Offered Notes (among others): (i) the title of such Offered Notes; (ii) the limit, if any, upon the aggregate principal amount of such Offered Notes; (iii) the rate or rates, or the method of determination thereof, at which such Offered Notes will bear interest, if any, and the date or dates from which such interest will accrue; (iv) the dates on which such interest will be payable (each an "Interest Payment Date") and the regular record dates for the interest payable on such Interest Payment Dates; (v) the obligation, if any, of the Company to redeem or purchase such Offered Notes pursuant to any sinking fund or analogous provisions or at the option of the holder thereof and the periods within which or the dates on which, the prices at which and the terms and conditions upon which such Offered Notes will be redeemed or purchased, in whole or in part, pursuant to such obligation; (vi) the periods within which or the dates on which, the prices at which and the terms and conditions upon which such Offered Notes may be redeemed, if any, in whole or in part, at the option of the Company; (vii) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which such Offered Notes will be issuable; (viii) whether such Offered Notes are to be issued in whole or in part in the form of one or more global Notes and, if so, the identity of the depositary for such global Notes; (ix) the terms, if any, under which the Offered Notes may be convertible into Common Stock; (x) whether such Offered Notes will be collateralized by the Company's First Mortgage Bonds and (xi) any other terms of such Offered Notes not inconsistent with the provisions of the Indenture. The Indenture does not contain any covenants or other provisions that are specifically intended to afford holders of the Notes special protection in the event of a highly leveraged transaction. Payment of Notes; Transfers; Exchanges Except as may be provided in the applicable Prospectus Supplement, interest, if any, on each Offered Note payable on each Interest Payment Date will be paid by check mailed to the person in whose name such Note is registered (the registered holder of any Indenture Security being herein called a "Holder") as of the close of business on the regular record date relating to such Interest Payment Date; provided, however, that interest payable at maturity (whether at stated maturity, upon redemption or otherwise, hereinafter "Maturity") will be paid to the person to whom principal is paid. However, if there has been a default in the payment of interest on any Note, such defaulted interest may be payable to the Holder of such Note as of the 10 12 close of business on a date selected by the Indenture Trustee not more than 15 days and not less than 10 days prior to the date proposed by the Company for payment of such defaulted interest. Principal of and premium, if any, and interest, if any, on the Notes at maturity will be payable upon presentation of the Notes at the principal corporate trust office of the Indenture Trustee in Chicago, Illinois. The Company may change the place of payment on the Notes, may appoint one or more paying agents (including the Company) and may remove any paying agent, all in its discretion. The applicable Prospectus Supplement will identify any new place of payment and any paying agent appointed, and will disclose the removal of any paying agent effected, prior to the date of such Prospectus Supplement. The transfer of Notes may be registered, and Notes may be exchanged for other Notes of authorized denominations and of like tenor and aggregate principal amount, at the principal corporate trust office of the Indenture Trustee in Chicago, Illinois. The Company may change the place for registration of transfer of the Notes, may appoint one or more additional security registrars or transfer agents (including the Company) and may remove any security registrar or transfer agent, all in its discretion. The applicable Prospectus Supplement will identify any new place for registration of transfer and any additional security registrar or transfer agent appointed, and will disclose the removal of any security registrar or transfer agent effected, prior to the date of such Prospectus Supplement. No service charge will be made for any transfer or exchange of the Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. (Art. Three, Sec. 305) The Company will not be required (a) to issue, register the transfer of or exchange Notes during a period of 15 days prior to giving any notice of redemption or (b) to issue, register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. Redemption Any terms for the optional or mandatory redemption of Offered Notes will be set forth in the applicable Prospectus Supplement. Except as may otherwise be provided in the applicable Prospectus Supplement with respect to Offered Notes redeemable at the option of the Holder, such Offered Notes will be redeemable only upon notice, by mail, not less than 30 or more than 60 days prior to the date fixed for redemption and, if less than all of the Offered Notes of any series, or any tranche thereof, are to be redeemed, the particular Offered Notes will be selected by such methods as the Indenture Trustee deems fair and appropriate. (Art. Four, Sec. 403 and 404) Any notice of optional redemption may state that such redemption shall be conditional upon the receipt by the Indenture Trustee, on or prior to the date fixed for such redemption, of money sufficient to pay the principal of and premium, if any, and interest, if any, on such Notes and that if such money has not been so received, such notice will be of no force or effect and the Company will not be required to redeem such Notes. (Art. Four, Sec. 404) Conversion Rights The applicable Prospectus Supplement will provide whether the Offered Notes will consist of convertible Notes and, if so, the initial conversion price per share at which such convertible Notes will be convertible into Common Stock. Subject to prior redemption of the convertible Notes, the Holders of such Notes will be entitled at any time on or before the close of business on the maturity date thereof to convert such Notes (or, in the case of convertible Notes of denominations in excess of $1,000 any portion of which is $1,000 or an integral multiple of $1,000) into shares of Common Stock at the initial conversion price set forth in the applicable Prospectus Supplement. No adjustment will be made on conversion of any convertible Notes for interest accrued thereon or, except as set forth below, for dividends on any securities issued upon such conversion. In order to exercise the right of conversion, the Holder of any such convertible Notes must surrender such convertible Notes to the Company at any office or agency of the Company maintained for such purpose. The convertible Notes to be surrendered must be accompanied by written notice to the Company that the Holder elects to convert such Notes. 11 13 If any convertible Note, whether or not called for redemption, is converted between a record date for the payment of interest and the next succeeding Interest Payment Date, such convertible Note must be accompanied by funds payable to the Company equal to the interest payable to the registered Holder on such Interest Payment Date on the principal amount so converted. In the case of any convertible Note or portion thereof called for redemption, conversion rights expire at the close of business on the Redemption Date, even if such redemption occurs at a time when conversion of such Note or portion thereof is in the best interests of the Holder. No fractional shares of Common Stock will be issued upon conversion but, in lieu thereof, an adjustment in cash will be made based on the market price at the close of business on the date of conversion. The Conversion Price will be subject to adjustment in the event of: (i) the payment of certain stock dividends on the Common Stock; (ii) the issuance of certain rights or warrants to all holders of the Common Stock entitling them to subscribe for or purchase Common Stock at a price less than the market price; (iii) the subdivision of Common Stock into a greater number of shares of Common Stock; (iv) the distribution by the Company to all holders of the Common Stock of evidences of indebtedness or assets of the Company (excluding rights or warrants and any dividends or distributions mentioned above); and (v) the reclassification of Common Stock into other securities. (Art. Five) Events of Default The following constitute Events of Default under the Indenture with respect to each series of Indenture Securities outstanding thereunder: (a) failure to pay any interest on any Indenture Security of such series within 30 days after the same becomes due and payable; (b) failure to pay any principal of any Indenture Security of such series when the same becomes due and payable; (c) failure to perform or breach of any covenant or warranty of the Company in the Indenture (other than a covenant or warranty of the Company in the Indenture solely for the benefit of one or more series of Indenture Securities other than the Notes), for 60 days after written notice to the Company by the Indenture Trustee, or to the Company and the Indenture Trustee by the Holders of at least 25% in principal amount of the Indenture Securities of such series outstanding under the Indenture as provided in the Indenture; (d) an event of default as defined in any mortgage, indenture or instrument under which there may be issued any indebtedness for borrowed money of the Company (including bonds issued under the Mortgage and Indenture Securities of other series issued under the Indenture), which event of default either (i) results in such indebtedness in an amount in excess of $15,000,000 becoming or being declared due and payable prior to maturity or (ii) results from the failure by the Company to make any payment in excess of $15,000,000 of the principal of such indebtedness on the date it becomes due and payable (after the expiration of any applicable grace periods), and such acceleration shall not have been rescinded or annulled or such failure to make payment shall not have been cured, as the case may be, or such indebtedness shall not have been otherwise discharged, within 90 days after notice shall have been given as provided in the Indenture; (e) certain events of bankruptcy, insolvency or reorganization with respect to the Company; and (f) any other Event of Default specified with respect to Indenture Securities of such series. (Art. Eight, Sec. 801) No Event of Default with respect to the Notes necessarily constitutes an Event of Default with respect to the Indenture Securities of any other series issued under the Indenture. Remedies If an Event of Default with respect to any series of Indenture Securities occurs and is continuing, then either the Indenture Trustee or the Holders of not less than 25% in principal amount of the outstanding Indenture Securities of such series may declare the principal amount (or if the Indenture Securities of such 12 14 series are discount notes or similar Indenture Securities, such portion of the principal amount of such Indenture Securities as may be specified in the terms thereof) of all of the Indenture Securities of such series to be due and payable immediately; provided, however, that if an Event of Default occurs and is continuing with respect to more than one series of Indenture Securities, the Indenture Trustee or the Holders of not less than 25% in aggregate principal amount of the outstanding Indenture Securities of all such series, considered as one class, may make such declaration of acceleration and not the Holders of the Indenture Securities of any one of such series. At any time after the declaration of acceleration with respect to the Indenture Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained, the Event or Events of Default giving rise to such declaration of acceleration will, without further act, be deemed to have been waived, and such declaration and its consequences will, without further act, be deemed to have been rescinded and annulled, if (a) the Company has paid or deposited with the Indenture Trustee a sum sufficient to pay (1) all overdue interest on all Indenture Securities of such series; (2) the principal of and premium, if any, on any Indenture Securities of such series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Indenture Securities; (3) interest upon overdue interest at the rate or rates prescribed therefor in such Indenture Securities, to the extent that payment of such interest is lawful; and (4) all amounts due to the Indenture Trustee under the Indenture; and (b) any other Event or Events of Default with respect to the Indenture Securities of such series, other than the nonpayment of the principal of the Indenture Securities of such series which has become due solely by such declaration of acceleration, have been cured or waived as provided in the Indenture. (Art. Eight, Sec. 802) If an Event of Default with respect to the Indenture Securities of any series occurs and is continuing, the Holders of a majority in principal amount of the outstanding Indenture Securities of such series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising any trust or power conferred on the Indenture Trustee, with respect to the Indenture Securities of such series; provided, however, that if an Event of Default occurs and is continuing with respect to more than one series of Indenture Securities, the Holders of a majority in aggregate principal amount of the outstanding Indenture Securities of all such series, considered as one class, will have the right to make such direction, and not the Holders of the Indenture Securities of any one of such series. (Art. Eight, Sec. 812) The Indenture Trustee is not required to exercise any of the rights and powers vested in it under the Indenture at the request or direction of any Holder unless such Holder shall have offered to the Indenture Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. (Art. Nine, Sec. 903) The right of a Holder of any Indenture Security of such series to institute a proceeding with respect to the Indenture is subject to certain conditions precedent, but each Holder has an absolute right to receive payment of principal and premium, if any, and interest, if any, when due and to institute suit for the enforcement of any such payment. (Art. Eight, Sec. 807 and 808) The Indenture provides that the Indenture Trustee, within 90 days after the occurrence of any default thereunder with respect to the Indenture Securities of a series, is required to give the Holders of the Indenture Securities of such series notice of any default known to it, unless cured or waived; provided, however, that, except in the case of a default in the payment of principal of or premium, if any, or interest, if any, on any Indenture Securities of such series, the Indenture Trustee may withhold such notice if the Indenture Trustee determines that it is in the interest of such Holders to do so; and provided, further, that in the case of a default of the character specified above in clause (c) under "Events of Default," no such notice shall be given to such Holders until at least 75 days after the occurrence thereof. (Art. Nine, Sec. 902) 13 15 The Company will be required to furnish annually to the Indenture Trustee a statement as to the performance by the Company of certain of its obligations under the Indenture and as to any default in such performance. (Art. Six, Sec. 606) Covenants; Consolidation, Merger, etc. The Company will cause (or, with respect to property owned in common with others, make reasonable effort to cause) all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and will cause (or, with respect to property owned in common with others, make reasonable effort to cause) to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as, in the judgment of the Company, may be necessary so that the business carried on in connection therewith may be properly conducted; provided, however, that the foregoing shall not prevent the Company from discontinuing, or causing the discontinuance of, the operation and maintenance of any of its properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business. (Art. Six, Sec. 605) Subject to the provisions described in the next paragraph, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and rights (charter and statutory) and franchises of the Company; provided, however, that the Company not be required to preserve any such right or franchise if, in the judgment of the Company, preservation thereof is no longer desirable in the conduct of the business of the Company and the loss thereof will not adversely affect the interests of the Holders in any material respect. (Art. Six, Sec. 604) The Company will not consolidate with or merge into any other corporation or corporations or convey, transfer or lease its properties and assets substantially as an entirety to any Person or Persons unless (a) the corporation or corporations formed by such consolidation or into which the Company is merged or the Person or Persons which acquires by conveyance or transfer, or which leases, the property and assets of the Company substantially as an entirety, expressly assumes, by supplemental indenture, the due and punctual payment of the principal of and premium, if any, and interest, if any, on all the Indenture Securities and the performance of all of the covenants of the Company under the Indenture, (b) immediately after giving effect to such transactions no Event of Default, and no event which after notice and lapse of time or both would become an Event of Default, will have occurred and be continuing, and (c) the Company will have delivered to the Indenture Trustee an opinion of counsel as provided in the Indenture. (Art. Eleven, Sec. 1101) Modification of Indenture Without the consent of any Holders of Indenture Securities, the Company and the Indenture Trustee may enter into one or more supplemental indentures for any of the following purposes: (a) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company in the Indenture and the Indenture Securities pursuant to a consolidation, merger or conveyance of substantially all of the Company's assets as described above; or (b) to add to the covenants of the Company for the benefit of the Holders of all or any series of outstanding Indenture Securities or to surrender any right or power conferred upon the Company by the Indenture; or (c) to add any additional Events of Default with respect to all or any series of outstanding Indenture Securities; or (d) to change or eliminate any provision of the Indenture or to add any new provision to the Indenture; provided that if such change, elimination or addition will adversely affect the interests of the Holders of Indenture Securities of any series in any material respect, such change, elimination or addition will become effective with respect to such series only when there is no Indenture Security of such series remaining outstanding under the Indenture; or (e) to provide collateral security for all series of Indenture Securities; or 14 16 (f) to establish the form or terms of Indenture Securities of any series as permitted by the Indenture; or (g) to evidence and provide for the acceptance of the appointment of a successor Indenture Trustee under the Indenture with respect to the Indenture Securities of one or more series and to add to or change any of the provisions of the Indenture as shall be necessary to provide for or to facilitate the administration of the trusts under the Indenture by more than one trustee; or (h) to provide for the procedures required to permit the utilization of a noncertificated system of registration for any series of Indenture Securities; or (i) to change any place where (1) the principal of and premium, if any, and interest, if any, on Indenture Securities of any series, or any tranche thereof, shall be payable, (2) any Indenture Securities of any series, or any tranche thereof, may be surrendered for registration of transfer, (3) Indenture Securities of any series, or any tranche thereof, may be surrendered for exchange and (4) notices and demands to or upon the Company in respect of the Indenture Securities of any series, or any tranche thereof, and the Indenture may be served; or (j) to cure any ambiguity or inconsistency or to make any other provisions with respect to matters and questions arising under the Indenture, provided such provisions shall not adversely affect the interests of the Holders of Indenture Securities of any series in any material respect. (Art. Twelve, Sec. 1201) Except as described above, the consent of the Holders of not less than a majority in principal amount of the Indenture Securities of all series then outstanding under the Indenture, considered as one class, is required for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, the Indenture pursuant to an indenture or supplemental indenture; provided, however, that if less than all of the series of Indenture Securities outstanding under the Indenture are directly affected by a supplemental indenture, then the consent only of the Holders of a majority in aggregate principal amount of the outstanding Indenture Securities of all series so directly affected, considered as one class, will be required; and provided, further, that if the Indenture Securities of any series shall have been issued in more than one tranche and if the proposed supplemental indenture shall directly affect the rights of the Holders of Indenture Securities of one or more, but less than all, of such tranches, then the consent only of the Holders of a majority in aggregate principal amount of the outstanding Indenture Securities of all tranches so directly affected, considered as one class, shall be required; and provided, further, that no such supplemental indenture will, without the consent of the Holder of each Indenture Security outstanding under the Indenture of each such series directly affected thereby, (a) change the stated maturity of, or any installment of principal of or the rate of interest on (or the amount of any installment of interest on), any Indenture Security, or reduce the principal thereof or redemption premium thereon, if any, or change the amount payable upon acceleration of a discount note or method of calculating the rate of interest thereon, or otherwise modify certain terms of payment of the principal thereof or interest or yield or premium thereon, (b) reduce the percentage in principal amount of the Indenture Securities outstanding of such series required to consent to any supplemental indenture or waiver under the Indenture or to reduce the requirement for quorum and voting, or (c) modify certain of the provisions in the Indenture relating to supplemental indentures, waivers of certain covenants and waivers of past defaults. A supplemental indenture which changes or eliminates any covenant or other provision of the Indenture which has expressly been included solely for the benefit of one or more particular series of Indenture Securities, or which modifies the rights of the Holders of Indenture Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under the Indenture of the Holders of any other Indenture Securities. (Art. Twelve, Sec. 1202) Defeasance The Indenture Securities of any series, or any portion of the principal amount thereof, will be deemed to have been paid for purposes of the Indenture (except as to any surviving rights of registration of transfer or exchange expressly provided for in the Indenture), and the entire indebtedness of the Company in respect 15 17 thereof will be deemed to have been satisfied and discharged, if there shall have been irrevocably deposited with the Indenture Trustee, in trust: (a) money in the amount which will be sufficient, or (b) Government Obligations (as defined below), which do not contain provisions permitting the redemption or other prepayment thereof at the option of the issuer thereof, the principal of and the interest on which when due, without any regard to reinvestment thereof, will provide monies which, together with the money, if any, deposited with or held by the Indenture Trustee, will be sufficient, or (c) a combination of (a) and (b) which will be sufficient, to pay when due the principal of and premium, if any, and interest, if any, due and to become due on such Indenture Securities or portions thereof on and prior to the maturity thereof. (Art. Seven, Sec. 701) For this purpose, "Government Obligations" include direct obligations of, or obligations unconditionally guaranteed by, the United States of America entitled to the benefit of the full faith and credit thereof and certificates, depositary receipts or other instruments which evidence a direct ownership interest in such obligations or in any specific interest or principal payments due in respect thereof. While there is no legal precedent on point, it is possible that, for federal income tax purposes, any deposit contemplated in the preceding paragraph could be treated as a taxable exchange of the related Notes for an issue of obligations of the trust or a direct interest in the case of securities held in the trust. In that case, Holders of such Notes would recognize gain or loss as if the trust obligations or the cash or securities deposited, as the case may be, had actually been received by them in exchange for their Notes. Such Holders thereafter would be required to include in income a share of the income, gain or loss of the trust. The amount so required to be included in income could be different from the amount that would be includable in the absence of such deposit. Prospective investors are urged to consult their own tax advisors as to the specific consequences to them of such deposit. DESCRIPTION OF CAPITAL STOCK General The authorized capital stock of the Company consists of 40,000,000 shares of Common Stock, without par value and 200,000 shares of Preferred Stock, without par value (the "Preferred Stock"). For a complete description of the relative rights and preferences of the Company's capital stock, reference is made to the Company's Amended Articles of Incorporation, as amended (the "Articles"), a copy of which is an exhibit to the Registration Statement of which this Prospectus is a part. Each share of Common Stock and Preferred Stock has one vote on all matters upon which shareholders are entitled to vote and all classes vote as a single class except as provided by law or the Articles. The holders of Common Stock and Preferred Stock are entitled to cumulative voting for the election of directors. The Company's Board of Directors is divided into three classes serving staggered three-year terms. Of the total number of authorized shares of Common Stock, 11,117,920 were issued and outstanding on May 25, 1995. In addition, as of May 25, 1995, 202,035 shares of Common Stock were reserved for issuance under the Employee Stock Purchase Plan, 202,962 shares were reserved for issuance under the Dividend Reinvestment and Stock Purchase Plan, 193,000 shares were reserved for issuance under the Long-Term Stock Plan of 1989, 1,009,032 shares were reserved for issuance under the Customer Stock Purchase Plan, 100,000 shares were reserved for issuance under the Non-Employee Director Stock Plan, and 81,157 shares were reserved for issuance under the 401(k) Savings Plan. The Preferred Stock may be issued from time to time in one or more series, and the Board of Directors, without further approval of the shareholders, is authorized to fix the dividend rights and terms, redemption rights and terms, liquidation preferences, conversion rights, special series voting rights and sinking fund provisions applicable to each such series of Preferred Stock. If the Company issues a series of Preferred Stock in the future that has special voting rights or preferences over the Common Stock with respect to the payment of dividends and upon the Company's liquidation, dissolution or winding up, the rights of the holders of the Common Stock may be adversely affected. The issuance of shares of Preferred Stock could be utilized, under certain circumstances, in an attempt to prevent an acquisition of the Company and may adversely affect the voting and other rights of the holders of Common Stock. As of May 31, 1995, there were no issued and outstanding shares of Preferred Stock. 16 18 Dividend Reinvestment and Stock Purchase Plan The Company has a Dividend Reinvestment and Stock Purchase Plan (the "Plan") under which participating shareholders may have cash dividends on all or a portion of their shares of Common Stock automatically reinvested and/or may invest optional cash payments of not less than $25 or more than $10,000 per quarter to purchase additional shares of Common Stock. Under the Plan, the price of shares of Common Stock purchased through reinvestment of cash dividends is 95% of the average of the closing sale price of Common Stock for the period of five trading days ending on the dividend payment date, and optional cash payments are invested at 100% of such average. No commission or service charge is paid by participants in connection with purchases under the Plan. Shares of Common Stock are offered for sale under the Plan only by means of a separate prospectus available upon request from the Company. Restriction on Dividends Under the provisions of the Articles, the Company is not permitted to declare or pay dividends on the Common Stock until full cumulative dividends on any outstanding shares of the Preferred Stock have been paid. The Common Stock is entitled to dividends when, as and if declared by the Company's Board of Directors, subject to various limitations on the declaration or payment of dividends imposed by the provisions of the Mortgage and, for so long as any shares of Preferred Stock remain outstanding, the restriction described in the prior paragraph. See "Description of Debt Securities -- Description of Bonds -- Dividend Restrictions." Liquidation In the event of liquidation, dissolution or winding up of the Company, the holders of the Common Stock are entitled to receive pro rata such assets as may remain upon discharge of all indebtedness and liabilities of the Company after payment of the amounts payable on all the then outstanding shares of Preferred Stock. Other The Common Stock has no conversion rights, redemption provisions or pre-emptive rights and is not liable for any further calls or assessments. The Preferred Stock has no pre-emptive rights. The Articles contain provisions which may deter changes in control or significant restructurings of the Company. In addition to providing for a classified board of directors as described above, the Articles (i) require that certain business combinations be approved by holders of at least 80% of the outstanding shares of voting stock of the Company unless all Disinterested Directors (as defined in the Articles) have approved the transaction or certain procedural and minimum price requirements are met; (ii) require that the transfer during a twelve-month period of assets equaling 10% or more of the book value of the assets of the Company be approved by at least 66 2/3% of the Company's directors; and (iii) impose supermajority voting requirements for amending certain of the foregoing provisions. The Illinois Business Corporation Act and the Virginia Stock Corporation Act also contain provisions requiring a supermajority vote to approve certain transactions. Further, the Company's Long-Term Stock Plan of 1989 provides that certain restrictions on options or restricted stock granted to officers and employees of the Company will be removed or waived if a change in control (as defined therein) of the Company occurs. One of the effects of the existence of authorized but unissued and unreserved Common Stock and Preferred Stock may be to enable the Board of Directors to issue shares in circumstances which could render more difficult or discourage an attempt to obtain control of the Company by means of a merger, tender offer, proxy contest or otherwise. Such additional shares also could be used to dilute the stock ownership of persons seeking to obtain control of the Company. Transfer Agent and Registrar The Transfer Agent and Registrar for the Common Stock is Harris Trust and Savings Bank, 311 W. Monroe Street, Chicago, Illinois 60690. 17 19 LEGAL OPINIONS Certain legal matters in connection with the legality of the Securities offered hereby will be passed upon for the Company by Chapman and Cutler, Chicago, Illinois, and for any agents, underwriters or dealers by Jones, Day, Reavis & Pogue, Chicago, Illinois. The statements as to matters of law and legal conclusions made under "Description of Debt Securities -- Description of Bonds - -- Security and Priority" are made on the authority of Chapman and Cutler, which has relied, in part, on the opinions of local counsel. EXPERTS The consolidated financial statements and schedules included in the Company's most recent Annual Report on Form 10-K, incorporated herein by reference, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are so incorporated herein in reliance upon the authority of said firm as experts in giving said report. Reference is made to said report which includes an explanatory paragraph with respect to the change in the method of accounting for postretirement benefits other than pensions and income taxes effective January 1, 1993 as discussed in the notes to consolidated financial statements. PLAN OF DISTRIBUTION The Company may sell Securities through underwriters or dealers, directly to one or more purchasers or through agents. The applicable Prospectus Supplement will set forth the terms of the offering of any Securities, including the names of any underwriters or agents, the purchase price of such Securities and the proceeds to the Company from such sale, any underwriting discounts and other items constituting underwriters' compensation, any initial public offering price, any discounts or concessions allowed or reallowed or paid to dealers and any securities exchanges on which such Securities may be listed. If underwriters are used in the sale, Securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Such Securities may be offered to the public either through underwriting syndicates represented by managing underwriters or by underwriters without a syndicate. Unless otherwise set forth in the applicable Prospectus Supplement, the obligations of the underwriters to purchase such Securities will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all of such Securities if any of such Securities are purchased. Any initial offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. Only underwriters named in a Prospectus Supplement are deemed to be underwriters in connection with the Securities offered thereby. Securities may also be sold directly by the Company or through agents designated by the Company from time to time. Any agent involved in the offer or sale of Securities will be named, and any commissions payable by the Company to such agent will be set forth in the applicable Prospectus Supplement. Unless otherwise indicated in the applicable Prospectus Supplement, any such agent will act on a best efforts basis for the period of its appointment. If so indicated in the applicable Prospectus Supplement, the Company will authorize agents, underwriters or dealers to solicit offers by certain specified institutions to purchase Securities at the public offering price set forth in such Prospectus Supplement pursuant to delayed delivery contracts providing for payment and delivery on a future date specified in such Prospectus Supplement. Such contacts will be subject only to those conditions set forth in the applicable Prospectus Supplement and such Prospectus Supplement will set forth the commissions payable for solicitation of such contracts. Any underwriters, dealers or agents participating in the distribution of Securities may be deemed to be underwriters and any discounts or commissions received by them on the sale or resale of Securities may be deemed to be underwriting discounts and commissions under the Securities Act of 1933, as amended (the "Securities Act"). Agents and underwriters may be entitled under agreements entered into with the Company 18 20 to indemnification by the Company against certain liabilities, including liabilities under the Securities Act or to contribution with respect to payments that the agents or underwriters may be required to make in respect thereof. Agents and underwriters may be customers of, engage in transactions with, or perform services for, the Company or its affiliates in the ordinary course of business. 19 21 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION SEC registration fee.............................................................. $ 68,966 Fees of state regulatory authorities.............................................. 5,000 Mortgage recording fees........................................................... 30,000 Printing expenses................................................................. 100,000 Accounting fees and expenses...................................................... 20,000 Legal fees and expenses........................................................... 150,000 Trustee fees...................................................................... 10,000 Transfer Agent and Registrar fee.................................................. 6,700 Blue Sky fees and expenses........................................................ 15,000 Rating Agency fees................................................................ 120,000 Miscellaneous expenses............................................................ 10,334 -------- Total........................................................................ $536,000 ========
All of the above amounts except the SEC registration fee are estimated. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Paragraph 56 of the Company's By-Laws provides in general that, subject to applicable statutory limitations, each director or officer of the Company and any person who, at the request of the Company, has served as a director or officer of another corporation in which the Company has a financial interest shall be indemnified against costs and expenses incurred (including any judgments, fines or reasonable settlements) in connection with the defense of any criminal or civil proceedings in which such person is named as a party by reason of having been such director or officer, or by reason of any action taken or not taken in such capacity unless such officer or director is finally adjudged to have been liable for negligence or misconduct in the performance of duty. Conviction or judgment in a criminal proceeding does not necessarily constitute an adjudication of liability for negligence or misconduct in performance of duty, under certain conditions. Paragraph 56 also provides that the provisions thereof shall not be construed as a limitation on the general power of the Company to enter into a contract or undertaking of indemnity with a director or officer in any proper case not provided for in paragraph 56. The Illinois Business Corporation Act and the Virginia Stock Corporation Act generally provide that each corporation subject to such Acts shall have the power to provide indemnification of the type summarized above, subject to certain liabilities of its officers and directors. ITEM 16. EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBITS - ------- ----------------------------------------------------------------------------------- 1.01 Form of Underwriting Agreement. *1.02 Form of Distribution Agreement (to be filed under cover of Form 8-K). 4.01 Amendment to Amended Articles of Incorporation of Company, as amended, dated May 30, 1995. *4.02 Amended Articles of Incorporation of Company, as amended April 29, 1994 (filed as Exhibit 3.01 to Form 10-Q for the quarter ended March 31, 1994, File No. 0-1284). 4.03 Amendment to Amended By-Laws of Company, as amended, dated April 28, 1995. *4.04 By-Laws of Company, as amended April 29, 1994 (filed as Exhibit 3.02 to Form 10-Q for the quarter ended March 31, 1994, File No. 0-1284).
II-1 22
EXHIBIT NUMBER DESCRIPTION OF EXHIBITS - ------- ----------------------------------------------------------------------------------- **4.05 Indenture of Mortgage, dated as of July 15, 1959, from the Company to Bank of America Illinois (successor to Continental Bank, National Association) and Robert J. Donahue (successor to M.J. Kruger), as Trustees, and the following supplemental indentures thereto, the First Supplemental Indenture, dated as of November 1, 1960, the Second Supplemental Indenture, dated as of June 1, 1962, the Third Supplemental Indenture, dated as of February 1, 1963, the Fourth Supplemental Indenture, dated as of June 15, 1963, the Fifth Supplemental Indenture, dated as of November 15, 1964, the Sixth Supplemental Indenture, dated as of March 15, 1968, the Seventh Supplemental Indenture, dated as of August 1, 1970, the Eighth Supplemental Indenture, dated as of September 1, 1972, the Ninth Supplemental Indenture, dated as of January 1, 1974, the Tenth Supplemental Indenture, dated as of July 1, 1976, the Eleventh Supplemental Indenture, dated as of December 1, 1976, the Twelfth Supplemental Indenture, dated as of April 1, 1981, the Thirteenth Supplemental Indenture, dated as of May 1, 1982, the Fourteenth Supplemental Indenture, dated as of March 1, 1987, Fifteenth Supplemental Indenture, dated as of October 1, 1987, the Sixteenth Supplemental Indenture, dated as of December 1, 1989, the Seventeenth Supplemental Indenture, dated as of April 1, 1990, the Eighteenth Supplemental Indenture, dated as of June 1, 1991, the Nineteen Supplemental Indenture, dated as of May 1, 1992, and the Twentieth Supplemental Indenture, dated as of December 1, 1992. **4.06 Form of Supplemental Indenture relating to the Bonds. **4.07 Form of Bond (contained in Exhibit 4.06). **4.08 Form of Indenture between the Company and Bank of America Illinois, as trustee, relating to the Notes. **4.09 Form of Note. **4.10 Form of Common Stock certificate. **5.01 Opinion of Chapman and Cutler. **12.01 Computation of Ratio of Consolidated Earnings to Fixed Charges. 23.01 Consent of Arthur Andersen LLP. **23.02 Consent of Chapman and Cutler (contained in Exhibit 5.01). **24.01 Power of Attorney. **25.01 Statement of Eligibility and Qualification of Bank of America Illinois on Form T-1 relating to the Bonds. **25.02 Statement of Eligibility and Qualification of Bank of America Illinois on Form T-1 relating to the Notes. **25.03 Statement of Eligibility and Qualification of Robert J. Donahue on Form T-2 relating to the Bonds.
- ------------------------- * Incorporated herein by reference as indicated. ** Previously filed. ITEM 17. UNDERTAKINGS (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any II-2 23 deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of any employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described under Item 15, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. II-3 24 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF BRENTWOOD, STATE OF TENNESSEE, ON MAY 30, 1995. UNITED CITIES GAS COMPANY By /s/ GENE C. KOONCE ------------------------------------- Gene C. Koonce President PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE - --------------------------------------------- ------------------------------- /s/ DWIGHT C. BAUM* Chairman of the Board - --------------------------------------------- Dwight C. Baum /s/ GENE C. KOONCE President and Director - --------------------------------------------- (Principal Executive Officer) Gene C. Koonce /s/ JAMES B. FORD* Senior Vice President and - --------------------------------------------- Treasurer (Principal Financial James B. Ford Officer) /s/ ADRIENNE H. BRANDON* Vice President and Controller - --------------------------------------------- (Chief Accounting Officer) Adrienne H. Brandon /s/ THOMAS J. GARLAND* Director - --------------------------------------------- Thomas J. Garland Director - --------------------------------------------- Dale A. Keasling /s/ VINCENT J. LEWIS* Director - --------------------------------------------- Vincent J. Lewis /s/ DENNIS L. NEWBERRY, II* Director - --------------------------------------------- Dennis L. Newberry, II /s/ STIRTON OMAN, JR.* Director - --------------------------------------------- Stirton Oman, Jr.
II-4 25
SIGNATURE TITLE - --------------------------------------------- ------------------------------- /s/ TIMOTHY W. TRIPLETT* Director - --------------------------------------------- Timothy W. Triplett /s/ GEORGE C. WOODRUFF, JR.* Director - --------------------------------------------- George C. Woodruff, Jr. *By: /s/ GENE C. KOONCE ----------------------------------------- (Gene C. Koonce, Attorney-in-fact)
Dated: May 30, 1995 II-5 EX-1.01 2 UNDERWRITING AGREEMENT 1 EXHIBIT 1.01 Shares* UNITED CITIES GAS COMPANY Common Stock UNDERWRITING AGREEMENT , 199_ New York, New York [Name and Address of Representatives] Dear Sirs: United Cities Gas Company, a corporation organized and existing under the laws of the State of Illinois and the Commonwealth of Virginia (the "Company"), proposes to issue and sell an aggregate of shares (the "Firm Shares") of the Company's authorized and unissued common stock, without par value (the "Common Stock") to you and to the other underwriters named in Schedule I (collectively the "Underwriters"), for whom you are acting as representatives (the "Representatives"). The Company agrees to grant to the Underwriters an option (the "Option") to purchase up to an additional shares of such Common Stock (the "Option Shares") on the terms and for the purposes set forth in Section 1(b) hereof. The Firm Shares and the Option Shares are hereinafter collectively referred to as the "Shares." The Company confirms as follows its agreement with the Representatives and the several other Underwriters. 1. Agreement to Sell and Purchase. (a) The initial public offering price per share for the Firm Shares and the purchase price per share for the Firm Shares to be paid by the several Underwriters shall be as set forth on Exhibit A hereto. The Company agrees to issue and sell to each Underwriter and, upon the basis of the representations, warranties and agreements of the Company herein contained, and subject to the terms and conditions herein set forth, each Underwriter agrees, severally and not jointly, to purchase from the Company at the purchase price per share for the Firm Shares the number of Firm Shares set forth opposite the name of such Underwriter in Schedule I, plus such additional number of Firm Shares which such - --------------- * Plus an option to purchase up to additional shares to cover over-allotments. 2 Underwriter may become obligated to purchase pursuant to Section 8 hereof. (b) Subject to all the terms and conditions hereof, the Company grants to the Underwriters the Option to purchase, severally and not jointly, all or any part of the Option Shares at the same price per share as the Underwriters shall pay for the Firm Shares. The Option may be exercised only to cover over-allotments in the sale of Firm Shares by the Underwriters and may be exercised in whole or in part at any time (but not more than once) on or before the th day after the date of this Agreement upon written or telegraphic notice (the "Option Shares Notice") by the Representatives to the Company no later than 12:00 noon, New York City time at least two and no more than five business days before the date specified for closing in the Option Shares Notice (the "Option Closing Date") setting forth the aggregate number of Option Shares to be purchased and the time and date for such purchase. On the Option Closing Date, the Company will issue and sell to the Underwriters the number of Option Shares set forth in the Option Shares Notice, and each Underwriter will purchase such percentage of the Option Shares as is equal to the percentage of Firm Shares that such Underwriter is purchasing, as adjusted by the Representatives in such manner as it deems advisable to avoid fractional Shares. The purchase price per share to be paid for the Option Shares shall be the same price per share as for the Firm Shares, less the amount of any dividend declared by the Company prior to the date hereof and payable on the Firm Shares and as to which the record date has occurred prior to the Option Closing Date. (c) The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (File No. 33-56983), including a prospectus, covering the registration of the Shares and the offering thereof from time to time in accordance with Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"). Such registration statement has been declared effective by the Commission. As provided in Section 4(a) hereof, a prospectus supplement reflecting the terms of the Shares, the terms of the offering thereof and the other matters set forth therein has been prepared and will be filed promptly pursuant to Rule 424 under the Securities Act ("Rule 424"). Such prospectus supplement, in the form first filed with (or transmitted for filing to) the Commission on or after the date hereof pursuant to Rule 424, is herein referred to as the "Prospectus Supplement." Such registration statement, as amended and supplemented at the date hereof, including the exhibits thereto and the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act, is herein called the "Registration Statement," and the basic prospectus included therein at the Effective Date (as hereinafter defined) relating to all offerings of securities under the Registration Statement, as supplemented 2 3 by the Prospectus Supplement, is herein called the "Prospectus," except that, if such basic prospectus is amended or supplemented subsequent to the Effective Date, the term "Prospectus" shall refer to the basic prospectus as so amended or supplemented and as further supplemented by the Prospectus Supplement, in either case including the documents filed by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are incorporated by reference therein. 2. Delivery and Payment. Delivery of the Firm Shares to the Representatives for the accounts of the Underwriters against payment of the purchase price by certified or official bank checks payable to the Company in next day funds, shall take place at the office of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois, at _____ a.m., __________ time, on the [fourth] business day following the date of this Agreement or at such time on such other date, not later than seven business days after the date of this Agreement, as shall be agreed upon by the Representatives and the Company (such date is hereinafter referred to as the "Closing Date"). To the extent the Option is exercised, delivery of the Option Shares against payment by the Underwriters (in the manner specified above) will take place at the offices specified above for the Closing Date at the time and date (which may be the Closing Date) specified in the Option Shares Notice (such date is hereinafter referred to as the "Option Closing Date"). Certificates evidencing the Shares shall be in definitive form and shall be registered in such names and in such denominations as the Representatives shall request at least two full business days prior to the Closing Date or the Option Closing Date, as the case may be, by written notice to the Company. For purposes of expediting the checking and packaging of certificates for the Shares, the Company agrees to make such certificates available for inspection, at such place in New York City as is designated by the Representatives, at least 24 hours prior to the Closing Date or the Option Closing Date, as the case may be. The cost of original issue tax stamps, if any, in connection with the issuance and delivery of the Firm Shares and Option Shares by the Company to the respective Underwriters shall be borne by the Company. The Company will pay and save each Underwriter and any subsequent holder of the Shares harmless from any and all liabilities with respect to or resulting from any failure or delay in paying federal and state stamp and other transfer taxes, if any, which may be payable or determined to be payable in connection with the original issuance or sale to such Underwriter of the Firm Shares and Option Shares. 3. Representations and Warranties of the Company. The Company represents to and warrants and covenants with each Underwriter that: 3 4 (a) The Company meets the requirements for use of Form S-3 under the Securities Act and (i)(A) on the original effective date of the Registration Statement, (B) on the effective date of the most recent post-effective amendment thereto, if any, and (C) on the date of the filing by the Company of any Annual Report on Form 10-K after the original filing of the Registration Statement and prior to or on the Closing Date (and if any Option Shares are purchased, prior to or on the Option Closing Date) (the latest of such dates herein referred to as the "Effective Date"), in each case the Registration Statement and any amendments and supplements thereto complied in all material respects with the requirements of the Securities Act and the rules and regulations of the Commission thereunder (the "Rules"), and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) on the date hereof and at the Closing Date (and, if any Option Shares are purchased, on the Option Closing Date), neither the Registration Statement nor any amendment or supplement thereto contains or will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and (iii) on the date that the Prospectus is filed with (or transmitted for filing to) the Commission pursuant to Rule 424 and on the Closing Date (and, if any Option Shares are purchased, on the Option Closing Date), neither the Prospectus nor any amendment or supplement thereto includes or will include 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 were made, not misleading, except that the representations and warranties in this subsection shall not apply to statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Underwriter through you expressly for use in the Registration Statement or the Prospectus. (b) The documents incorporated by reference in the Prospectus pursuant to Item 12 of Form S-3 under the Securities Act, at the time they were filed with the Commission, complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder (the "Exchange Act Rules") and, when read together and with the other information in the Prospectus, do not and will not, on the date hereof and at the Closing Date (and if any Option Shares are purchased, on the Option Closing Date), include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 4 5 (c) The Company has full corporate power and authority to enter into this Agreement. This Agreement has been duly and validly authorized, executed and delivered by the Company. (d) The Company has filed with the state public utility regulatory commissions in Georgia, Illinois, Kansas, Tennessee and Virginia seeking appropriate orders relating to the issuance and sale of the Shares. Such orders have been entered by such commissions and are effective and sufficient to permit the issuance and sale of the Shares on the terms contemplated by this Agreement. The Company is not subject to the jurisdiction of the Federal Energy Regulatory Commission or the state public utility regulatory commissions in Iowa, Kentucky, Missouri and South Carolina with respect to the issuance and sale of the Shares. (e) The certificate to be delivered pursuant to paragraph (f) of Section 5 hereof and all other documents delivered by the Company or its representatives in connection with the issuance and sale of the Shares were on the dates on which they were delivered, or will be on the dates on which they are to be delivered, true and complete in all material respects. (f) The Company has been duly incorporated and is, and at the Closing Date and, if later, the Option Closing Date, will be, validly existing and in good standing under the laws of the State of Illinois and the Commonwealth of Virginia and duly licensed or qualified to do business as a foreign corporation in the States of Georgia, Iowa, Kansas, Kentucky, Missouri, South Carolina and Tennessee. The Company has, and at the Closing Date will have, full power and authority (corporate and other) to conduct all the activities conducted by it, to own or lease all the assets owned or leased by it and to conduct its business as described in the Registration Statement and the Prospectus; and the Company is, and at the Closing Date and, if later, the Option Closing Date, will be, duly licensed or qualified to do business as a foreign corporation in all jurisdictions in which the nature of the activities conducted by it or the character of the assets owned or leased by it makes such licensing or qualification necessary and where the failure to so qualify would have a material adverse effect upon the business or financial condition of the Company and the Subsidiaries (as hereinafter defined), taken as a whole. (g) The Company owns all of the outstanding common stock of UCG Energy Corporation, a Delaware corporation ("UCG Energy") and United Cities Gas Storage Company, a Delaware corporation ("UCG Storage"), each of which is engaged in the business described in the Prospectus and is a corporation duly organized and existing under the laws of its state of incorporation. UCG Energy is duly qualified to do business as a foreign corporation in the States of Alabama, Florida, 5 6 Georgia, Illinois, Iowa, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, Texas and Virginia, with full power and authority (corporate and other) to conduct all of the activities conducted by it, to own or lease all the assets owned or leased by it and to conduct its business as described in the Registration Statement and the Prospectus. UCG Storage is duly qualified to do business as a foreign corporation in the States of Kansas, Kentucky and Tennessee with full power and authority (corporate and other), except as otherwise described in the documentation delivered pursuant to the last sentence of paragraph 3(i) hereof, to conduct all of the activities conducted by it, to own or lease all the assets owned or leased by it and to conduct its business as described in the Registration Statement and the Prospectus. Each of UCG Energy and UCG Storage is licensed or qualified to do business as a foreign corporation in each other state or jurisdiction in which such licensing or qualification is necessary for UCG Energy and UCG Storage to conduct their respective businesses as presently conducted and where the failure to so qualify would have a material adverse effect upon the business or financial condition of the Company and the Subsidiaries, taken as a whole. Other than UCG Energy, UCG Storage, UCG Leasing, Inc., a Georgia corporation ("UCG Leasing"), and United Cities Propane Gas of Tennessee, Inc., a Tennessee corporation ("UCPGT"), none of the Company, UCG Energy or UCG Storage has any significant subsidiaries as defined in the Rules. UCG Energy, UCG Storage, UCG Leasing and UCPGT are herein sometimes referred to individually as a "Subsidiary" and collectively as the "Subsidiaries." (h) UCG Energy owns all of the outstanding common stock of each of UCG Leasing and UCPGT, each of which is engaged in the business described in the Prospectus and is a corporation duly organized and existing under the laws of its state of incorporation. UCG Leasing and UCPGT are each qualified or licensed to do business as a foreign corporation in each state or jurisdiction in which such licensing or qualification is necessary for UCG Leasing or UCPGT, as applicable, to conduct its business as presently conducted and where the failure to so qualify would have a material adverse effect upon the business or financial condition of the Company and the Subsidiaries, taken as a whole, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus. (i) Except as set forth in the last sentence of this paragraph (i), each of the Company and the Subsidiaries has valid and sufficient grants, franchises, miscellaneous permits and easements, free from unduly burdensome restrictions, adequate for the conduct of its business in the territories in which it is now conducting such business and the ownership of the properties now owned by it and, except as otherwise set forth in the Prospectus, there are no legal or governmental proceedings pending or threatened which might result in a 6 7 material modification, suspension or revocation thereof. Each of the Company and the Subsidiaries has, and is operating in compliance with, in all material respects, all requisite corporate power and authority, and all material and necessary authorizations, approvals, orders, licenses, certificates and permits of and from all governmental regulatory officials and bodies, to own, lease, license and operate its properties and conduct its business as presently conducted and as contemplated by the Prospectus, and the Company and the Subsidiaries have filed all reports and taken all other action required by the authority issuing the same where the failure to file or take other action might reasonably be expected to give rise to a right in such authority to seek to revoke, suspend or materially limit any such material license, certificate or permit. The Company has all requisite power, authority, authorizations, approvals, orders, licenses, certificates and permits to enter into this Agreement and to carry out the provisions and conditions hereof. Neither the Company nor any Subsidiary has received any notice (nor does the Company know of any basis therefor) of conflict with asserted rights of others in any respect which could materially adversely affect its business, except as described in the Registration Statement and Prospectus. The foregoing representations of the Company contained in this paragraph (i) shall not apply with respect to those matters set forth in documentation delivered to the Representatives concurrently with the execution of this Agreement as they relate to the Federal Energy Regulatory Commission's jurisdiction with respect to the Barnsley, Kentucky storage field, the grants, franchises, miscellaneous permits and easements relating to the operations of the Company in the State of Missouri as to which matters the Company represents only that there are no legal or governmental proceedings pending or threatened which might result in a material modification, suspension or revocation of any such grants, franchises, miscellaneous permits and easements, and that any revocation, suspension or limitation of any or all such grants, franchises, miscellaneous permits and easements would not have a material adverse effect upon the business or financial condition of the Company and the Subsidiaries, taken as a whole. (j) The capital stock of the Company (including the Shares being issued) has been duly authorized by all necessary corporate action on the part of the Company. All of the issued and outstanding shares of capital stock of the Company have been, and the Shares upon issuance will be, duly and validly authorized and issued, fully paid and nonassessable and free of preemptive or similar rights. The description of the Common Stock in the Registration Statement and the Prospectus is, and at the Closing Date and, if later, the Option Closing Date will be, complete and accurate in all material respects. Except as set forth in the Prospectus, the Company does not have outstanding, and at the Closing Date or, if later, the Option Closing Date will not have outstanding, 7 8 any options to purchase, or any rights or warrants to subscribe for, or any securities or obligations convertible into, or any contracts or commitments to issue or sell, any shares of Common Stock, any shares of capital stock of any Subsidiary or any such warrants, convertible securities or obligations. No holders of securities of the Company have any rights to the registration of shares of capital stock or other securities of the Company. Upon issuance and delivery of the Shares hereunder and payment of the purchase price as herein contemplated, the several Underwriters will acquire valid marketable title to the Shares free and clear of any liens, pledges, encumbrances, equities and claims whatsoever. (k) All of the outstanding shares of capital stock of UCG Energy and UCG Storage have been duly and validly authorized and issued and are fully paid and nonassessable and are legally owned by the Company free and clear of all liens, claims, security interests or other encumbrances. All of the outstanding shares of UCG Leasing and UCPGT have been duly and validly authorized and issued and are fully paid and nonassessable and are legally owned by UCG Energy free and clear of all liens, claims, security interests or other encumbrances. Other than as described in the Prospectus, there are no rights to subscribe for or to purchase (by way of the exercise of any option or warrant, the conversion or redemption of any other security, or otherwise), or any restriction upon the voting or transfer of, any of the capital stock of any Subsidiary. (l) Neither the Company nor any Subsidiary is, nor at the Closing Date or the Option Closing Date will any of them be, in violation of its certificate or articles of incorporation or bylaws. No default exists, and no event has occurred which, with notice or lapse of time or both, would constitute a default in the due performance and observance of any obligation, agreement or condition by the Company or any Subsidiary contained in any mortgage, indenture, deed of trust, note, loan agreement or other agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound or to which any property or asset of the Company or any Subsidiary is subject, except for defaults the effect of which would not be material to the Company and the Subsidiaries taken as a whole. (m) The performance of this Agreement and the consummation of the transactions contemplated hereby will not conflict with, result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the assets of the Company or any Subsidiary pursuant to the terms or provisions of, or give any other party a right to terminate any of its obligations under, or result in the acceleration of any obligation under the certificate or articles of incorporation or bylaws (or equivalent documents) 8 9 of the Company or any Subsidiary, any indenture, mortgage, deed of trust, voting trust agreement, loan agreement, bond, debenture, note agreement or other evidence of indebtedness, lease, contract or other agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary or any of its properties is bound or affected, or violate or conflict with any judgment, ruling, decree, order, statute, rule or regulation of any court or other governmental agency or body applicable to the business or properties of the Company or any Subsidiary; and no consent, approval, authorization or order of or any filing or declaration with, any court or governmental agency or body is required for the consummation by the Company of the transactions on its part herein contemplated, except as have been obtained under the Securities Act or the Rules and such as may be required under state securities or Blue Sky laws or the by-laws and rules of the National Association of Securities Dealers, Inc. ("NASD") in connection with the purchase and distribution by the Underwriters of the Shares to be sold by the Company. (n) The financial statements, selected financial information and schedules included or incorporated by reference in the Registration Statement and the Prospectus fairly present the financial condition, results of operations and cash flow of the Company and the Subsidiaries on a consolidated basis at the respective dates thereof and for the respective periods covered thereby, all in conformity with generally accepted accounting principles applied on a consistent basis throughout the period involved, except as otherwise disclosed in the Prospectus. No other financial statements or schedules of the Company are required by the Securities Act, the Exchange Act, the Exchange Act Rules or the Rules to be included in the Registration Statement or the Prospectus. (o) Arthur Andersen LLP (the "Accountants"), who audited certain of the financial statements filed with the Commission and included or incorporated by reference in the Registration Statement and the Prospectus, are independent accountants with respect to the Company as required by the Securities Act and the Rules. (p) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, neither the Company nor any Subsidiary has sustained any material 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 is material to the Company and the Subsidiaries taken as a whole, otherwise than as set forth or contemplated by the Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, there have not 9 10 been, and prior to the Closing Date or the Option Closing Date, as the case may be, there will not be, any declaration or payment of any dividends or other distributions with respect to the capital stock of the Company, any default in the payment of principal or interest on any outstanding indebtedness of the Company, any material change in the capital stock of the Company or any Subsidiary or in the long-term debt, liabilities, contingent or otherwise, or obligations under capital leases of the Company or any Subsidiary or any material adverse change, or any development known to the Company involving a prospective material adverse change, in or affecting the business, prospects, financial position, stockholders' equity, or results of operations of the Company or any Subsidiary, in each case otherwise than as set forth in or contemplated by the Prospectus. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any material transaction entered into by the Company or any Subsidiary, other than transactions in the ordinary course of business and changes and transactions contemplated by the Registration Statement and the Prospectus. The Company and the Subsidiaries have no contingent obligations which are not disclosed in the Registration Statement and Prospectus which can reasonably be expected to have a material adverse effect on the financial condition, business, operations or prospects of the Company and the Subsidiaries taken as a whole. (q) The Company is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. (r) Except as set forth in the Registration Statement and the Prospectus, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any of their respective officers in their capacity as such, before or by any federal or state court, commission, regulatory body, administrative agency or other governmental body, domestic or foreign, wherein an unfavorable ruling, decision or finding might materially and adversely affect the Company and its Subsidiaries taken as a whole or the business, properties, business prospects, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries taken as a whole. (s) There is no document or contract of a character required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement which is not described or filed as required. (t) No statement, representation, warranty or covenant made by the Company in this Agreement or made in any certificate or document required by this Agreement to be 10 11 delivered to the Representatives was or will be, when made, inaccurate, untrue or incorrect. (u) Neither the Company nor, to the knowledge of the Company, any of its directors, officers or controlling persons has taken, directly or indirectly, any action designed or which might reasonably be expected to cause or result, under the Securities Act or otherwise, in, or which has constituted, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Shares. (v) No holder of securities of the Company has rights to the registration of any securities of the Company because of the filing of the Registration Statement. (w) Neither the Company nor any Subsidiary is in violation of any law, statute, ordinance, rule, regulation, order or decree of any court, governmental body or regulatory authority or administrative agency having jurisdiction over the Company or any Subsidiary or any of the property or assets of the Company or any Subsidiary (including, without limitation, to the best of the knowledge of the Company, any such law, statute, ordinance, rule, regulation, order or decree with respect to environmental protection or the release, handling, treatment, storage or disposal of hazardous substances or toxic wastes) which violation is likely to materially adversely affect the financial condition, business, operations or prospects of the Company and the Subsidiaries taken as a whole. (x) Any certificate signed by any officer of the Company and delivered to the Representatives or to counsel for the Underwriters shall be deemed a representation and warranty of the Company to the Underwriters as to the matters covered thereby. (y) In the opinion of counsel for the Company, the Company is not a "holding company" or a "subsidiary company" of a "public utility company" or of a "holding company" or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended (the "Holding Company Act"). (z) The Shares are eligible for quotation on the National Association of Securities Dealers Automated Quotation System. (aa) No claims have been asserted by any person to the use of any material trademarks or trade names used by or necessary for the conduct of the business of the Company or any Subsidiary or challenging or questioning the right of the Company or any Subsidiary to use any such trademark or trade 11 12 name. The use in connection with the business and operations of the Company and the Subsidiaries of such trademarks and trade names does not, to the Company's knowledge, infringe on the rights of any person. 4. Agreements of the Company. The Company agrees with the several Underwriters as follows: (a) If reasonably requested by you in connection with the offering of the Shares, the Company will prepare a preliminary prospectus supplement containing such information as you and the Company deem appropriate and, immediately following the execution of this Agreement, the Company will prepare a Prospectus Supplement that complies with the Securities Act and the Rules and that sets forth the number of Firm Shares and their terms not otherwise specified in the Prospectus, the name of each Underwriter participating in the offering and the number of Firm Shares that each severally has agreed to purchase, the name of each Underwriter, if any, acting as representative of the Underwriters in connection with the offering, the price at which the Firm Shares are to be purchased by the Underwriters from the Company, the initial public offering price, any selling concession and reallowance, and such other information as you and the Company deem appropriate in connection with the offering of the Shares. The Company will promptly transmit a copy of the Prospectus Supplement to the Commission via EDGAR for filing pursuant to Rule 424 under the Securities Act and will furnish to the Underwriters as many copies of any preliminary prospectus supplement and the Prospectus as you shall reasonably request. (b) If at any time when the Prospectus is required by the Securities Act to be delivered in connection with sales of the Shares any event shall occur or condition exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or counsel for the Company, to amend the Registration Statement or amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the opinion of either such counsel, at any such time to amend the Registration Statement or amend or supplement the Prospectus in order to comply with the requirements of the Securities Act or the Rules, or at any time to file under the Exchange Act any documents to be incorporated by reference in the Registration Statement pursuant to Item 12 of Form S-3 in order to comply with the Securities Act, the Rules, the Exchange Act or the Exchange Act Rules, then the Company will promptly prepare and file with the Commission, subject to Section 4(e) hereof, such amendment or supplement as may be necessary to correct such 12 13 untrue statement or omission or to make the Registration Statement or the Prospectus comply with such requirements. (c) During the period when the Prospectus is required by the Securities Act to be delivered in connection with sales of the Shares, the Company will notify you immediately, and confirm the notice in writing, (i) of the effectiveness of any amendment to the Registration Statement, (ii) of the mailing or the delivery to the Commission for filing of any supplement to the Prospectus or any document that would as a result thereof be incorporated by reference in the Prospectus, (iii) of the receipt of any comments from the Commission with respect to the Registration Statement, the Prospectus, the Prospectus Supplement or any document incorporated by reference in the Prospectus, (iv) of any request by the Commission for any amendment to the Registration Statement or any supplement to the Prospectus or for additional information relating thereto or to any document incorporated by reference in the Prospectus and (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, or of the institution or threatening of any proceeding for any of such purposes. The Company will use every reasonable effort to prevent the issuance of any such stop order or of any order suspending such qualification and, if any such order is issued, to obtain the lifting thereof at the earliest possible moment. (d) During the period when the Prospectus is required by the Securities Act to be delivered in connection with sales of the Shares, the Company will, subject to Section 4(e) hereof, file promptly all documents required to be filed with the Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. (e) During the period when the Prospectus is required by the Securities Act to be delivered in connection with sales of the Shares, the Company will inform you of its intention to file documents required to be filed with the Commission pursuant to Section 13 or 14 of the Exchange Act, including any amendment to the Registration Statement, any supplement to the Prospectus or any document that would as a result thereof be incorporated by reference in the Prospectus; will furnish you with copies of any such amendment, supplement or other document a reasonable time in advance of filing; and will not file any such amendment, supplement or other document in a form to which you or counsel for the Underwriters shall object in good faith. (f) The Company has furnished or will furnish to you, without charge, three signed copies of the Registration Statement as originally filed and of all amendments thereto (or, to the extent a signed copy is not available, a conformed 13 14 copy, certified by an officer of the Company to be in the form as originally filed), whether filed before or after the Registration Statement became effective, three copies of all exhibits and documents filed therewith or incorporated by reference therein pursuant to Item 12 of Form S-3 (through the end of the period when the Prospectus is required by the Securities Act to be delivered in connection with sales of the Shares) and three signed copies of all consents and certificates of experts and has furnished or will furnish to you, for each other Underwriter, one conformed copy of the Registration Statement (as originally filed) and of each amendment thereto (including documents incorporated by reference into the Prospectus but without exhibits, except any exhibits specifically incorporated by reference into the Prospectus). (g) The Company will use its best efforts, in cooperation with the Underwriters, to qualify the Shares for offering and sale under the applicable securities laws of such states and other jurisdictions as you may designate and to maintain such qualifications in effect for a period of not less than one year from the date hereof; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. The Company will file such statements and reports as may be required by the laws of each jurisdiction in which the Shares have been qualified as above provided. (h) The Company will make generally available to its stockholders as soon as practicable, but not later than 45 days after the close of the period covered thereby, an earnings statement of the Company (in form complying with the provisions of Rule 158 of the Rules), covering (i) a period of 12 months beginning after the effective date of the Registration Statement but not later than the fist day of the Company's fiscal quarter next following such effective date and (ii) a period of 12 months beginning after the date of this Agreement but not later than the first day of the Company's fiscal quarter next following the date of this Agreement. (i) The Company will use the net proceeds received by it from the sale of the Shares in the manner specified in the Prospectus under the caption "Use of Proceeds." (j) For a period of five years after the Closing Date, the Company will furnish to you and, upon request, to each Underwriter, copies of all annual reports, quarterly reports and current reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated 14 15 by the Commission, and such other documents, reports and information as shall be furnished by the Company to its stockholders generally. (k) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company will pay, or reimburse if paid by the Representative, all costs and expenses incident to the performance of the obligations of the Company under this Agreement, including costs and expenses of or relating to (1) the preparation, printing and filing of the Registration Statement and exhibits thereto, each preliminary prospectus, the Prospectus, any amendment or supplement to the Registration Statement or the Prospectus, (2) the preparation and delivery of certificates representing the Shares, (3) the printing of this Agreement, any Agreement Among Underwriters and any Dealer Agreements, (4) the registration or qualification of the Shares for offer and sale under the securities or Blue Sky laws of the jurisdictions referred to in paragraph (g) of this Section 4, including the reasonable fees, disbursements and other charges of counsel to the Underwriters in connection therewith, and the preparation and printing of preliminary, supplemental and final Blue Sky memoranda, (5) furnishing (including costs of shipping and mailing) such copies of the Registration Statement, the Prospectus, any preliminary prospectus, and all amendments and supplements thereto as may be requested for use in connection with the offering and sale of the Shares by the Underwriters or by dealers to whom Shares may be sold, (6) counsel to the Company and (7) the fees of the transfer agent and registrar for the Shares. (l) The Company will comply with all the provisions of any undertakings contained in the Registration Statement. (m) If this Agreement shall be terminated by the Company (otherwise than pursuant to Section 8) or if for any reason the Company shall be unable to perform its obligations hereunder, the Company will reimburse the several Underwriters for all out-of-pocket expenses (including the fees, disbursements and other reasonable charges of counsel to the Underwriters) reasonably incurred by them in connection herewith. (n) The Company will not at any time, directly or indirectly, take any action designed or which might reasonably be expected to cause or result in, under the Securities Act or otherwise, or which will constitute, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Shares. (o) The Company will use its best efforts to do and perform all things required or necessary to be done and performed under this Agreement by the Company prior to the Closing Date or the Option Closing Date, as the case may be, 15 16 and to satisfy all conditions precedent to delivery of the Shares. (p) The Company will use its best efforts to maintain qualification of the Company's Common Stock in the National Market System of the National Association of Securities Dealers Automated Quotation System ("NASDAQ") and comply with Schedule D of the NASD By-laws. (q) The Company will not, for a period of 90 days after the commencement of the public offering of the Shares, without the prior written consent of the Underwriters, issue, sell, offer to sell or otherwise dispose of any shares of Common Stock or rights to acquire such shares (other than shares issued by the Company (i) pursuant to the Company's (a) Employee Stock Purchase Plan, (b) Dividend Reinvestment and Stock Purchase Plan, (c) Long-Term Stock Plan of 1989, (d) Customer Stock Purchase Plan, (e) Non-Employee Director Stock Plan, (ii) in connection with the acquisition of all of the outstanding shares of Monarch Gas Company pursuant to the letter of intent dated April 6, 1995, or (iii) for the benefit of participants in the Company's employee investment plan under Section 401(k) of the Internal Revenue Code of 1986, as amended). 5. Conditions of the Obligations of the Underwriters. The obligations of each Underwriter hereunder are subject to the accuracy, on the date of this Agreement, and on the Closing Date and the Option Closing Date, as applicable, of the representations of the Company in this Agreement, the accuracy and completeness in all material respects of all statements made by the Company or any its officers in any certificate delivered to the Representatives or its counsel pursuant to this Agreement, performance by the Company of its obligations under this Agreement and each of the following conditions: (a) (i) No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall be pending or threatened by the Commission, (ii) no order suspending the effectiveness of the Registration Statement or the qualification or registration of the Shares under the securities or Blue Sky laws of any jurisdiction shall be in effect and no proceeding for such purpose shall be pending before or threatened or contemplated by the Commission or the authorities of any such jurisdiction, (iii) any request for additional information on the part of the staff of the Commission or any such authorities shall have been complied with to the satisfaction of the staff of the Commission or such authorities and (iv) after the date hereof no amendment or supplement to the Registration Statement or the Prospectus shall have been filed unless a copy thereof was first submitted to the Representatives within a reasonable period of time prior to the filing thereof and the Representatives did not object 16 17 thereto in good faith, and (v) the Representatives shall have received certificates of the Company, dated the Closing Date and the Option Closing Date and signed by the President or any Vice President of the Company (who may, as to proceedings threatened, rely upon the best of their information and belief), to the effect of clauses (i), (ii) and (iii). (b) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, (1) there shall not have been any material adverse change in the general affairs, business prospects, management, business, properties, condition (financial or otherwise) or results of operations of the Company and the Subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, in each case other than as set forth in or contemplated by the Registration Statement and the Prospectus and (2) neither the Company nor any Subsidiary shall have sustained any material loss or interference with its business or properties from fire, explosion, flood or other casualty, whether or not covered by insurance, or from any labor dispute or any court or legislative or other governmental action, order or decree, which is not set forth in the Registration Statement and the Prospectus, if, in the judgment of the Representatives, any such development makes it impracticable or inadvisable to consummate the sale and delivery of the Shares by the Underwriters at the initial public offering price. (c) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, there shall have been no litigation or other proceeding instituted against the Company or any of its Subsidiaries or any of their respective officers or directors in their capacities as such, before or by any federal, state or local court, commission, regulatory body, administrative agency or other governmental body, domestic or foreign, in which litigation or proceeding an unfavorable ruling, decision or finding would materially and adversely affect the business, properties, business prospects, condition (financial or otherwise) or results of operations of the Company and the Subsidiaries taken as a whole. (d) Each of the representations and warranties of the Company contained herein shall be true and correct in all material respects at the Closing Date and, with respect to the Option Shares, at the Option Closing Date, as if made at the Closing Date and, with respect to the Option Shares, at the Option Closing Date, and all covenants and agreements herein contained to be performed on the part of the Company and all conditions herein contained to be fulfilled or complied with by the Company at or prior to the Closing Date and, with respect to the Option Shares, at or prior to the Option Closing Date, shall have been duly performed, fulfilled or complied with. 17 18 (e) Concurrently with the execution and delivery of this Agreement and at the Closing Date and, as to the Option Shares, at the Option Closing Date, there shall be furnished to the Representatives a certificate of the Company, dated the date of its delivery, signed by the President or any Vice President of the Company, in form and substance satisfactory to the Representatives, to the effect that (1) each signer has carefully examined the Registration Statement and the Prospectus (including the incorporated documents) and (A) as of the date of such certificate, such documents are true and correct in all material respects and do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and (B) in the case of the certificate delivered on the Closing Date and, if later, the certificate delivered on the Option Closing Date, since the date of the Prospectus Supplement, no event has occurred as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances under which they are made, not untrue or misleading in any material respect and there has been no document required to be filed under the Exchange Act and the Exchange Act Rules that upon such filing would be deemed to be incorporated by reference into the Prospectus that has not been so filed, (2) each of the representations and warranties of the Company contained in this Agreement were, when originally made, and are at the time such certificate is delivered true and correct in all material respects, (3) each of the covenants required to be performed by the Company on or prior to the date of such certificate has been duly, timely and fully performed and each condition herein required to be complied with by the Company on or prior to the delivery of such certificate has been duly, timely and fully complied with, (4) to the knowledge of such officer, no actions to prohibit the sale of the Shares have been taken or threatened by the Commission, (5) to the knowledge of such officer, no order suspending the effectiveness of the Registration Statement or prohibiting the sale of the Shares has been issued and no proceedings for such purpose are pending before or threatened by the Commission, (6) when the Registration Statement became effective and at all times subsequent thereto up to the delivery of such certificate, the Registration Statement and the Prospectus and any amendments or supplements thereto contained all statements and information required to be included therein, in the light of the circumstances in which made, and neither the Registration Statement nor the Prospectus nor any amendment or supplement thereto included any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading, (7) subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, and except as contemplated in the Prospectus, 18 19 neither the Company nor any Subsidiary incurred any direct or contingent liabilities or obligations material to the Company and the Subsidiaries, taken as a whole, not in the ordinary course of business, or entered into any transactions material to the Company and the Subsidiaries, taken as a whole, not in the ordinary course of business, and there has not been any change in the capital stock or outstanding indebtedness of the Company or any Subsidiary material to the Company and the Subsidiaries, taken as a whole, or any adverse change in the financial position, net worth or results of operations of the Company or any Subsidiary which is material to the Company and the Subsidiaries, taken as a whole, and (8) subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, neither the Company nor any Subsidiary has sustained any loss of or damage to its properties, whether or not insured, which is material to the Company and the Subsidiaries, taken as a whole. (f) The Representatives shall have received on each of the Closing Date and the Option Closing Date from Chapman and Cutler, counsel for the Company, an opinion, dated such Closing Date or Option Closing Date, as the case may be, satisfactory in form and substance to counsel for the Underwriters, to the effect that: (i) The Company (A) is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Illinois and the Commonwealth of Virginia, (B) is duly qualified and in good standing as a foreign corporation in the States of Georgia, Iowa, Kansas, Kentucky, Missouri, South Carolina and Tennessee, and to the best of the knowledge, information and belief of such counsel, the Company is duly qualified and in good standing as a foreign corporation in each other state or jurisdiction in which the location of its properties or the conduct of its business makes such qualification necessary and where the failure to so qualify would have a material adverse effect upon the business or financial condition of the Company and the Subsidiaries, taken as a whole, and (C) has due corporate authority to carry on its business as described in the Prospectus and to own, lease, license and operate the properties used in said business; (ii) Each Subsidiary (A) is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (B) to the best of the knowledge, information and belief of such counsel, is duly qualified and in good standing as a foreign corporation in each jurisdiction in which the location of its properties or the conduct of its business makes such qualification necessary and where the failure to so qualify would have a material adverse effect upon the business or financial condition of the Company and 19 20 the Subsidiaries, taken as a whole, and (C) has due corporate authority to carry on its business as described in the Prospectus and to own, lease, license and operate the properties used in said business; (iii) This Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and legally binding agreement of the Company, subject, however, to bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and by the exercise of judicial discretion in accordance with general principles applicable to equitable and similar remedies and to possible limitations on the validity or enforceability of the indemnification and contribution provisions contained in this Agreement as a result of securities laws or public policy; (iv) The Company has valid and sufficient grants, franchises, miscellaneous permits and easements free from unduly burdensome restrictions, adequate for the conduct of its business in the territories in which it is now conducting such business and the ownership of the properties now owned by it, except as to such matters relating to the operations of the Company in the State of Missouri as may be acceptable to the Representatives; (v) All authorizations, approvals, consents or other orders of any governmental authority or agency required in connection with the authorization, issuance and sale of the Shares by the Company pursuant to this Agreement (other than qualification under state securities laws, Blue Sky laws or the by-laws and rules of the NASD) have been obtained and continue in full force and effect; (vi) The Company has authorized capital stock as set forth in the Registration Statement and the Prospectus under the heading "Description of Capital Stock;" the authorized capital stock conforms, as to legal matters, to the description thereof contained in the Prospectus under the caption "Description of Capital Stock;" (vii) The issue and sale of the Shares by the Company and the performance of this Agreement and the consummation of the transactions herein contemplated will not result in a material breach or violation of any of the terms or provisions of, or constitute a material default under, any indenture, mortgage, deed of trust, loan agreement, partnership agreement, joint venture, stock purchase agreement, or other material agreement or instrument known to such counsel to which the Company is a party or by which the Company is bound or to which any of the properties or assets of the Company or any Subsidiary is subject, nor will such action result in any 20 21 violation of the provisions of the Amended Articles of Incorporation, as amended, or By-laws, as amended, of the Company, or any statute or, to the best of such counsel's knowledge, any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its properties; (viii) The Shares have been duly authorized by all necessary corporate action, the certificates therefor are in due and proper form and, when issued, delivered and paid for in accordance with the terms of this Agreement, and duly countersigned by the transfer agent and registrar thereof, will be validly issued, fully paid and nonassessable, and free of all preemptive or similar rights. The Shares conform to the description thereof contained in the Prospectus; (ix) The Registration Statement has become effective under the Securities Act and, to the best of such counsel's knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending before or are contemplated by the Commission. Any required filing of the Prospectus or any supplements to it have been made in accordance with Rule 424(b) of the Rules; (x) Such counsel does not know of any legal or governmental proceeding pending or threatened to which the Company or any Subsidiary is a party or to which any of the properties of the Company or any Subsidiary is subject which is required to be described in the Registration Statement or the Prospectus and is not so described, or of any contract or other document which is required to be described in the Registration Statement or the Prospectus or is required to be filed as an exhibit to the Registration Statement which is not described or has not been filed as required. The statements in the Prospectus, insofar as such statements constitute a summary of documents referred to therein or of statutes, laws or legal or governmental proceedings, are accurate summaries in all material respects and fairly and correctly present the information called for with respect to such documents and matters; (xi) The Registration Statement, at the Effective Date, and the Prospectus, at the date it was filed with (or transmitted for filing to) the Commission pursuant to Rule 424 (except the financial statements, schedules and financial and statistical data included therein, as to which no opinion need be expressed) complied as to form in all material respects with the Securities Act and the Rules; and 21 22 (xii) The Company is not a "holding company" or a "subsidiary company" of a "public utility company" or of a "holding company" or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," as such terms are defined in the Holding Company Act. In addition, such counsel shall state that such counsel has participated in conferences with officers and other representatives of the Company, counsel for the Underwriters, representatives of the independent public accountants for the Company and the Representatives at which the contents of the Registration Statement and Prospectus and related matters were discussed and, although, except for the matters referred to under the heading "Legal Opinions" in the Prospectus, such counsel is not passing upon and does not assume responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement and Prospectus, on the basis of the foregoing, no facts have come to the attention of such counsel that lead them to believe that either the Registration Statement, at the Effective Date, or the Prospectus, at the date it was filed with (or transmitted for filing to) the Commission pursuant to Rule 424 and as of the date of such opinion, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that such counsel need express no comment with respect to the financial statements, schedules and other financial and statistical data included in the Registration Statement or the Prospectus). With respect to the matters covered by foregoing clauses (i) and (ii), Chapman and Cutler may rely upon certificates of responsible officers of the Company as to the nature and extent of business being conducted by the Company and the Subsidiaries in states or jurisdictions wherein they are not licensed or qualified as foreign corporations. With respect to the matters covered by foregoing clause (iv) and, insofar as it relates to states other than the State of Illinois, in clause (v) above, such counsel may rely upon the opinion of Mark G. Thessin, Esq., Vice President, Regulatory Affairs for the Company. Such opinion of counsel for the Company shall state that the opinion of such other counsel is in form and substance satisfactory to counsel for the Company and, in their opinion, they and the Underwriters are justified in relying on such other opinion. In addition, such counsel need not express any opinion with respect to the Federal Energy Regulatory Commission's jurisdiction with respect to the Barnsley, Kentucky storage field and UCG Storage. (g) The Representatives shall have received on each of the Closing Date and the Option Closing Date from Jones, Day, Reavis & Pogue, counsel to the Underwriters, an opinion dated 22 23 such Closing Date or Option Closing Date, as the case may be, with respect to the Registration Statement, the Prospectus and this Agreement, which opinion shall be satisfactory in all respects to the Representatives. The Company must have furnished to such counsel such documents as they may request for the purpose of enabling them to render such opinion. In rendering such opinion, Jones, Day, Reavis & Pogue may rely on certificates of responsible officers of the Company as to matters of fact and upon advice from State authorities as to good standing. (h) The Representatives shall have received on the Closing Date and the Option Closing Date from the Accountants a signed letter dated the date hereof, the Closing Date or the Option Closing Date, as the case may be, in form and substance satisfactory to the Representatives (and the Representatives, in its sole discretion, may determine that any such letter is satisfactory to the Representatives even though it discloses changes in financial condition from earlier specified periods which in the Representatives's judgment are immaterial) to the effect that they are independent public accountants with respect to the Company as required by the Securities Act and the Rules, and it is their opinion that the financial statements and schedules examined by them and included or incorporated by reference in the Company's most recently filed Annual Report on Form 10-K and included or incorporated by reference in the Registration Statement comply as to form in all material respects with the applicable accounting requirements of the Securities Act, the Exchange Act and the regulations relating to financial statements in annual reports on Form 10-K and with respect to such other matters as the Representatives may reasonably request. (i) The approvals and consents of the Illinois Commerce Commission, the Kansas State Corporation Commission, the Tennessee Public Service Commission, the Georgia Public Service Commission and the Virginia State Corporation Commission and any other required approvals and consents required for the valid issuance and sale of the Shares by the Company in accordance with the provisions of this Agreement shall have been obtained and shall be in full force and effect. (j) The Company shall have furnished to the Representatives such certificates, in addition to those specifically mentioned herein, as the Representatives may have reasonably requested as to the accuracy and completeness at the Closing Date and the Option Closing Date of any statement in the Registration Statement or the Prospectus or any documents filed under the Exchange Act and deemed to be incorporated by reference into the Prospectus, as to the accuracy at the Closing Date and the Option Closing Date of the representations and warranties of the Company herein, as to the performance by the Company of its obligations 23 24 hereunder, or as to the fulfillment of the conditions concurrent and precedent to the obligations hereunder of the Representatives. (k) The Shares shall be qualified for sale in such states as the Representatives may reasonably request, each such qualification shall be in effect and not subject to any stop order or other proceeding on the Closing Date or the Option Closing Date as applicable. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement will comply with this Agreement only if they are in form and scope satisfactory to counsel for the Representatives. The use by the Underwriters of any amendments or supplements to the Prospectus which are furnished by the Company will not constitute a waiver of any of the conditions of this Section 5. 6. Indemnification. (a) The Company will indemnify and hold harmless each Underwriter, the directors, officers, employees and agents of each Underwriter and each person, if any, who controls each Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages, expenses and liabilities (including any and all investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted), to which they, or any of them, may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages, expenses or liabilities arise out of or are based on any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any preliminary prospectus supplement, the Prospectus or any amendment or supplement to the Registration Statement or the Prospectus or any incorporated document, or the omission or alleged omission to state in such document a material fact required to be stated in it or necessary to make the statements in it not misleading, provided that the Company will not be liable to the extent that such loss, claim, damage, expense or liability arises from the sale of the Shares in the public offering to any person by an Underwriter and is based on an untrue statement or omission or alleged untrue statement or omission (1) made in reliance on and in conformity with information furnished in writing to the Company by the Representatives on behalf of any Underwriter expressly for inclusion in the Registration Statement, any preliminary prospectus supplement or the Prospectus or (2) in a preliminary prospectus supplement if the Prospectus (or the Prospectus as amended or supplemented) corrects the untrue statement or omission or alleged untrue statement or omission that is the basis of the 24 25 loss, claim, damage, expense or liability for which indemnification is sought and the person asserting any such loss, claim, damage, expense or liability purchased Shares from such Underwriter but was not sent or given a copy of the Prospectus at or prior to the written confirmation of the sale of such Shares to such person. The Company acknowledges that the statements set forth under the heading "Underwriting" and, based on the Company's representation in paragraph 3(u) hereof, in the first paragraph on the inside front cover in any preliminary prospectus supplement and the Prospectus constitute the only information relating to any Underwriter furnished in writing to the Company by the Representatives on behalf of the Underwriters expressly for inclusion in the Registration Statement, any preliminary prospectus supplement or the Prospectus. This indemnity agreement will be in addition to any liability that the Company might otherwise have. (b) Each Underwriter will indemnify and hold harmless the Company, each director of the Company and each officer of the Company who signs the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company to each Underwriter, but only insofar as losses, claims, damages, expenses or liabilities arise out of or are based on any untrue statement or omission or alleged untrue statement or omission made in reliance on and in conformity with information relating to any Underwriter furnished in writing to the Company by the Representatives on behalf of such Underwriter expressly for use in the Registration Statement, any preliminary prospectus or the Prospectus. The Company acknowledges that the statements under the caption "Underwriting" and, based on the Company's representation in paragraph 3(u) hereof, in the first paragraph on the inside front cover in any preliminary prospectus supplement and the Prospectus constitute the only information furnished in writing to the Company by the Representatives on behalf of the Underwriters expressly for inclusion in the Registration Statement, any preliminary prospectus supplement or the Prospectus. This indemnity will be in addition to any liability that each Underwriter might otherwise have. (c) Any party that proposes to assert the right to be indemnified under this Section 6 will, promptly after receipt of notice of commencement of any action against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section 6, notify each such indemnifying party of the commencement of such action, enclosing a copy of all papers served, but the omission so to notify such indemnifying party will not relieve it from any liability that it may have to any indemnified party under this Section 6 unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by 25 26 the indemnifying party. If any such action is brought against any indemnified party and it notifies the indemnifying party of its commencement, the indemnifying party will be entitled to participate in, and, to the extent that it elects by delivering written notice to the indemnified party promptly after receiving notice of the commencement of the action from the indemnified party, jointly with any other indemnifying party similarly notified, to assume the defense of the action, with counsel satisfactory to the indemnified party, and, after notice from the indemnifying party to the indemnified party of its election to assume the defense, the indemnifying party will not be liable to the indemnified party for any legal or other expenses except as provided below and except for the reasonable costs of investigation subsequently incurred by the indemnified party in connection with the defense. The indemnified party will have the right to employ its counsel in any such action, but the fees, expenses and other charges of such counsel will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based on advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the fees, disbursements, expenses and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that no indemnifying party shall, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm (in addition to any local counsel) at any one time for all such indemnified party or parties. All such fees, disbursements and other charges will be reimbursed by the indemnifying party promptly as they are incurred. An indemnifying party will not be liable for any settlement of any action or claim effected without its written consent (which consent will not be unreasonably withheld). (d) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in the foregoing paragraphs of this Section 6 is applicable in accordance with its terms but for any reason is held to be unavailable from the Company or the Underwriters, the Company and the Underwriters will contribute to the total loss, claim, damage, expense and liability (including any investigative, legal and other expenses reasonably incurred in 26 27 connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, but after deducting any contribution received by the Company from persons other than the Underwriters, such as persons who control the Company within the meaning of the Securities Act, officers of the Company who signed the Registration Statement and directors of the Company, who also may be liable for contribution) to which the Company and any one or more of the Underwriters may be subject in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other. The relative benefits received by the Company and the Underwriters shall be deemed to be in the same proportions as the net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the front cover of the Prospectus. If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing sentence, but also the relative fault of the Company or the Underwriters with respect to the statements or omissions which resulted in such loss, claim, damage, expense or liability, or any action in respect thereof, as well as any other relevant equitable considerations with respect to such offering. Such 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 Company or by the Representatives on behalf of 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 Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were 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, expense and liability referred to in this Section 6(d) shall be deemed to include, for purposes of this Section 6(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 6(d), no Underwriter shall be required to contribute any amount in excess of the amount of the underwriting discounts and commissions received by it, and no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such 27 28 fraudulent misrepresentation. The Underwriters' obligations to contribute as provided in this Section 6(d) are several (and not joint) in proportion to the respective underwriting obligations. For purposes of this Section 6(d), any person who controls a party to this Agreement within the meaning of the Securities Act will have the same rights to contribution as that party, and each officer of the Company who signed the Registration Statement will have the same rights to contribution as the Company, subject in each case to the provisions hereof. Any party entitled to contribution, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made under this Section 6(d), will notify any such party or parties from whom contribution may be sought, but the omission so to notify will not relieve the party or parties from whom contribution may be sought from any other obligation it or they may have under this Section 6 except to the extent such party or parties are prejudiced by the failure to receive such notice. No party will be liable for contribution with respect to any action or claim settled without its written consent (which consent will not be unreasonably withheld). (e) The indemnity and contribution agreements contained in this Section 6 and the representations and warranties of the Company contained in this Agreement shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of the Underwriters, (ii) acceptance of any of the Shares and payment therefor or (iii) any termination of this Agreement. 7. Termination. (a) The obligations of the several Underwriters under this Agreement may be terminated at any time prior to the Closing Date (or, with respect to the Option Shares, on or prior to the Option Closing Date), by notice to the Company from the Representatives, without liability on the part of any Underwriter to the Company, if, prior to delivery and payment for the Firm Shares (or the Option Shares, as the case may be), in the sole judgment of the Representatives (i) the Company shall have failed, refused or been unable, at or prior to the Closing Date (or the Option Closing Date, as the case may be) to perform any agreement on its part to be performed, or because any other condition to the Underwriters' obligations hereunder required to be fulfilled by the Company is not fulfilled, (ii) trading in any of the equity securities of the Company shall have been suspended by the Commission or by the National Association of Securities Dealers Automated Quotations Market System, (iii) trading in securities generally on the New York Stock Exchange shall have been suspended or limited or minimum or maximum prices shall have been generally established on such exchange, or additional material governmental restrictions, not in force on the date 28 29 of this Agreement, shall have been imposed upon trading in securities generally by such exchange or by order of the Commission or any court of other governmental authority, (iv) a general banking moratorium shall have been declared by either federal or New York State authorities, (v) if at or prior to the Closing Date (or the Option Closing Date, as the case may be) the Company shall have sustained a loss by strike, fire, flood, accident or other calamity of such character as to interfere materially with the conduct of the business and operations of the Company regardless of whether or not such loss shall have been insured, or (vi) any material adverse change in the financial or securities markets in the United States or in political, financial or economic conditions in the United States or any outbreak or material escalation of hostilities or declaration by the United States of a national emergency or war or other calamity or crisis shall have occurred, the effect of any of which is such as to make it, in the sole judgment of the Representatives, impracticable or inadvisable to market the Shares on the terms and in the manner contemplated by the Prospectus. 8. Substitution of Underwriters. If any one or more of the Underwriters shall fail or refuse to purchase any of the Firm Shares which it or they have agreed to purchase hereunder, and the aggregate number of Firm Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of Firm Shares, the other Underwriters shall be obligated, severally, to purchase the Firm Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase, in the proportions which the number of Firm Shares which they have respectively agreed to purchase pursuant to Section 1 bears to the aggregate number of Firm Shares which all such non-defaulting Underwriters have so agreed to purchase, or in such other proportions as the Representatives may specify; provided that in no event shall the maximum number of Firm Shares which any Underwriter has become obligated to purchase pursuant to Section 1 be increased pursuant to this Section 8 by more than one-ninth of such number of Firm Shares to be purchased by such Underwriter without the prior written consent of such Underwriter. If any Underwriter or Underwriters shall fail or refuse to purchase any Firm Shares and the aggregate number of Firm Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase exceeds one-tenth of the aggregate number of the Firm Shares and arrangements satisfactory to the Representatives and the Company for the purchase of such Firm Shares are not made within 48 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company for the purchase or sale of any Shares. In any such case, either the Representatives or the Company will have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and in the Prospectus or in any 29 30 other documents or arrangements may be effected. Any action taken pursuant to this Section 8 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. 9. Miscellaneous. The reimbursement, indemnification and contribution agreements in Sections 4 and 6 will remain in full force and effect regardless of any termination of this Agreement, any investigation made by or on behalf of any Underwriter, the Company or any controlling person and delivery of and payment for the Shares. This Agreement is solely for the benefit of the Underwriters and the Company and their successors and assigns, and, to the extent expressed in this Agreement, for the benefit of persons controlling any of the Underwriters or the Company, and directors and officers of the Company, and their respective successors and assigns, and no other person, partnership, association or corporation shall acquire or have any right under or by virtue of this Agreement. The term "successors and assigns" does not include any purchaser of Shares from any Underwriter merely because of such purchase. This Agreement shall become effective upon execution. All notices and communications under this Agreement will be in writing, effective only on receipt and mailed or delivered, by messenger, facsimile transmission or otherwise, if to the Underwriters, to the Representatives, c/o ________________________ at __________________________ ______________________, and if to the Company, to its agent for service at such agent's address on the cover of the Registration Statement. This Agreement may be signed in multiple counterparts that taken as a whole constitute one agreement. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. THE COMPANY AND THE UNDERWRITERS EACH HEREBY IRREVOCABLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 30 31 Please confirm that the foregoing correctly sets forth the agreement between us. Very truly yours, UNITED CITIES GAS COMPANY By____________________________ Confirmed: By________________________________ Acting on behalf of itself and the Underwriters named in Schedule I 31 32 SCHEDULE I NUMBER OF FIRM SHARES TO BE NAME PURCHASED ---- ------------- ____________ Total . . . . . . . . . . . . . . ============ 33 EXHIBIT A UNITED CITIES GAS COMPANY ________________________ PRICE INFORMATION 1. The initial public offering price per share for the Firm Shares shall be $ . 2. The purchase price per share for the Firm Shares to be paid by the several Underwriters shall be $ representing an amount equal to the initial public offering price set forth above, less $ per share. EX-4.01 3 AMENDMENT TO ARTICLES OF INCORPORATION 1 EXHIBIT 4.01 AMENDMENT TO ARTICLES OF INCORPORATION MAY 30, 1995 ARTICLE FIVE Paragraph 1: The aggregate number of shares which the corporation is authorized to issue is 40,200,000, divided into two classes consisting of 200,000 shares designated as Preferred Stock, without par value, issuable in series as hereinafter provided (hereinafter referred to as the "Preferred Stock"), and 40,000,000 shares designated as Common Stock, without par value (hereinafter referred to as the "Common Stock"). Paragraph 2: The preferences, qualifications, limitations, restrictions, and the special or relative rights in respect of the shares of each class hereinabove designated shall be as follows: Section 1. Issuance of Preferred Stock in Series. The Preferred Stock may be divided into and issued from time to time as shares of one or more series, each series to be appropriately designated by a distinguishing number, letter, or title prior to the issue of any shares thereof. The Preferred Stock of all series shall be of the same class and of equal rank and shall be identical except as to the terms that may be fixed by the Board of Directors as hereinafter in this Section 1 provided. All shares of each series shall be alike in every particular. Before any shares of Preferred Stock of any series shall be issued, the Board of Directors shall fix and is hereby expressly empowered to fix, in the manner provided by law, the following relative rights and preferences, in respect of any or all of which there may be variations between different series: (i) The designation of such series and the number of shares which shall constitute such series, which number may, unless the authorized number of shares of such series shall be limited, be increased or decreased (but not below the number of shares thereof, if any, then outstanding) from time to time by like action of the Board of Directors; (ii) The rate of dividend; (iii) The price at and the terms and conditions on which shares may be redeemed; (iv) The amount payable on shares of such series in the event of any voluntary liquidation, dissolution or winding up of the affairs of the corporation; (v) The amount payable on shares of such series in the event of any involuntary liquidation, dissolution or winding up of the affairs of the corporation; (vi) Any sinking fund provisions for the redemption or purchase of shares; (vii) The terms and conditions on which shares may be converted, if the shares of any series are issued with the privilege of conversion; 2 (viii) Any special voting rights providing for the required approval of a specified proportion of the shares of any series for any specified corporate action; so far as not inconsistent with the provisions of this Article Five applicable to all series of Preferred Stock. Shares of Preferred Stock shall be issued only as full-paid and nonassessable shares. All or any shares of any series of Preferred Stock at any time redeemed, purchased or acquired by the corporation shall be canceled in accordance with law and shall not be reissued as shares of the same series, but shall become authorized and unissued shares of Preferred Stock undesignated as to series. Section 2. Dividends. Out of any source lawfully available for the payment of dividends, as and when declared by the Board of Directors, the holders of Preferred Stock of each series shall be entitled to receive dividends at, but not exceeding, the maximum dividend rate fixed for such series and expressed in the certificates therefore, payable at the times fixed for such series and expressed in the certificates therefore, and accruing from the date of original issue of each share of such stock, before any dividends shall be declared or paid or set apart for payment on the Common Stock and before any sum shall be paid or set apart for the purchase or redemption of any Preferred Stock. After full dividends on Preferred Stock for all past dividend periods and for the then current dividend period shall have been declared and paid, or set apart for payment, then, and not otherwise, dividends may be declared and paid out of any remaining source lawfully available for the payment thereof upon the Common Stock, share and share alike, to the exclusion of the holders of Preferred Stock. Section 3. Liquidation, Dissolution or Winding Up. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the corporation, the holders of the Preferred Stock of each series shall be entitled to receive in cash for each share thereof the amount fixed for the respective series as herein provided, with an amount equal to any accrued and unpaid dividends thereon to the date fixed for such payment, before any distribution of the assets shall be made to the holders of Common Stock. After such payment shall have been made in full to the holders of the outstanding Preferred Stock or funds necessary for such payment shall have been set aside by the corporation in trust for the account of the holders of the outstanding Preferred Stock so as to be and continue available therefor, the remaining assets of the corporation shall be divided and distributed among the holders of the Common Stock ratably, share and share alike. If, upon such liquidation, dissolution or winding-up, the assets of the corporation distributable aforesaid among the holders of the Preferred Stock shall be insufficient to permit the payment to them of said amount, the entire assets shall be distributed ratably according to their respective interest among the holders of the Preferred Stock. A consolidation or merger of the corporation or any purchase or redemption of the stock of the corporation or any purchase or redemption of stock of the corporation of any class shall not be regarded as a liquidation, dissolution or winding up of the affairs of the corporation within the meaning of this Section 3. -2- 3 Section 4. Common Stock. Subject to the foregoing provisions of this Article Five, such dividends (payable in cash, stock or otherwise) as may be determined by the Board of Directors may be declared and paid out of funds legally available therefore upon the Common Stock of the corporation from time to time. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the corporation, after payment to the holders of Preferred Stock of the amounts to which they are entitled as hereinbefore provided, the holders of the Common Stock shall be entitled to share ratably in all assets then remaining subject to distribution to the shareholders. Section 5. No Pre-Emptive Rights. No holder of any shares of the capital stock of the corporation shall be entitled as of right to purchase or subscribe for any unissued stock of any class or any additional shares of any class to be issued by reason of any increase of the authorized capital stock of this corporation of any class, or bonds, certificates of indebtedness, debentures or other securities convertible into stock of this corporation of any class, or bonds, certificates of indebtedness debentures or other securities convertible into stock of this corporation or carrying any right to purchase stock of any class, but any such unissued stock or such additional authorized issue of any stock or of other securities convertible into stock or carrying any right to purchase stock, may be issued and disposed of pursuant to resolution of the Board of Directors to such persons, firms, corporations or associations and upon such terms as may be deemed advisable by the Board of Directors in the exercise of its discretion. Section 6. Voting Rights. Each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders. In all elections for directors every shareholder shall have the right to vote, in person or by proxy, for the number of shares owned by him, for as many persons as there are directors to be elected or to cumulate said shares, and give one candidate as many votes as the number of directors multiplied by the number of his shares shall equal, or to distribute them on the same principle among as many candidates as he shall think fit. -3- EX-4.03 4 AMENDMENT TO BY-LAWS 1 EXHIBIT 4.03 April 28, 1995 AMENDMENT TO BY-LAWS NOW, THEREFORE, BE IT AND IT IS HEREBY RESOLVED, that the first sentence of Section 13 of the By-Laws of this Corporation be and it is hereby amended to increase the number of Directors consituting the whole Board of Directors to nine (9). EX-23.01 5 CONSENT OF ARTHUR ANDERSON LLP 1 EXHIBIT 23.01 [ON ARTHUR ANDERSEN LLP LETTERHEAD] CONSENT OF INDEPENDENT PUBLIC ACCOUNTS As independent public accountants, we hereby consent to the incorporation by reference in this Amendment No. 1 to the Form S-3 registration statement (No. 33-56983) of our report dated February 16, 1995 appearing in the Annual Report on Form 10-K for the year ended December 31, 1994 of United Cities Gas Company, and to all references to our Firm included in this registration statement. ARTHUR ANDERSEN LLP Nashville, Tennessee May 26, 1995 -----END PRIVACY-ENHANCED MESSAGE-----